Equipmake Holdings - Results for the year ended 31 May 2022
RNS Number : 2799H
Equipmake Holdings PLC
23 November 2022
 

 

 

Equipmake Holdings PLC

("Equipmake" or the "Company")

Results for the year ended 31 May 2022

 

Equipmake, the UK developer and manufacturer of best-in-class electrification products for the provision of electric vehicle ("EV") drivetrains, globally, is pleased to announce its audited results for the 12-month period ended 31 May 2022 with a revenue performance ahead of initial expectations, reflecting progress in commercialisation in target markets.

Financial highlights

·    Revenue from commercial and production contracts up 51.9% to £2.67m (2021 £1.76m)

·    Total revenue (inc. grant revenue) up 2.9% to £3.71m (2021 £3.60m)

·    Post -period end, completed an IPO on the Aquis Access Stock Exchange (AQSE), raising gross proceeds of £10m

Operational Highlights

·    Developed a prototype repowered solution for a double deck bus for London - a retrofit for the iconic TfL Routemaster bus fleet

·    Developed a fully electric bus chassis for the South American market

·    Secured a £4.5million multi-year production contract to supply Equipmake's own ASIL-D compliant motor drive inverter, to a leading European electric hyper-car developer

·    Secured a £2.2 million contract with First York Limited (part of FirstGroup PLC) to retrofit 12 vehicles with Equipmake's full EV powertrain solution; first vehicle due to be delivered in Q4 2022

·    Commenced supply of EV drivetrains to Emergency One, the UK's leading manufacturer of fire and rescue vehicles, one of which is being actively marketed to the fire truck market in the USA 

·    Signed non-binding MOUs with PT Vktr Technologi Mobilitas and a large Indian Tier 1 automotive supplier for evaluation of multiple unit EV conversions in local markets

·    Strengthened the Board with appointments of James Bishop as COO and Steven McGillivray as CFO, and post - period end, Clive Scrivener, Jonathan Beasley, and Dena Bellamy as independent non-executive directors

Commenting on the results, Ian Foley, Equipmake CEO, said:

"We are pleased with this set of results, which reflects a revenue performance ahead of expectations for the period prior to our IPO on the Aquis Exchange. We were able to shift our revenue mix towards more commercial and production contracts and secured a number of high-profile customers and partnerships. This is an excellent demonstration of our progress in bringing our leading range of EV solutions into our chosen markets, with strong traction and high-quality partners.

"With the funds raised at IPO, we have been able to maintain this momentum and invest in the business to ensure Equipmake is in a strong position to deliver on its healthy pipeline for the coming year and beyond.

Whilst we continue to be cognisant of the impact of supply chain issues on our ability to meet project timelines, with our expectations for FY 2023 underpinned by work fully contracted and with advanced discussions underway to facilitate the conversion of our significant medium-term pipeline into orders, we move into the remainder of our current financial year with confidence."

 

-ENDS-

 

For further information, please contact:

Equipmake

Ian Foley, Founder and CEO

Steven McGillivray, CFO

 

Via MHP

Panmure Gordon (Corporate Adviser & Broker)

John Prior / James Sinclair-Ford / Soman Thakran (Corporate Finance)

Hugh Rich / Sam Elder (Corporate Broking)

 

Tel: +44 (0)20 7886 2500

MHP (Financial PR Adviser)

Tim Rowntree

Eleni Menikou

Alan Tovey

 

Tel: +44 (0)20 3128 8100

equipmake@mhpgroup.com

 

About Equipmake

 

Equipmake is a UK-based technology company which has developed a range of electrification products for the provision of electric vehicle drivetrains to meet the needs of the automotive, aerospace and other sectors in support of the transition from fossil-fuelled to zero-emission powertrains.

Equipmake a leader in ultra-high performance electric motors and complete EV drivetrains and ultra-fast power electronic systems. As well as developing proprietary technology - such as an ultra-compact, lightweight high performance spoke motor - it also offers industry-leading EV consultancy too.
Equipmake believes that its vertically integrated solution will enable it to offer more competitive pricing than others, who are integrating bought-in system components, with the benefit of higher margins.

Following a number of years of engagement with potential customers, the Company now has a significant pipeline of opportunities, as demand for electric vehicles increases as part of the global decarbonisation movement.

Equipmake listed on the Aquis Stock Exchange Growth Market in July 2022 and the £10 million raised is being used to scale up the business to meet its pipeline of opportunities.

 

CEO review

Introduction

We delivered a strong performance in FY 2022, with revenue ahead of expectations prior to our IPO on the Aqius Access Exchange and a rebalanced revenue mix, as commercial and production contracts revenue rose by 51.9% against FY 2021.  This performance was driven by growth in orders and their subsequent conversion to contracts, as the global move towards a zero-emission transport network continues to accelerate.

Business Overview

We secured several major contracts during the year, including a multi-year production contract to supply our ASIL-D compliant motor drive inverter to a leading European electric hyper-car developer. This is a major milestone for the Company, marking the transition from an R&D phase to production. Delivery commenced in October 2021 and this inverter is now being utilised in one of the fastest accelerating production cars in the world.

The Company also started working with a division of FirstGroup, First York Limited, to fully convert 12 Optare Versa buses from an EV Generation one system to Equipmake's Zero Emission Drivetrain. This project, one of a number of similar projects we are exploring, is in line with our strategy to retrofit older, typically diesel or diesel-electric hybrid engine buses, extending lifespans and reducing emissions associated with manufacturing new vehicles. We expect to deliver the first of these vehicles to First York during Q4 2022.

We commenced delivery of EV drivetrains for Fire Trucks to Emergency One, the UK's leading manufacturer of fire and rescue vehicles, one of which is being actively marketed by one of the largest suppliers of fire trucks in the USA

In addition, we entered a non-binding Memorandum of Understanding (MoU) with a major Tier 1 Indian supplier to the global automotive industry, to help establish a manufacturing plant in India to manufacture EV powertrains, their sub-systems, and components for passenger buses and/or heavy commercial vehicles utilising Equipmake IP. 

Whilst the main commercial focus of the Company remains the development of heavy-duty powertrain systems for buses and fire trucks globally, we continue to make progress in other sectors.

During the period, the Company announced it had been chosen as a development partner of Gilmour Space of Australia who are developing a low earth orbit satellite launch rocket; a project requiring a high performance (low weight) solution. Equipmake has already achieved the target specification and delivered the first product to Gilmour who have incorporated the Company's cutting-edge motors and inverters to power the rocket fuel pumps. The first prototype units have been delivered and successfully trialled and the first rocket is due to launch in 2023, with production units due to be supplied in 2024. 

Aerospace projects such as this solidify Equipmake's reputation in the marketplace as a leading developer of high-performance electric drivetrain technology and have led to interest from several other companies in the sector. 

Ahead of our IPO, we strengthened our board, appointing James Bishop as COO Steven McGillivray as CFO. Clive Scrivener, Jonathan Beasley, and Dena Bellamy also joined as independent non-executive directors, all of whom bring a wealth of experience to the Equipmake board, which is invaluable as we execute our growth strategy.

Current Trading

On 29th July 2022, Equipmake Holdings PLC was admitted to the Aquis Stock Exchange Growth Market (ticker: EQIP), raising gross proceeds of £10m (before expenses), which are being invested in executing the Company's growth strategy. We are investing in capacity and people to meet the increasing production demand, with work on our proposed additional site extension due to commence in Q1 2023.  This will allow us to convert and deliver our substantial medium-term pipeline.  As the fundraising was completed after our financial year end, the results here do not reflect the impact of this investment in the business.

The business is trading in line with management expectations, with positive momentum maintained into the current financial year. Delivery of contracts secured in the previous financial year is on track, and discussions with new and existing customers regarding projects across both our core bus market and adjacent markets are ongoing. We continue to develop our range of electrification products, investing significantly in R&D through FY22 and into the current year.

Post-year end, in collaboration with our South American partner, Agrale, Equipmake successfully launched an electric bus in Argentina featuring the Company's latest-generation zero-emission powertrain.  The bus has successfully completed pre-service trials and commenced in-service trials in November 2022. 

On 18th August 2022, we signed a non-binding MOU with PT Transportasi Jakarta and PT Vktr Teknologi Mobilitas for an implementation plan for an electric bus retrofit trial in Jakarta, Indonesia.  This underlines progress made in respect of bus opportunities in Indonesia, with our strong local partnerships ensuring Equipmake is well placed to capitalise on these. Development of the first trial vehicle is underway, with trials in Jakarta expected to start in Q2 2023.

With support from Transport for London (TfL), Equipmake recently showcased an all-electric repower of the Iconic London Routemaster bus at the main industry bus show, Euro Bus Expo in November 2022, commencing pre-service trials with Metroline immediately following this.  The bus, which features a 400kWh battery (with an expected in-service range of 150 miles), will complete in-service trials over a six-month period and will provide valuable test data as TfL continues to evaluate a range of clean technologies, including state-of-the-art repower systems such as Equipmake's Zero Emission Drivetrain.

Outlook

The successes detailed above have been achieved in a challenging environment for the industry, with electronic component shortages causing supply risk and inflationary pressures. Our vertically integrated model, which means that we are the design authority for most of our systems, has provided resilience to these challenges, enabling us to navigate difficulties and maintain supply whilst controlling costs.

While we remain mindful of challenges, we are encouraged by the level of demand and interest in both our core bus markets and the adjacent markets we are exploring. Equipmake continues to be well-positioned in these highly favourable markets, with strong EV market growth expected in line with the ongoing global decarbonisation movement.

As outlined at the time of the IPO, we remain fully committed to growing the business and to that end, are focused on investing in the following areas:

·    Capital and operational expenditure to establish a manufacturing facility, providing the capacity to deliver up to 250 vehicles per year

·    Securing additional in-house expertise and aligning operational resource and processes to facilitate the scaling up process 

·    Ongoing training of our workforce to ensure we remain at the forefront of the industry 

·    Securing long-term resilient supply chain relationships for key components

Whilst we continue to be cognisant of the impact of supply chain issues on our ability to meet project timelines, with our expectations for FY 2023 underpinned by work fully contracted and with advanced discussions underway to facilitate the conversion of our significant medium-term pipeline into orders, we move into the remainder of our current financial year with confidence.

 

Ian Foley

Chief Executive Officer



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MAY 2022

 





As restated



2022


2021


Note

£


£






Turnover

4

3,706,785


3,603,568






Cost of sales


(6,087,868)


(4,640,103)






Gross loss


(2,381,083)


(1,036,535)






Administrative expenses


(1,919,378)


(1,032,513)






Other operating income

5

565,132


495,143






Share based payment charge

28

(574,227)


-






Fair value adjustment ‑ convertible loan note

23

(750,000)


-






Operating loss

6

(5,059,556)


(1,573,905)






Interest receivable and similar income

10

(1,182)


3,534






Interest payable and similar expenses

11

(144,994)


(22,727)






Loss before taxation


(5,205,732)


(1,593,098)






Tax on loss

12

(104,499)


(82,839)






Loss for the financial year


(5,310,231)


(1,675,937)
















Total comprehensive income for the year


(5,310,231)


(1,675,937)






(Loss) for the year attributable to:










Non‑controlling interests


(692,772)


(418,976)






Owners of the parent Company


(4,617,459)


(1,256,961)








(5,310,231)


(1,675,937)






Basic loss per share in pence

26

(22.6)


(60.0)

 

CONSOLIDATED BALANCE SHEET

AS AT 31 MAY 2022

 






As restated




2022


2021


Note


£


£







Fixed assets

 





Tangible assets

15


527,139


612,560










527,139


612,560

Current assets












Stocks

17


807,973


44,447







Debtors: amounts falling due within one year

18


1,920,728


1,384,768







Cash at bank and in hand

19


1,876,083


3,841,299










4,604,784


5,270,514

Creditors: amounts falling due within one year

20


(5,794,645)


(1,277,149)













Net current (liabilities)/assets

 


(1,189,861)


3,993,365







Total assets less current liabilities



(662,722)


4,605,925







Creditors: amounts falling due after more than one year

21


(307,169)


(455,099)







Provisions for liabilities












Other provisions

24


(44,057)


-
















(44,057)


-

Net (liabilities)/assets



(1,013,948)


4,150,826













Capital and reserves












Called up share capital

25


50,000


2







Other reserves

27


5,748,311


5,835,579







Profit and loss account

27


(7,386,486)


(2,987,394)







Share-based payments reserve

27


574,227








-

Equity attributable to owners of the parent Company



(1,013,948)


2,848,187







Non‑controlling interests



-


1,302,639










(1,013,948)


4,150,826

 

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 22 November 2022     

 

 

 

Ian Foley

Chief Executive Officer

 



 

 

COMPANY BALANCE SHEET

AS AT 31 MAY 2022

 






As restated




2022


2021


Note


£


£







Fixed assets

 





Investments

16


6,458,087


82










6,458,087


82

Current assets

 





Debtors: amounts falling due within one year

18


1,269,386


99,264







Cash at bank and in hand

19


1,737,118


337,206










3,006,504


436,470

Creditors: amounts falling due within one year

20


(3,859,315)


-







Net current (liabilities)/assets

 


(852,811)


436,470

Total assets less current liabilities



5,602,276


436,552













Net assets



5,602,276


436,552













Capital and reserves












Called up share capital

25


50,000


2







Other reserves

27


4,962,502


-







Merger relief reserve

27


849,982









Profit and loss account

27


(831,435)


436,550







Share-based payments reserve

27


574,227


-










5,605,276


436,552

 

 

 

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company's loss for the year was £876,485 (2021: £34).

 

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 22 November 2022     

 

 

 

 

Ian Foley

Chief Executive Officer

 

 



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MAY 2022

 


Called up share capital

Other reserves

Profit and loss account

Share-based payments reserve

Equity attributable to owners of parent Company

Non‑controlling interests

Total equity


£

£

£

£

£

£

£









At 1 June 2021 (as previously stated)

2

5,835,579

(1,203,929)

-

4,631,652

1,398,394

6,030,046

Prior year adjustment (note 29)

-

-

(1,783,465)

-

(1,783,465)

(95,755)

(1,879,220)

At 1 June 2021 (as restated)

2

5,835,579

(2,987,394)

-

2,848,187

1,302,639

4,150,826

Comprehensive income for the year

 







Loss for the year

-

-

(4,617,459)

-

(4,617,459)

(692,772)

(5,310,231)

Total comprehensive income for the year

-

-

(4,617,459)

-

(4,617,459)

(692,772)

(5,310,231)

Reclassify non-controlling interest following share-for-share exchange

-

-

609,867

-

609,867

(609,867)

-

Dividends: Equity capital

-

-

(395,000)

-

(395,000)

-

(395,000)

Share-based payments movement

-

-

-

574,227

574,227

-

574,227

Share‑for‑share exchange

16,000

(49,770)

-

-

(33,770)

-

(33,770)

Issue of B shares

5,000,000

(5,000,000)

-

-

-

-

-

Cancellation of B shares

(5,000,000)

5,000,000

-

-

-

-

-

Purchase of own shares

(3,500)

-

3,500

-

-

-

-

Bonus issue of shares

37,498

(37,498)

-

-

-

-

-

Total transactions with owners









49,998

(87,268)

218,367

574,227

145,457

-

145,457









At 31 May 2022

50,000

5,748,311

(7,386,486)

574,227

(1,013,948)

-

(1,013,948)

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MAY 2021

 

 

 


Called up share capital

Other reserves

Profit and loss account

Equity attributable to owners of parent Company

Non‑controlling interests

Total equity


£

£

£

£

£

£








At 1 June 2020 (as previously stated)

2

5,835,579

188,616

6,024,197

1,862,565

7,886,762








Prior year adjustment (note 29)

-

-

(1,919,050)

(1,919,050)

(140,950)

(2,060,000)








At 1 June 2020 (as restated)

2

5,835,579

(1,730,434)

4,105,147

1,721,615

5,826,762















Comprehensive income for the year

 













Loss for the year

-

-

(1,256,960)

(1,256,960)

(418,976)

(1,675,936)








At 31 May 2021

2

5,835,579

(2,987,394)

2,848,187

1,302,639

4,150,826

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MAY 2022

 


Called up share capital

Other reserves

Merger relief reserve

Profit and loss account

Share-based payments reserve

Total equity


£

£

£

£

£

£








At 1 June 2020

2

-

-

436,584

-

436,586








Comprehensive income for the year

 






Loss for the year

-

-

-

(34)

-

(34)

At 1 June 2021

2

-

-

436,550

-

436,552








Comprehensive income for the year

 






Loss for the year

-

-

-

(876,485)

-

(876,485)








Contributions by and distributions to owners

 






Dividends: Equity capital

-

-

-

(395,000)

-

(395,000)

Share-based payments charge

-

-

-

-

574,227

574,227

Share‑for‑share exchange

16,000


5,849,982

-

-

5,865,982

Issue of B shares

5,000,000


(5,000,000)

-

-

-

Cancellation of B shares

(5,000,000)

5,000,000

-

-

-

-

Purchase of own shares

(3,500)

-

-

3,500

-

-

Bonus issue of shares

37,498

(37,498)

-

-


-

Total transactions with owners

49,998

4,962,502

849,982

(1,267,985)

574,227

5,168,724








At 31 May 2022

50,000

4,962,502

849,982

(831,435)

574,227

5,605,276

 

 

 


 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MAY 2022

 

 



2022


2021



£


£






Cash flows from operating activities

 




Loss for the financial year


(5,310,231)


(1,675,937)

Adjustments for:

 




Depreciation of tangible assets


220,668


265,858

Loss on disposal of tangible assets


-


25,268

Interest paid


144,994


22,727

Interest received


1,182


(3,534)

RDEC Taxation credit (net)


(445,496)


(353,149)

(Increase) in stocks


(763,526)


(44,447)

(Increase)/decrease in debtors


(443,613)


73,218

Increase in creditors


598,558


738,546

Increase in provisions


44,057


-

Corporation tax received


353,149


239,451

Share‑based payments charge


574,227


-

Fair value losses ‑ convertible loan


750,000


-

Stamp duty paid on share‑for‑share exchange


(33,770)


-

Net cash generated from operating activities

 

(4,309,801)


(711,999)

Cash flows from investing activities

 




Purchase of tangible fixed assets


(135,248)


(452,491)

Interest received


-


3,534

Net cash from investing activities

 

(135,248)


(448,957)

 

 

Cash flows from financing activities

 




New finance leases and hire purchase contracts


-


289,350

Repayment of obligations under finance leases and hire purchase contracts


(89,488)


(64,440)

Dividends paid


(395,000)


-

Interest paid


(35,679)


(22,727)

New convertible loan


3,000,000


-

Net cash used in financing activities

 

2,479,833


202,183

Net (decrease) in cash and cash equivalents

 

(1,965,216)


(958,773)

Cash and cash equivalents at beginning of year


3,841,299


4,800,072

Cash and cash equivalents at the end of year

 

1,876,083


3,841,299

Cash and cash equivalents at the end of year comprise:

 




Cash at bank and in hand


1,876,083


3,841,299



1,876,083


3,841,299

 


 

CONSOLIDATED ANALYSIS OF NET DEBT

FOR THE YEAR ENDED 31 MAY 2022

 



At 1 June 2021


Cash flows


Payments made in year


Fair value adjustments


At 31 May 2022



£


£


£


£


£












Cash at bank and in hand


3,841,299


(1,965,216)


-


-


1,876,083












Finance leases


(534,168)


-


89,487


-


(444,681)












Convertible loan notes


-


(3,000,000)




(750,000)


(3,750,000)














3,307,131


(4,965,216)


89,487


(750,000)


(2,318,598)

 

 

 

 

 

 

 



 

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MAY 2022

 

 

 

 

 

1.

 

Equipmake (Holdings) Plc is a public company limited by shares incorporated in England and Wales. The company registration number is 04303233. The registered office is Unit 7, Snetterton Business Park,Snetterton, Norfolk, NR16 2JU. The group consists of the parent Equipmake (Holdings) Limited and subsidiary Equipmake Limited. All group entities are included within the consolidation These financial statements are presented in sterling which is the functional currency of the entity and are rounded to the nearest £1.

 

2.       Accounting policies

 


2.1

 

Basis of preparation of financial statements

 

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

 

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).

 

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

 

The following principal accounting policies have been applied:

 


2.2

 

Basis of consolidation

 

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

 

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. During the year, the company has acquired the remaining 25% shareholding in Equipmake Limited. Under FRS102 and Business Combinations, the company has applied fair value accounting for this acquisition, which has led to an uplift in valuation of £5,849,982.

 

In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 June 2016.

 



2.3

 

Going concern

 

At the time of approving the financial statements, the directors have a reasonable expectation that the company and group has adequate resources to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

The Directors have prepared detailed forecasts, models and cash flows (which cover a period in excess of 12 months from the date of approval of these financial statements), in order to support the going concern assumption for which these accounts are prepared.  Although the Group has experienced a loss in the year, this is as expected due to the Group being in the development phase for a significant portion of its product line.

 

The Group has previously received investment and government grants to support the development phase of operations.  Post year‑end, the Company raised £10m of gross funding via an IPO on the Aquis Access Stock Exchange.  This listing provides the Group with sufficient funds to meet the financial requirements of its growth plan for a period in excess that required for the going concern assumption.  The Group will carefully monitor cash spend over the course of the ensuing year to ensure that it has sufficient funding as it moves into the production phase.

 

The Directors believe that due to the ongoing development of the Group's products and its considerable pipeline of opportunities, they remain a going concern and therefore confirm that it is appropriate to prepare the accounts on a going concern basis

 

As a result the directors believe that the company and group will be able to continue to meet its liabilities as they fall due for a period of at least twelve months from the date of approval of the financial statements. Consequently the financial statements have been prepared on a going concern basis.

 


2.4

 

Foreign currency translation

 

Functional and presentation currency

 

The Company's functional and presentational currency is GBP.

 

Transactions and balances

 

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

 

At each period end foreign currency monetary items are translated using the closing rate. Non‑monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non‑monetary items measured at fair value are measured using the exchange rate when fair value was determined.

 



2.5

 

Revenue

 

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding trade discounts, and net of VAT. Revenue is recognised on delivery of those goods and services or in the period in which related costs are incurred.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

 


2.6

 

Operating leases: the Group as lessee

 

Rentals paid under operating leases are charged to profit or loss on a straight‑line basis over the lease term.

 

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight‑line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 


2.7

 

Research and development

 

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Expenditure on internally generated development is recognised as an expense when incurred.

 

If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.  No development costs are currently capitalised.

 


2.8

 

Government grants

 

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss as other income at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.

 

Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income within turnover in the same period as the related expenditure, which is recognised in cost of sales.  These grants relate to the primary function of the business and facilitate the delivery of the Group's primary purpose.  Other grants are shown within other operating income.

 


2.9

 

Interest income

 

Interest income is recognised in profit or loss using the effective interest method.

 



2.10

 

Finance costs

 

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 


2.11

 

Pensions

 

Defined contribution pension plan

 

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

 

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.

 


2.12

 

Share based payments

 

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non‑market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

The fair value of the award also takes into account non‑vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).

 

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

 

Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.

 


2.13

 

Taxation

 

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

 

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.



 


2.14

 

Exceptional items

 

Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence. This includes fair value adjustments in respect of the convertible loan notes and transaction costs associated with the IPO. 

 

In respect of the IPO transactions fees, any costs incurred in the current financial year have been prepaid and will be expensed when the future economic benefits are expected to flow to the entity.  Fees prepaid in 2022 £123,894 (2021: nil).

 


2.15

 

Tangible fixed assets

 

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

 

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.

 

Depreciation is provided on the following basis:

 





Leasehold improvements


20% Straight line                                           





Plant and machinery


20 ‑ 33% Straight line                                     





Specialist assets


50% Straight line                                           

 

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

 

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 

Assets under development are recognised at their cost. No depreciation is charged on these assets until the assets are complete and available for use.

 


2.16

 

Investments

 

Investments in subsidiaries are initially measured at cost at acquisition and reviewed for impairment at each reporting date, with any movement in the fair value recognised in the profit and loss.  Where an investment is acquired in stages, it may be more appropriate to recognise the fair value during initial recognition and then assess the deemed cost for impairment at each reporting date.

 

The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are required immediately in the profit and loss account.

 


2.17

 

Stocks

 

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis.

 

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.



 


2.18

 

Debtors

 

Short‑term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment

 


2.19

 

Cash and cash equivalents

 

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 

 


2.20

 

Creditors

 

Short‑term creditors are measured at the transaction price. Other financial liabilities are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 


2.21

 

Provisions for liabilities

 

Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.

Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the Balance Sheet.

 


2.22

 

Financial instruments

 

The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from third parties, loans to related parties and investments in ordinary shares.

 

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.

 

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

 

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.

 

Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

 



2.23

 

Dividends

 

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

 


2.24

 

Correction of prior period error

 

The comparative figures have been restated to correct the account treatment of the intangible asset for the product exploitation rights and correction of understated accruals and reclassification of expenditure. Details of this restatement can be found in note 29.

 

 

3.

 

 

Judgments in applying accounting policies and key sources of estimation uncertainty

 

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date, and the amounts reported for income and expenditure during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The key assumptions concerning the future and other key sources of estimating uncertainty at the reporting date include:

 

Warranty provision

Provision is made for warranties. This requires management's best estimate of the expenditure that will be incurred in respect of warranty claims, which are detailed in the terms and conditions of sale. For further details on the provision value, see note 13.

 

Valuation of investment - share-for-share exchange

During the year, a share-for-share exchange was completed which required the Directors to make a judgement as to the number of Equipmake Holdings shares to issue for each Equipmake Limited share. At the time of the share exchange, it was management's view is that the value of the Group is derived from the operating company (Equipmake Limited) and it was therefore appropriate to swap a 25% shareholding in the subsidiary for a 25% shareholding in the parent company.

 

The fair value calculation includes judgements and assumptions regarding the value of the company and the discount factor used to reflect the lack of control that is inherent in a 25% investment.

 

Share based payments

 

Some of Equipmake Holdings Plc's employees have been granted share options by the company. The fair value of these options on the date of grant has been determined using the Black Scholes Model. The directors consider this the most suitable model for calculating the fair value of the options. For further details, see note 28.

 

The management believe that there will not be only one acceptable choice for estimating the fair value of share- based payment arrangements. The judgements and estimates that management apply in determination of the share- based compensation are summarised below:

·   Selection of a valuation model

·   Making assumptions used in determining the variables used in a valuation model

i.    expected life

ii.    expected volatility

iii.   expected dividend yield

iv.   expected probability of market conditions being met for the difference tranches of share options


Impairment of investments and inter-company receivable

The directors have assessed the valuation of the investment in Equipmake Limited (subsidiary) and inter-company receivable held in Equipmake Holdings PLC, at the balance sheet date. The Directors believe that due to the ongoing development of the Company's products and its considerable pipeline of opportunities (along with the raising of £10m of gross funding via an IPO on the Aquis Access Stock Exchange for Equipmake Holdings Plc, which will further enhance the capabilities and resources of Equipmake Limited), that this investment is not impaired.

 

 

 

 

 

 

4. Turnover

 

An analysis of turnover by class of business is as follows:

 

 



2022


As restated





2021



£


£

Commercial contracts


2,254,443


1,759,086






Grants receivable


1,035,396


1,844,482






Production contracts


416,946


-








3,706,785


3,603,568

 

Analysis of turnover by country of destination:

 

 



2022


2021



£


£

United Kingdom


2,588,683


2,280,693






Rest of Europe


391,646


683,166






Rest of world


649,816


327,154






Far East


76,640


312,557








3,706,785


3,603,570

 



 

 

5. Other operating income

 

 



2022


2021



£


£

Government grants receivable


15,136


59,155






RDEC claim


549,996


435,988








565,132


495,143

 

 

 

6. Operating loss

 

The operating loss is stated after charging:

 

 



2022


2021



£


£

Operating lease payments ‑ property


174,211


157,381






Operating lease payments ‑ other


32,995


11,501






Depreciation of tangible fixed assets


220,668


265,858






Foreign exchange loss/(gain)


8,081


7,079






Loss on the sale of tangible fixed assets


-


25,268






Share‑based payments


574,227


-






Research and development costs *


4,230,735


3,445,842






Fair value adjustment ‑ convertible loan


750,000


-

 

 

* Based on qualifying R&D expenditure

 

7. Auditors' remuneration

 

 



2022


2021



£


£

Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements


65,000


20,700

 

 

Fees payable to the Group's auditor and its associates in respect of:

 

 

Taxation compliance services


-


1,000






Reporting accountant services


60,000


-




-


All other services


1,200


2,500








61,200


3,500

 

 

 

8. Employees

 

Staff costs, including directors' remuneration, were as follows:

 

 



Group


Group


Company


Company



2022


2021


2022


2021



£


£


£


£










Wages and salaries


2,537,185


2,155,931


-


-










Social security costs


278,944


223,339


-


-










Cost of defined contribution scheme


88,286


81,143


-


-










Share based payments


574,227


-
















3,478,642


2,460,413


-


-

 

 

The average monthly number of employees, including the directors, during the year was as follows:

 

 

 



2022


2021



            No.


            No.






Employees


69


58

 

 

The Company has no employees other than the directors, who did not receive any remuneration (2021 ‑ £NIL)

 

 

9. Directors' remuneration

 



2022


2021



£


£

Directors' emoluments


102,218


101,500






Group contributions to defined contribution pension schemes


40,220


40,110






Share-based payments


442,714


-








585,152


141,610

 

 

During the year retirement benefits were accruing to 3 directors (2021 ‑ 2) in respect of defined contribution pension schemes.  The number of directors who received shares under long term incentive schemes was 1 (2021 - nil).

 

The highest paid director's emoluments were as follows:

Directors' emoluments and amounts receivable under long-term incentive schemes £449,099 (inclusive of £442,714 related to share-based payments) (2021: £90,000)

Group contributions to defined contribution pension schemes £110 (2021: £40,000)

 

10. Interest receivable 

 



2022


2021



£


£






Other interest (payable)/receivable


(1,182)


3,534








(1,182)


3,534

 



 

11.  Interest payable and similar expenses  

 



2022


2021



£


£

Loan interest payable


32,526


21,479






Other interest payable


112,468


1,194








144,994


22,673

 

 

12.  Taxation

 



2022


2021



£


£






Corporation tax

 




Current tax on RDEC


104,499


82,839








104,499


82,839











Total current tax

 

104,499


82,839











Deferred tax

 




Total deferred tax

 

-


-











Taxation on loss on ordinary activities

 

104,499


82,839

 

 



 

Factors affecting tax charge for the year

 

The tax assessed for the year is lower than (2021 lower than) the standard rate of corporation tax in the UK of 19% (2021 19%). The differences are explained below:

 

 



2022


2021



£


£

Loss on ordinary activities before tax


(5,205,732)


(1,593,098)

Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 ‑ 19%)


(989,089)


(302,689)






Effects of:

 




Unrecognised deferred tax assets


607,688


362,998






Expenses not deductible for tax purposes


265,650


12,801






Adjustments in respect of prior periods


11,252


9,729






Total tax charge for the year

 

104,499


82,839

 

Factors that may affect future tax charges

 

 

Changes to the UK corporation tax rates were substantially enacted as part of the 2021 Budget on 24 May 2021. This included an increase to the main rate from 19% to 25% from April 2023. The company will be taxed at a rate of 25% unless its profits are sufficiently low enough to qualify for a lower rate of tax, the lowest being 19%.

Where applicable, deferred taxes at the balance sheet date have been measured using tax rates between 19% and 25% to reflect the rate of the timing differences are likely to unwind and are reflected in the financial statements.

 

Deferred tax is not recognised in respect of losses of £8,281,504 (2021: £4,034,060) due to the uncertainty that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

 

 

13. Dividends

 



2022


2021



£


£






Ordinary dividends


395,000


-








395,000


-

 

 



 

14. Intangible assets  

 

 

 

Group (as restated)

 


Computer software



£







Cost

 


At 1 June 2021


11,471




At 31 May 2022


11,471




Amortisation

 





At 1 June 2021


11,471




At 31 May 2022


11,471







Net book value

 








At 31 May 2022


-




At 31 May 2021


-

 

 

No intangible assets are held within the parent company.



 

15. Tangible fixed assets

 

Group

 

 

 

 










 


Long‑term leasehold property


Plant and machinery


Specialist assets


Assets in development


Total



£


£


£


£


£












Cost or valuation

 





















At 1 June 2021


55,452


722,037


502,119


-


1,279,608












Additions


25,144


58,820


-


51,283


135,247












At 31 May 2022


80,596


780,857


502,119


51,283


1,414,855























Depreciation

 





















At 1 June 2021


18,347


223,807


424,894


-


667,048












Charge for the year on owned assets


11,509


131,934


77,225


-


220,668












At 31 May 2022


29,856


355,741


502,119


-


887,716













































Net book value

 





















At 31 May 2022


50,740


425,116


-


51,283


527,139












At 31 May 2021


37,105


498,230


77,225


-


612,560

 

 

Specialist/technical plant and equipment relates to project specific equipment whose value is consumed over the life of the relevant project. Cost of such assets are therefore written off over the minimum project duration.

No tangible assets are held within the parent company.

 


 

16. Fixed asset investments

 

Company

 

Investments in subsidiary companies



£




Cost or valuation

 


At 1 June 2021


82




Additions


33,795




Fair value of addition arising on share-for-share exchange


5,849,982




Other movements - share-based payments


574,228




At 31 May 2022


6,458,087

  

 

 


Subsidiary undertaking

 

 


The following was a subsidiary undertaking of the Company:

 


Name

 

Registered office

 

Class of shares

 

Holding

 


Equipmake Limited                                                   

Unit 7 Snetterton Business Park, Snetterton, Norfolk, NR16 2JU, England   

Ordinary/
Deferred   

   100 %

 


During the year, the company has acquired the remaining 25% shareholding in Equipmake Limited. Under FRS102 and Business Combinations, the company has applied fair value accounting for this acquisition, which has led to an uplift in valuation of £5,849,982.

                        

17.  Stocks

 


Group


Group


2022


2021


£


£


197,418


-

Work in progress





610,555


44,447

Raw materials




807,973


44,447

 

All stock is held within the subsidiary company Equipmake Limited

 

18.  Debtors 

 


Group


Group


Company


Company


2022


2021


2022


2021


£


£


£


£









Trade debtors

533,740


353,182


-


-









Amounts owed by group undertakings

-


-


1,265,867


99,264









Other debtors

230,956


67,831


3,429


-









Prepayments and accrued income

710,536


610,606


90


-









Tax recoverable

445,496


353,149


-


-










1,920,728


1,384,768


1,269,386


99,264

 

19.  Cash and cash equivalents  

 


Group


Group


Company


Company


2022


2021


2022


2021


£


£


£


£

Cash at bank and in hand

1,876,083


3,841,299


1,737,118


337,206










1,876,083


3,841,299


1,737,118


337,206

 

 

 

20.  Creditors: Amounts falling due within one year   

 


Group


Group


Company


Company




As restated






2022


2021


2022


2021


£


£


£


£

Trade creditors

546,807


104,291


-


-









Other taxation and social security

85,371


65,259


-


-









Obligations under finance lease and hire purchase contracts

137,512


79,069


-


-









Other creditors

144,163


30,776


109,315


-









Convertible loan notes

3,750,000


-


3,750,000











Accruals and deferred income

1,130,792


997,754


-


-










5,794,645


1,277,149


3,859,315


-

 

 

On 18 January 2022, the company issued convertible loan notes for £3,000,000. These have subsequently been recognised at fair value at the end of the reporting period (see note 23). The loan notes will convert to ordinary shares immediately upon either the listing of the company or the longstop date (31 December 2022). Until the loan notes convert, interest is accrued on the principal amount at 10% per annum

 

 

21. Creditors: Amounts falling due after more than one year

 


Group


Group


2022


2021


£


£

Net obligations under finance leases and hire purchase contracts

307,169


455,099






307,169


455,099



 

22. Hire purchase and finance leases

 




Group


Group




2022


2021




£


£

Within one year



137,512


79,069







Between 1‑5 years



307,169


455,099










444,681


534,168










Group


Group




2022


2021




£


£

HP Loan 1 - Societe Generale - £69,300 at 2.49%.  Repayable until November 2023



22,573


38,071

HP Loan 2 - Societe Generale - £278,010 at 2.70%.  Repayable until December 2024



152,870


206,747

HP Loan 3 - Quantum Funding Ltd - £87,750 at 5.51%.  Repayable until November 2025



78,539


87,750

HP Loan 4 - Quantum Funding Ltd - £201,600 at 4.33%.  Repayable until February 2026



190,699


201,600




444,681


534,168

 

 

 

23. Financial Instruments

 


Group


Group


Company


Company


2022


2021


2022


2021


£


£


£


£

Financial assets

 















Other financial assets measured at amortised cost

931,438


941,681


1,265,295


99,264

















Financial liabilities

 















Other financial liabilities measured at amortised cost

(1,277,014)


(922,519)


-


-









Other financial liabilities measured at fair value through profit or loss

(3,859,315)


-


(3,859,315)


-









 

 

Financial assets that are debt instruments measured at amortised cost comprise cash, trade debtors, other debtors and amounts owed by associated undertakings.

Financial liabilities measured at amortised cost comprise trade creditors, other creditors, accruals, loans, and amounts due under hire purchase.

 

Other financial liabilities measured at fair value through profit and loss comprise of a convertible loan note which is included in full in creditors due within 1 year. The fair value of this, has been assessed at the undiscounted value of the loan, which is £3,750,000, plus expected interest payable of £109,315. As at the 31 May 2022, there was a fair value adjustment of £750,000.   

 

24. Provisions

 

Group


Warranty provision


£





Charged to profit or loss

44,057



At 31 May 2022

44,057



 

25. Share capital  

 




2022


2021




£


£

Allotted, called up and fully paid

 











500,000,000 (2021 ‑ 2) Ordinary B shares of £0.00010 (2021: £1) each



50,000


2







The following amendments to Share Capital took place in the year:









Number



At 1 June 2021 ‑ Ordinary shares of £1 each



2



Bonus issue ‑ Ordinary shares of £1 each    



81






83









Sub‑division of £1 ordinary shares into £0.0001 ordinary shares    



830,000



Bonus issue ‑ Ordinary shares of £0.0001 each    



374,170,000



Share‑for‑share exchange ‑ Ordinary shares of £0.0001 each    



125,000,000



At 31 May 2022 ‑ Ordinary shares of £0.0001 each    



500,000,000


 

 

 







The following other movements in relation to Share Capital are as follows:

 

On 18 January 2022, the company acquired the remaining 25 ordinary shares in its subsidiary by way of a share exchange. This has been recognised at 18 January 2022 as the legal form of the share reorganisation has been satisfied, however, the forms duly stamped with Stamp Duty have not yet been returned by HMRC and therefore have not yet been entered into the statutory books and records.

 

On 28 February 2022 3,500,000 deferred shares (nominal value of £0.0001 each) were repurchased by the company and subsequently cancelled.On 24 March 2022, the company capitalised £5,000,000 of the merger reserve and issued B Ordinary shares to the value of £5,000,000 to existing shareholders of the company. On the 25 March 2022, the company entered into a reduction in capital releasing £5,000,000 to other distributable reserves and the shares were subsequently cancelled.

 

 

26. Earnings per share

 

 

Basic loss per share of 22.6p (2021: 60.0p) is based on the following data:





2022


2021





Earnings used in calculation of total earnings per share:

(4,617,459)


(1,256,961)

Earnings on total losses attributable to equity holders of the parent    








Shares in issue




Weighted average number of ordinary £0.0001 shares in issue    

208,333,375


208,333,375

Earnings/(loss) per share




On total losses attributable to equity holders of the parent    

(0.0226)


(0.0060)





 

 

The Group had no dilutive or potentially dilutive instruments at any point during either of the years presented.

 

27.

 

 

Reserves

 

Other reserves - Group

 

Brought forward other reserves comprise the amount attributable to the owners of the Company following the issue of shares in the subsidiary at a premium to non-controlling interests in previous financial periods.

 

Other reserves - Company

 

£5,000,000 was capitalised and appropriated as capital to existing shareholders in the form of 5,000,000 £1 B ordinary shares during the financial year.  These shares were subsequently cancelled.

 

As a result of the reduction in capital which resulted in the cancellation of 5,000,000 £1 B ordinary shares during the financial year, £5,000,000 has been credited against the proceeds of this issue.

 

Share-based payments reserve - Group and Company

 

Used to reflect the assessed fair value of the equity settled options issued as share-based payments.

 

Merger relief reserve - Company only

 

The merger relief reserve accounts for the uncapitalised fair value adjustment in respect of the investment in the wholly owned subsidiary Equipmake Limited which is eliminated on consolidation and therefore not presented on a group basis.  £5,000,000 was capitalised and appropriated as capital to existing shareholders in the form of 5,000,000 £1 B ordinary shares during the financial year.  These shares were subsequently cancelled.

 

Profit and loss account - Group and Company

 

The profit and loss account represents cumulative profits and losses net of dividends and other adjustments.

 

 

28. Share-based payments

 

 

The company operates an equity-based share-based remuneration scheme for employees. The fair value is measured by use of the Black Scholes option pricing method. Non-vesting conditions and market conditions are taken into account when estimating the fair value of the option at grant date. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non- transferability, exercise restrictions and behavioural considerations. If options remain unexercised after a period of 10 years from the date of grant, the options expire.

 

The vesting criteria of the options is based on the exit price (vesting of option on an exit event other than a listing) or the company value on the exercise date (vesting of option on listing).  Across all option holders, 1.5% of the fully diluted share capital vested when the company completed the IPO in July 2022.  A further 1% would vest when the company value exceeds £200m.  A further 1% would vest when the company value exceeds £400m. 0.5% would vest when the company value exceeds £800m.

 

Under schemes listed below, options have been granted to subscribe for the following number of additional A Ordinary shares of £0.0001 each in the capital of the company.

 

The company granted share options on the 26 November 2021 with 138,888 options granted in respect of A Ordinary shares of £0.0001 each.

 

The EMI Options shall lapse on the tenth anniversary of the Grant Date, or if the Exit Event is a Listing, it shall lapse on the tenth anniversary of the Listing Date (other lapses conditions are outlined in the Options Agreement).

 

The company also granted non‑EMI options in the year, which were subsequently cancelled and re-issued post-year end. The revised non-EMI options updated the terms of the agreements to prevent dilution on a listing.  Subject to the EMI options being capable of exercise in full, the recipients will be granted the option to acquire a number of A Ordinary shares which, when added to the A Ordinary shares issuable on exercise of the EMI options, equates to 4% of the fully diluted share capital. These options shall lapse on the same date as the EMI options.

 

 

 


Weighted average exercise price (pence)


Number


Weighted average exercise price


Number


2022


2022


(pence)


2021






2021











Granted during the year

0.000001


138,888




-









Outstanding at the end of the year

0.000001


138,888




-














2022


2021

Option pricing model used





Black Scholes



















Weighted average share price (pence)





3012



















Exercise price (pence)





0.000001



















Weighted average contractual life (days)





365



























Expected volatility





50.79%



















Risk‑free interest rate





0.612%
































2022


2021






£


£

Equity‑settled schemes recognised in the profit or loss for the year





574,227


-














574,227


-

 

 

 

29. Prior year adjustment

 

 


 

At 31/05/20

At 31/05/21


 

As previously reported

Adjustment

As restated

As previously reported

Adjustment

As restated


P&L -








Cost of sales

(3,667,412)

-

(3,667,412)

(4,853,843)

213,740

(4,640,103)


Administrative costs

(818,998)

240,000

(578,998)

(999,552)

(32,961)

(1,032,513)


Other operating income

52,865

295,618

348,483

59,155

435,988

495,143


Tax on loss

258,572

(295,618)

(37,046)

353,149

(435,988)

(82,839)


Loss for the financial year

(1,141,554)

240,000

(901,554)

(1,856,716)

180,779

1,675,937


Non-controlling interest

(232,160)

48,800

(183,360)

(464,171)

45,195

(418,976)


Owners of the parent company

(909,394)

191,200

(718,194)

(1,392,545)

135,584

(1,256,961)










Balance Sheet -








Intangible assets

2,060,000

(2,060,000)

-

1,820,000

(1,820,000)

-


Creditors: amounts falling due within one year

(525,274)

-

(525,274)

(1,217,930)

(59,220)

(1,277,150)


Profit and loss account

188,616

(1,919,050)

(1,730,434)

(1,203,929)

(1,783,465)

(2,987,394)


Non-controlling interests

1,862,565

(140,950)

1,721,615

1,398,394

(95,755)

1,302,639


Net assets

7,886,762

(2,060,000)

5,826,762

6,030,046

(1,879,220)

4,150,826























 

 

(a)  Removal of intangible asset (product exploitation rights)

 

As part of the due diligence process (in anticipation of the parent company Equipmake Plc being admitted to the Aquis Access Stock Exchange), it was identified that the treatment of the intangible asset for the product exploitation rights was not in accordance with FRS102. As a result, this amount has been removed as a prior year adjustment. The impact is as follows:

2020: £2,060,000 of cost removed from intangible assets, being the brought forward net book value. £240,000 of amortisation removed for the financial year.2021: £1,820,000 of cost removed from intangible assets, being the brought forward net book value. £240,000 of amortisation removed for the financial year.

 

(b)  Additional accruals

 

During the review process of the interim accounts for 2022, it was identified that two unposted accruals that were immaterial to the May 2021 accounts were having a material impact on the 2022 interim figures. This adjustment only relates to the 2021 accounts. The amounts are as follows:

Commission payable totalling £24,000, levy charges totalling £35,220. Total adjustment of £59,220.

 

(c)  Reclassification of costs between cost of sales and administrative expenses

 

In the previous year, there was a reclassification of £213,740 from Cost of Sales to Administration expenses due to an incorrect treatment of staff costs between the expenditure categories. Historically, the business has not included staffing as overheads, but as it has grown, it has recruited support staff and general management. This was the case in the prior year, which has led to the reclassification of staffing costs in expenditure.

 

(d)  Reclassification of RDEC claim

 

Given that the RDEC R&D claims are classed as taxable income, the Company has decided to reclassify the gross RDEC claim as other income and show the

 

30. Capital commitments

 

At 31 May 2022 the Group and Company had capital commitments as follows:

 

 

 


Group


Group


2022


2021


£


£

Contracted for but not provided in these financial statements

66,267


-

 

 



 

 

31. Pension commitments

 

The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £40,825 (2021: £41,033). Contributions totalling £20,642 (2021: £19,132) were payable to the fund at the balance sheet date and are included in creditors

 

 

32. Commitments under operating leases

 

At 31 May 2022 the Group and the Company had future minimum lease payments due under non‑cancellable operating leases for each of the following periods:

 

 


Group


Group


2022


2021


£


£

Not later than 1 year

205,130


151,732





Later than 1 year and not later than 5 years

512,635


475,313






717,765


627,045

 

 

33.

 

 

Related party transactions

 


At the year end, Equipmake Holdings Plc was owed £1,265,867 (2021: £99,264) by its subsidiary company Equipmake Limited. This loan is interest free and repayable on demand. The Key Management Personnel of Equipmake Limited are the same as Equipmake Holdings Plc, being the Directors.

The following director loans existed during the year within the consolidated figures:

The balance bought forward on the director loan account was £4,192 (2021: £10,848). During the year there were drawings of £1,242 (2021: £15,040) and repayments of £5,364 (2021: £21,696) with a carry forward balance owed to the company of £70 (2021: £4,192). No interest was charged during the year (2021:£Nil).

 

 

 

34.

 

 

Post balance sheet events

 

The following events have occurred since the year‑end:

On 16 June 22, the Company approved the grant of share options over 32,825,283 Ordinary Shares.

 

On 28 July 22, the Company issued 191,440,779 £0.0001 Ordinary Shares at an issue price of £0.0425.

 

On 29 July 22, the Company issued 43,853,336 £0.0001 Ordinary Shares at an issue price of £0.0425.

 

Total gross proceeds received by virtue of the shares issued on 28 July 2022 and 29 July 2022 was £10,000,000 (approximately £9,000,000 after fees). IPO fees prepaid in the year of £123,894 will be reversed post year-end.

 

On 29 July 22, the Company was admitted to the Aquis Access Stock Exchange (Ticker: EQIP)

 

On 29 July 22, options over a number of A ordinary shares vested. The options over A ordinary shares equate to 1.5% of the post-IPO ordinary share capital - 13,380,542 shares.

 

 

35.

 

 

Controlling party

 

The ultimate controlling party of the group, by virtue of his majority shareholding, is Ian Foley.

As at 31st May 2022, Ian Foley controlled 75% via his majority shareholding. Post-listing, his control has been reduced to 45.54%.

 

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