Equipmake Holdings - Results for the year ended 31 May 2023

Consolidated Statement Of Cashflows

		For the year ended 31 May		For the year ended 31 May
		2023		2022
		£'s		£'s
Cash flows from operating activities
Loss for the year		(4,831,375)		(5,310,231)
Adjustments for:
Amortisation of intangible assets		27,380		-
Depreciation of tangible assets		187,108		220,668
Profit on disposal of tangible assets		(14,951)		-
Interest paid		86,505		144,994
Interest received		(16,908)		1,182
RDEC Taxation credit (net)		(197,854)		(445,496)
SME R&D credit		(232,389)		-
Increase in stocks		(2,150,351)		(763,526)
Increase in debtors		(2,137,644)		(443,613)
(Decrease)/increase in creditors		(156,025)		598,558
(Decrease)/increase in provisions		(44,057)		44,057
Corporation tax received		-		353,149
Share-based payments expense		475,321		574,227
Fair value losses - convertible loan		-		750,000
Stamp duty paid on share-for-share exchange		-		(33,770)
Net cash flows used in operating activities		(9,005,240)		(4,309,801)
Cash flows from investing activities
Purchase of tangible fixed assets		(443,198)		(135,248)
Sale of tangible fixed assets		25,500		-
Intangible assets - capitalisation of internal development cost		(810,417)		-
Net cash used in investing activities		(1,228,115)		(135,248)
Cash flows from financing activities
Issue of ordinary shares		16,235,000		-
Share issue costs		(811,750)		-
New secured hire purchase loans		106,779		-
Repayment of obligations under finance leases and hire purchase contracts		(144,177)		(89,488)
Dividends paid		-		(395,000)
Interest paid		(32,434)		(35,679)
Interest received		3,540		-
New convertible loan		-		3,000,000
Net cash from financing activities		15,356,958		2,479,833
Net increase/(decrease) in cash and cash equivalents		5,123,603		(1,965,216)
Cash and cash equivalents at the beginning of the year		1,876,083		3,841,299
Cash and cash equivalents at the end of the year		6,999,686		1,876,083

 

 

Consolidated Analysis Of Net Debt For The Year Ended 31 May 2023

	At 1 June 2022	Cash flows	Payments made in year	Increase in lease liability	At 31 May 2023
	£'s	£'s	£'s	£'s	£'s
Cash at bank and in hand	1,876,083	5,123,603	-	-	6,999,686
Finance leases	(444,681)	-	144,179	(106,779)	(407,281)
Convertible loan notes	(3,750,000)	3,750,000	-	-	-
	(2,318,598)	8,873,603	144,179	(106,779)	6,592,405

 

The notes below form an integral part of these Financial Statements.

 

Notes To The Financial Statements

 

1.   General information

Equipmake Holdings 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 Plc and subsidiary Equipmake Limited. All Group entities are included within the consolidation.

Equipmake is a UK-based engineering specialist pioneering the development and production of electrification products across the automotive, aerospace, bus, coach, and fire truck industries support of the transition from fossil-fuelled to zero-emission powertrains.

These financial statements are presented in sterling which is the functional currency of the entity and are rounded to the nearest £1.

2.   Accounting policies

2.1  Basis of preparation of financial statements

These financial statements have been prepared in accordance with FRS 102 ''The Financial Reporting Standard applicable in the UK and Republic of Ireland'' (''FRS 102'') and the requirements of the Companies Act 2006.

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies.

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

The Company is a qualifying entity for the purposes of FRS 102, being a member of a group where parent of that group prepares publicly available consolidated financial statements, including the Company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The Company has therefore taken advantage exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

-       Section 7 'Statement of Cash Flows': Presentation of a statement of cash flow and related notes and disclosures.

-       Section 33 'Related Party Disclosures' - Compensation for key management personnel.

The following principal accounting policies have been applied:

2.2  Basis of consolidation

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

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date.

In accordance with the transitional exemption available in FRS 102, the Group has chosen not to respectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 1 June 2016.

2.3  Going concern

The financial statements have been prepared on a going concern basis which the Directors believe to be appropriate.  The loss for the year was in line with expectations and the £16.2m of gross fundraising completed during the year, provides adequate funding for the Company to execute its plans for growth.  The Company has prepared detailed financial forecasts and cash flow projections which reflect the anticipated revenue growth over the next few years, in line with the strategy communicated at the IPO.  After considering a number of reasonable sensitivities and the availability of a number of mitigation levers, such as the deferral of capital expenditure, recruitment and discretionary overhead spend, as well as the re-phasing of working capital

2.    Accounting policies (continued)

commitments to align with order conversion, the Directors confirm that sufficient cash is available to meet the Company's liabilities as they fall due for the foreseeable future and at least twelve months from the date of approval of these financial statements.  The detailed cash flow calculations are based on the Company's annual budget, approved by the board and reflect a number of key assumptions including:

·      revenue growth supported by current orderbook and opportunity pipeline;

·      margin rates incorporating expected input costs and sales prices;

·      working capital requirements incorporating current customer and supplier payment terms;

·      increased overhead spend to support the anticipated increase in revenue; and

·      continued investment in product development.

Further detail regarding current trading and the outlook for the business is provided with the CEO statement on pages 4 and 5 of this report. The Directors believe that the Company is well placed to navigate the challenges that it is likely to face during a period of significant growth and have a reasonable expectation that it has sufficient resources to meet its financial obligations for the foreseeable future. On this basis, the Directors continued to adopt the going concern basis for preparation of these financial statements.

2.4  Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

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

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

2.5  Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding trade discounts, and net of VAT.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (under "ex works" incoterms, this is typically when the goods are made available for transport or collection but the transfer of rights depends on the contractual terms agreed), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

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

Revenue from licencing agreements is recognised when it is probable that the economic benefits associated with the transaction will flow to the entity and the amount of revenue can be measured reliably. Revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement, including consideration of ongoing obligations, guaranteed minimum payments and payments contingent upon future events.

2.6  Leases

Operating leases: the Group as a lessee

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

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

Finance leases: The Group as a lessee

An asset and corresponding liability are recognised for leasing agreements that transfer to the Group substantially all of the risks and rewards incidental to ownership ("finance leases"). The amount capitalised is the fair value of the leased asset or, if lower, the present value of the minimum lease payments payable during the lease term, both determined at inception of the lease. Lease payments are treated as consisting of capital and interest elements. The interest is charged to statement of comprehensive income, so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are expensed as incurred.

2.7  Government grants

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

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

2.8  Interest income

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

2.9  Finance costs

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

2.10        Pensions

Defined contribution pension plan

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

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

2.11                        Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition. The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).

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

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

2.12        Taxation

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

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

2.13        Exceptional items

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

In respect of IPO transactions fees, £0.6m in the current financial year were expensed to the Statement of Comprehensive Income and £0.5m of broker fees was charged to share premium. In FY2022 these costs were prepaid. Fees prepaid in 2023 were £Nil (2022: £0.1m).

2.14        Tangible fixed assets

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

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

Depreciation is provided on the following basis:

Leasehold improvements                                   20% Straight line

Plant and machinery                                           20-33% Straight line

Specialist assets                                                    50% Straight line

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

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

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

2.15        Intangible items

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

Intangible assets are reviewed for impairment each financial year.

Research and development

Internally generated intangible assets arising from development, or the development phase of internal projects, have been recognised in the year where the following can be demonstrated:

a)     The technical feasibility of completing the intangible asset so that it will be available for use or sale;

b)    Intention to complete the intangible asset and use or sell it;

c)     Ability to use or sell the intangible asset;

d)    How the intangible asset will generate probable future economic benefits (e.g., the existence of a market);

e)    Availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

f)     Ability to measure reliably the expenditure attributable to the intangible asset during its development.

Development costs have been recognised as an intangible asset for the first time in the year, as it can be demonstrated that all of the criteria for recognition have been met.

In the research phase of an internal project, it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.

All development costs capitalised in the year relate to development of an integrated electric vehicle powertrain, for which it was considered that there was insufficient evidence of probable future economic benefits in prior periods to recognise as an asset. Advancement of the development work and fulfilment of customer orders, demonstrating feasibility and existence of a market for the products, has prompted a decision to capitalise development costs in the year. Expenditure on these assets items previously recognised as an expense have not been recognised as part of the cost of the asset.

Completed assets are being amortised over 3-5 years straight line.

2.16        Investments       

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

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

2.17        Stocks and work-in-progress

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

Work-in-progress ("WIP'') includes an allocation of direct labour costs and overhead appropriate to the stage of manufacture. At each balance sheet date, stocks and WIP are assessed for impairment. If impairment has occurred, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

2.18        Debtors

Short-term debtors are measured at transaction price, less any impairment.

2.19        Cash and cash equivalents

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

2.20        Creditors

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

2.21        Provisions for liabilities

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

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

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

2.22        Financial instruments

The Group has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument, and are offset only when the Group currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Financial assets

Trade, group and other debtors (including accrued income) which are receivable within one year and which do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses.

Where the arrangement with a debtor constitutes a financing transaction, the debtor is initially measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument and subsequently measured at amortised cost.  

A provision for impairment of trade debtors is established when there is objective evidence that the amounts due will not be collected according to the original terms of the contract.  Impairment losses are recognised in profit or loss for the excess of the carrying value of the trade debtor over the present value of the future cash flows discounted using the original effective interest rate.  Subsequent reversals of an impairment loss that objectively relate to an event occurring after the impairment loss was recognised, are recognised immediately in profit or loss.

Financial liabilities

Financial instruments are classified as liabilities and equity instruments according to the substance of the contractual arrangements entered into.  An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Trade, group and other creditors (including accruals) payable within one year that do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.

Where the arrangement with a creditor constitutes a financing transaction, the creditor is initially measured at the present value of future payments discounted at a market rate of interest for a similar instrument and subsequently measured at amortised cost.

Derivatives

Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

The Group enters into currency forward contracts. These are measured at fair value at the end of the reporting period, with any changes in fair value recognised in profit or loss.

Equity instruments

Financial instruments classified as equity instruments are recorded at the fair value of the cash or other resources received or receivable, net of direct costs of issuing the equity instruments.

2.23        Dividends

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

3.    Judgements in applying accounting policies and key sources of estimation uncertainty

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

Revenue recognition

The Company has established a clear decision matrix for each order/contract to ensure a consistent approach for determining the basis for recognising revenue.  In some circumstances, judgements are made in respect of the amount of revenue to be recognised at each reporting date.  For example, where goods and services supplied on the same contract cannot be split for the purposes of revenue recognition and the work is performed over a period of months or years, the Company would recognise revenue based on the stage of completion.  Further details regarding the calculation are included under note 2.5.

Share based payments

Some of Equipmake Limited's employees have been granted share options by the Company. The fair value of these options on the date of grant has been determined using the Black Scholes Model. The directors consider this the most suitable model for calculating the fair value of the options. For further details, see note 29.

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

·      Selection of valuation model

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

I.       Expected life

II.      Expected volatility

III.     Expected dividend yield

IV.     Probability of performance-based vesting conditions being met.

Options with both time-based and performance-based vesting conditions were granted in the year. The vesting thresholds for the performance-linked options were revised during the year in line but remain consistent with the revenue forecasts for FY2023 and FY2024. Given that the Directors believe that the Company will achieve its revenue targets for FY2023 and FY2024, a charge has been recognised for the relevant portion of the vesting period. 

Share options were also granted to two non-employees of the Company. A share-based payments charge has been recognised in respect of one of these individuals, for whom it has been judged that share options were awarded as a result of past services provided to the Company.

Development costs

Management has reviewed activity relating to both customer-related and internal product development projects during the period and capitalised costs where it is considered that the FRS102 criteria have been met. The judgements and estimates that management apply when identifying costs to be capitalised are summarised below:

·      Estimated size and value of the market for the product being developed;

·      Assessment of technical, financial and other resources required and available to complete development;

·      Technical feasibility of completing the development work;

·      Completion status of the development work; and

·      Expected useful life of the asset once completed.

In the research phase of an internal project, it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.

Impairment of investments and inter-company receivable

The directors have assessed the valuation of the investment in Equipmake Limited (subsidiary) and inter- company receivable held in Equipmake Holdings PLC, at the balance sheet date. The Directors believe that due to the ongoing development of the Company's products, its considerable pipeline of opportunities and the market capitalisation / share price of the Company (along with the raising of £10m of gross funding via an IPO on the Aquis Stock Exchange for Equipmake Holdings Plc and a further £6.2m in a subsequent funding round), that this investment is not impaired.

Stock

The directors have assessed whether any inventories are impaired by comparing the estimated selling price less costs to complete to the carrying amount at year end. Judgements and estimates that management apply in making this assessment include:

·      Identification of defective, slow-moving or obsolete stocks;

·      Estimates of prices obtainable for the goods at the time that they will be available for sale; and

·      Projected costs of completion and sale.

Contingent liability

A contingent liability for the provision of warranties is calculated by management. Warranties requires management's best estimate of the expenditure that will be incurred in respect of warranty claims, which are detailed in the terms and conditions of sale. Certain contracts contain an obligation for Equipmake to provide a warranty on the products that it provides. The precise terms of the warranty vary on a contract-by-contract basis but currently range between three and eight years. Given that these products are new to the market, Equipmake is unable to reference a history of warranty claims in order to provide a basis for estimating an accurate provision. The Company acknowledges the contractual obligation but is unable to provide a basis for estimation of a provision that complies with the requirements of the accounting standards.

4.    Segmental reporting and turnover

Segmental information is presented in respect of the Group's operating segments based on the format that the Group reports to its chief operating decision maker, for the purpose of allocating resources and assessing performance. 

The Group considers that the chief operating decision maker comprises the Executive Directors of the business.

The Directors manage the Group as a single business delivering electric power train solutions across a range of markets. Information that was made available to the chief operating decision maker in the reporting period included a split of gross margin by customer project, and therefore segmental information is presented along the same lines. Operating segments that share similar characteristics have been aggregated where the criteria for aggregation have been met. 

 

Comparative segmental analysis has not been provided for the year ended 31 May 2022 because the information is not available.

 

	Powertrain (inc. vehicle integration)	Powertrain (supply only)	EV components	Engineering projects	Licencing/ royalties	Total (excluding Grants)	Grants	Total
	£'s	£'s	£'s	£'s	£'s	£'s	£'s	£'s
Revenue	900,000	849,700	1,575,545	1,311,951	300,000	4,937,196	116,344	5,053,540
Cost of sales	(1,016,277)	(875,551)	(956,171)	(831,472)	-	(3,679,471)	(165,792)	(3,845,263)
Gross Margin	(116,277)	(25,851)	619,374	480,479	300,000	1,257,725	(49,448)	1,208,277
Administrative expenses	-	-	-	-	-	-	-	(6,436,692)
Other operating income	-	-	-	-	-	-	-	280,658
Operating loss	-	-	-	-	-	-	-	(4,947,757)
Net interest	-	-	-	-	-	-	-	(69,597)
Loss before taxation	-	-	-	-	-	-	-	(5,017,354)
Taxation	-	-	-	-	-	-	-	185,979
Loss for the financial year	-	-	-	-	-	-	-	(4,831,375)

 

An analysis of turnover by class of business is as follows:	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Powertrain (inc. vehicle integration)	900,000		-
Powertrain (supply only)	849,700		167,156
EV components	1,575,545		416,946
Engineering projects	1,311,951		2,021,458
Grants receivable	116,344		1,035,396
Other	300,000		65,829
	5,053,540		3,706,785
Analysis of turnover by country of destination:
United Kingdom	2,550,385		2,588,683
Rest of Europe	1,265,000		391,646
Asia (exc. Far East)	300,000		-
Rest of world	908,955		649,816
Far East	29,200		76,640
	5,053,540		3,706,785

All revenue reported is external to the Group.

Details of external customers where revenue is 10% or more of the Group's total revenues (inclusive of grants) are as follows:

·      £1,021,593 (20.2%) in the EV components segment.

·      £900,000 (17.8%) in the Powertrain (inc. vehicle integration) segment.

·      £849,700 (16.8%) in the Powertrain (supply only) segment.

·      £786,703 (15.6%) in the Engineering projects and EV components segments.

·      £668,260 (13.2%) in the Engineering projects segment.

 

 

5.    Other operating income

	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Government grants receivable	-		15,136
RDEC claim	244,265		549,996
Other income	36,393		-
Total other operating income	280,658		565,132

6.    Operating loss

The operating loss is stated after charging:	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Operating lease payments - property	269,645		174,211
Operating lease payments - other	48,154		32,995
Depreciation of tangible fixed assets - owned (note 16)	169,035		209,159
Depreciation of tangible fixed assets - held under finance lease and hire purchase (note 16)	87,096		141,525
Amortisation of intangible fixed assets (note 17)	27,380		-
Profit on the sale of tangible fixed assets	(14,951)		-
Foreign exchange loss	84,801		8,081
Share-based payments (note 29)	475,321		574,227
Research and development costs *	1,752,143		4,230,735
Exceptional items (note 12)	615,064		750,000

*Based on qualifying R&D expenditure (of this, a further £724,353 was capitalised).

 

 

7.    Auditors' remuneration

Fees payable to the Group's auditor and its associates for the audit of the:	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Group's annual financial statements	83,500		65,000
Other fees payable to the Group's auditor and its associates in respect of:
Reporting accountant services	85,250		60,000
All other services	2,050		1,200
	87,300		61,200

 

8.    Employees

Staff costs, including directors' remuneration, were as follows:	Group 2023	Group 2022	Company 2023	Company 2022
			£'s	£'s
Wages and salaries	3,600,915	2,537,185	413,443	-
Social security costs	405,474	278,944	49,909	-
Cost of defined contribution scheme	112,266	88,286	38,840	-
Share based payments	150,803	574,227	-	-
	4,269,458	3,478,642	502,192	-

 

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

	For the year ended 31 May 2023		For the year ended 31 May 2022
Employees	82		69

 

The Company has no employees other than the directors, who did not receive any remuneration (2022: £Nil). Remuneration of Directors is paid from Equipmake Limited and recharged to Equipmake Holdings Plc.

9.    Directors

	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Directors' emoluments	438,109		102,218
Group contributions to defined contribution pension schemes	45,947		40,220
Share-based payments	76,892		442,714
	560,948		585,152

 

During the year retirement benefits were accruing to 3 directors (2022: 3) in respect of defined contribution pension schemes. The number of directors who received shares under long term incentive schemes was 1 (2022: 1).

The highest paid director's emoluments were as follows:

Directors' emoluments and amounts receivable under long-term incentive schemes £147,584 (2022: £449,099, inclusive of £442,714 related to share-based payments).

Group contributions to defined contribution pension schemes £40,000 (2022: £110).

10.  Interest receivable

	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Other interest receivable / (payable)	16,908		(1,182)
	16,908		(1,182)

11.  Interest payable and similar expenses

	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Loan interest payable	86,505		32,526
Other interest payable	-		112,468
	86,505		144,994

 

12.  Exceptional items

	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Costs relating to Equipmake's admission to AQSE	(615,064)		-
Fair value adjustment - convertible loan note	-		(750,000)
	(615,064)		(750,000)

 

As at 31 May 2023, exceptional costs are in respect of IPO transactions fees expensed to the Statement of Comprehensive Income. In FY2022 these costs were prepaid. Fees prepaid in 2023 were £Nil (2022: £0.1m).

In the year ended 31 May 2022 exceptional cost were expensed as part of the fair value adjustment in respect of a convertible loan note. As at 31 May 2023, there was a fair value adjustment of £Nil.

13.  Taxation

	For the year ended 31 May 2023		For the year Ended 31 May 2022
	£'s		£'s
Corporation tax
Current tax on RDEC	46,410		104,499
Tax credit - R&D SME scheme	(232,389)
	(185,979)		104,499
Total current tax
Deferred tax	-		-
Total deferred tax	-		-
Taxation on loss on ordinary activities	(185,979)		104,499

Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - lower than) the standard rate of corporation tax in the UK of 20 % (2022: 19%). The standard rate of corporation tax for the year is calculated to be 20% as a result of the UK corporation tax main rate increasing from 19% to 25% on 1^st April 2023. 

The differences are explained below:

 

Reconciliation of effective rate and tax charge	For the year ended 31 May 2023		For the year Ended 31 May 2022
	£'s		£'s
Loss on ordinary activities before tax	(5,017,354)		(5,205,732)
Loss multiplied by the rate of corporation tax in the UK of 20 % (2022: 19%)	(1,003,471)		(989,089)
Effects of:
Unrecognised deferred tax assets	1,030,305		607,688
Remeasurement of deferred tax for changes in tax rates	(204,624)		-
Enhanced super deduction	(4,613)
Expenses not deductible for tax purposes	228,412		265,650
Depreciation on ineligible assets	401
SME R&D tax credit	(232,389)
Adjustments in respect of prior years	-		11,252
Total tax charge for the year	(185,979)		104,499

Factors that may affect future tax charges

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

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

Deferred tax is not recognised in respect of losses of £11,632,746 (2022: £8,281,504) due to the uncertainty that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

14.  Dividends

	For the year ended 31 May 2023		For the year ended 31 May 2022
	£'s		£'s
Ordinary dividends	-		395,000
	-		395,000

 

 

 

15.  Intangible assets

Group	Development expenditure	Other Intangibles	Total
	£'s	£'s	£'s
Cost
At 1 June 2022	-	11,471	11,471
Additions - internally developed	810,417	-	810,417
At 31 May 2023	810,417	11,471	821,888
Amortisation
At 1 June 2022	-	11,471	11,471
Charge	27,380	-	27,380
At 31 May 2023	27,380	11,471	38,851
Net book value
At 31 May 2023	783,037	-	783,037
At 31 May 2022	-	-	-

No intangible assets are held within the parent company.

The average remaining useful life of intangible assets being amortised is 3.6 years. The cost of assets not yet being amortised is £568,694, with amortisation expected to commence for these assets in the year ending 31 May 2024. Of this, £461,704 will be amortised over 3 years and £106,990 will be amortised over 5 years. 

16.  Tangible fixed assets

Group	Leasehold property	Plant and machinery	Specialist equipment	Assets in development	Total
	£'s	£'s	£'s	£'s	£'s
Cost or valuation
At 1 June 2021	55,452	722,037	502,119	-	1,279,608
Additions	25,144	58,820	-	51,283	135,247
At 31 May 2022	80,596	780,857	502,119	51,283	1,414,855
Depreciation
At 1 June 2021	18,347	223,807	424,894	-	667,048
Charge for the year	11,509	131,934	77,225	-	220,668
At 31 May 2022	29,856	355,741	502,119	-	887,716
Cost or valuation
At 1 June 2022	80,596	780,857	502,119	51,283	1,414,855
Additions	19,676	317,904	-	105,620	443,200
Disposals	-	(72,680)	-	-	(72,680)
At 31 May 2023	100,272	1,026,081	502,119	156,903	1,785,375
Depreciation
At 1 June 2022	29,856	355,741	502,119	-	887,716
Charge for the year	18,073	169,035	-	-	187,108
Eliminated on disposal	-	(62,130)	-	-	(62,130)
At 31 May 2023	47,929	462,646	502,119	-	1,012,694
Net book value
At 31 May 2023	52,343	563,435	-	156,903	772,681
At 31 May 2022	50,740	425,116	-	51,283	527,139

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

The net book value of fixed assets includes £275,216 (2022: £225,533) in respect of assets held under finance leases and hire purchase contracts.

 

17.  Fixed asset investments

 

	Investments in subsidiary companies
	£'s
Cost or valuation
At 1 June 2021	82
Additions	33,795
Fair value of addition arising on share-for-share exchange	5,849,982
Other movements - share-based payments	574,228
At 31 May 2022	6,458,087
At 1 June 2022	6,458,087
Additions	11,000,000
Other movements - share-based payments	475,321
At 31 May 2023	17,933,408

On 31 May 2023, Equipmake Holdings PLC allotted 11,000 ordinary shares of £0.01 each in Equipmake Limited, as consideration for releasing Equipmake Limited from its obligation to repay an £11,000,000 intercompany loan. The share issue reflects the long-term nature of the funding relationship between Equipmake Holdings and Equipmake Limited, with Equipmake Limited being the primary trading and operating entity within the Group.   

Subsidiary undertaking

The following was the only subsidiary undertaking of the Company during the year ended 31 May 2023:

Name	Registered office	Class of shares	Holding
Equipmake Limited	Unit 7 Snetterton Business Park, Snetterton, Norfolk, NR16 2JU, England	Ordinary/ Deferred	100%

18.  Stocks

	Group 2023		Group 2022
	£'s		£'s
Work in progress	485,452		197,418
Raw materials	2,472,873		610,555
	2,958,325		807,973

All stock is held within the subsidiary company Equipmake Limited.

The cost of Group stocks recognised as an expense in the year ended 31 May 2023 amounted to £2,961,711 (2022: £3,106,835).

 

19.  Debtors

	Group 2023	Group 2022	Company 2023	Company 2022
	£'s	£'s	£'s	£'s
Trade debtors	2,463,277	533,740	-	-
Amounts owed by group undertakings	-	-	-	1,265,867
Other debtors	231,677	230,956	16,504	3,429
Prepayments and accrued income	931,284	710,536	33,948	90
Tax recoverable	875,740	445,496	-	-
	4,501,978	1,920,728	50,452	1,269,386

20.  Cash and cash equivalents

	Group 2023	Group 2022	Company 2023	Company 2022
	£'s	£'s	£'s	£'s
Cash at bank and in hand	6,999,686	1,876,083	6,601,712	1,737,118
	6,999,686	1,876,083	6,601,712	1,737,118

21.  Creditors: Amounts falling due within one year

	Group 2023	Group 2022	Company 2023	Company 2022
	£'s	£'s	£'s	£'s
Trade creditors	470,449	546,807	22,855	-
Amounts owed to group undertakings	-	-	282,776	-
Other taxation and social security	138,234	85,371	3,515	-
Obligations under finance lease and hire - purchase contracts	152,098	137,512	-	-
Other creditors	216,611	144,163	161,729	109,315
Convertible loan notes	-	3,750,000	-	3,750,000
Accruals and deferred income	979,884	1,130,792	33,459	-
	1,957,276	5,794,645	504,334	3,859,315

On 18 January 2022, the Company issued convertible loan notes for £3,000,000. These were subsequently recognised at fair value at the end of the 31 May 2022. The loan notes converted to ordinary shares immediately upon listing of the Company, and as such there is no such balance as at 31 May 2023. Until the loan notes converted, interest was accrued on the principal amount at 10% per annum.

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

	Group 2023		Group 2022
	£'s		£'s
Net obligations under finance leases and hire purchase contracts	255,183		307,169
	255,183		307,169

No asset under finance lease were held within the parent company.

23.  Hire purchase and finance leases

Minimum lease payments under hire purchase fall due as follows:	Group 2023		Group 2022
	£'s		£'s
Within one year	152,098		137,512
Between 1-5 years	255,183		307,169
	407,281		444,681
	Group 2023		Group 2022
	£'s		£'s
HP Loan 1  - £69,300 at 2.49%. Repayable until November 2023	7,694		22,573
HP Loan 2 - £278,010 at 2.70%. Repayable until December 2024	96,036		152,870
HP Loan 3 - £87,750 at 5.51%. Repayable until November 2025	58,611		78,539
HP Loan 4 - £201,600 at 4.33%. Repayable until February 2026	144,828		190,699
HP Loan 5 - £91,400 at 6.03%. Repayable until September 2026	87,402		-
HP Loan 6 - £15,379 at 4.58%. Repayable until October 2025	12,710		-
	407,281		444,681

 

24.  Financial instruments

	Group 2023	Group 2022	Company 2023	Company 2022
	£'s	£'s	£'s	£'s
Financial liabilities
Other financial liabilities measured at fair value through profit or loss	(16,231)	(3,859,315)	(3,922)	(3,859,315)

Financial liabilities measured at fair value through profit and loss comprise:

·      A convertible loan note which was included in full in creditors due within 1 year as at 31 May 2022; at 31 May 2023 there was no such balance. As at 31 May 2023, there was a fair value adjustment of £Nil (2022: £750,000).

·      US dollar forward contracts outstanding at 31 May 2023 of £16,231 (2022: £Nil).

 

25.  Provisions and contingent liabilities

Warranty provision	Group 2023		Group 2022
	£'s		£'s
Opening balance - 1 June	44,057		-
Charged to the profit and loss	(44,057)		44,057
Closing balance 31 May	-		44,057

No warranty provisions were held within the parent company.

The warranty provision relates to management's best estimate of costs be incurred in respect of warranty claims for items sold in the year, where warranty terms have been agreed in the terms and conditions of sale. As at 31 May 2023 no such warranty provision was held. The warranty provision in the previous year was not considered material.

Certain sales contracts contain an obligation for Equipmake to provide a warranty; however, the products sold are new to the market and intended for long-term use. This lack of historical data, combined with a lack of comparable data on similar products and known challenges in establishing the party responsible in the event of a warranty claim, has led to management making the assessment that a provision for warranty costs cannot be reliability estimated at this point in time. It is expected that a provision for warranty costs will be recognised in future periods once sufficient data becomes available.

 

26.  Share capital

 

	As at 31 May 2023		As at 31 May 2022
Allotted, called up and fully paid	£'s		£'s
948,229,409 (2022: 500,000,000) Ordinary Shares of £0.0001 each	94,823		50,000
The following amendments to Share Capital took place in the year:
Share issue on conversion of convertible loan - 88,235,294 Ordinary Shares of £0.0001 each	8,824		-
Share issue - 235,294,115 Ordinary Shares of £0.0001 each	23,529		-
Share issue - 124,700,000 Ordinary Shares of £0.0001 each	12,470		-
Total	94,823		50,000

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

In January 2022, prior to its IPO, the Company secured £3m of investment from an existing shareholder in the form of a convertible loan note. The loan was converted into equity as part of the IPO process at a 20% discount to the market rate, resulting in a share issue of 88,235,294 Ordinary Shares.

On 28 July 2022, the Company issued 198,823,529 £0.0001 Ordinary Shares at an issue price of £0.0425 and subsequentially on 29 July 2022, the Company issued 36,470,586 £0.0001 Ordinary Shares at an issue price of £0.0425.

On 29 July 2022, the Company was admitted to the Aquis Access Stock Exchange (Ticker: EQIP).

On 31 January 2023, the Company issued 23,626,996 £0.0001 Ordinary Shares at an issue price of £0.05, raising a total of £1.181 million for the Company (before expenses).

On 1 February 2023, the Company issued 101,073,004 Ordinary Shares at an issue price of £0.05, raising a total of £5.054 million for the Company (before expenses).

 

27.  Earnings per share

Basic loss per share of 0.60p (2022: 2.3p) is based on the following data:

	2023		2022
	£'s		£'s
Earnings used in calculation of total earnings per share: Earnings on total losses attributable to equity holders of the parent	(4,831,375)		(4,617,459)
Shares in issue
Weighted average number of ordinary £0.0001 shares in issue	811,174,508		208,333,375
Earnings/(loss) per share	(0.0060)		(0.023)

27.  Earnings per share (continued)

Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company, being loss making in both this year and the comparative year would mean that any exercise would be anti-dilutive.

 

28.  Reserves

Share premium- Group and Company

The share premium account represents amounts subscribed for share capital in excess of nominal value, net of directly attributable issue costs.

Other reserves - Group

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

Other reserves - Company

Brought forward result of a reduction in capital which resulted in the cancellation of 5,000,000 £1 B ordinary shares during the financial year ended 31 May 2022, £5,000,000 was credited against the proceeds of this issue.

Share-based payments reserve - Group and Company

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

Merger relief reserve - Company only

The merger relief reserve accounts for the uncapitalised fair value adjustment in respect of the investment in the wholly owned subsidiary Equipmake Limited which is eliminated on consolidation and therefore not presented on a Group basis.

Profit and  loss  account - Group and Company

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

 

29.  Share-based payments

The parent company (Equipmake Holdings Plc) operates an equity based share based remuneration scheme for employees of Equipmake Limited. These share options have been granted to employees of Equipmake Limited but will ultimately be settled in equity in Equipmake Holdings Plc. The share based payments charge has been recognised as an expense in the financial statements of Equipmake Limited, in accordance with the accounting standards. The fair value is measured by use of the Black Scholes option pricing method.

Under the schemes listed below, options have been granted to subscribe for shares in Equipmake Holdings Plc.

Equipmake Holdings Plc granted share options on the 26 November 2021 with 138,888 options granted in respect of A Ordinary shares of £0.0001 each. The vesting criteria of the options were based on the exit price (vesting of option on an exit event other than a listing) or the Company value on the exercise date (vesting of option on listing). Across all option holders, 1.5% of the fully diluted share capital vested when the Company completed the IPO in July 2022. A further 1% would vest when the Company value exceeds £200m. A further 1% would vest when the Company value exceeds £400m. 0.5% would vest when the Company value exceeds £800m. The share-based payments charge in respect of these options was recognised in full in the year to 31 May 2022.

Equipmake Holdings Plc granted non-EMI options over A Ordinary shares in the year to 31 May 2022, of which 2,308,744 were substantially modified on 1 June 2022. The revised non-EMI options updated the terms of the agreements to prevent dilution on a listing. Subject to the EMI options being capable of exercise in full, the recipient will be granted the option to acquire a number of A Ordinary shares which, when added to the A Ordinary shares issuable on exercise of the EMI options, equates to 4% of the fully diluted share capital. These options shall lapse on the same date as the EMI options.  The initial fair value of the combined EMI and non-EMI share options were recognised 31 May 2022 and so only the revised fair value from modification has been recognised.

Equipmake Holdings Plc granted 24,950,000 share options on 19 July 2022. At the year ended 31 May 2023 700,000 options had lapsed. The vesting conditions of these options were either performance related or time based, vesting over a period of 3 to 8 years. Performance related vesting conditions are linked to revenue, though the option agreements state that the options can vest on management discretion. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations. If options remain unexercised after a period of 10 years from the date of grant, the options expire. Non-vesting conditions and market conditions are taken into account when estimating the fair value of the option on the grant date. Options shall lapse on the tenth anniversary of the Grant Date (other lapses conditions are outlined in the Options Agreement).

 

In addition, share options were also granted on 25 July 2022, to two non-employees of the Company. A share-based payments charge has been recognised in respect of 7,653,061 options granted to one of these individuals, for whom it has been judged that share options were awarded as a result of past services provided to the Company.

	Weighted average exercise price (pence) 2023	Number 2023	Weighted average exercise price (pence) 2022	Number 2022
B/fwd.	0.01	22,201,056	-	-
Granted during the year	6.54	34,911,805	0.01	22,201,056
Lapsed	10.00	(700,000)	-	-
Outstanding at the end of the year	3.92	56,412,861	0.01	22,201,056
Exercisable at the end of the year	1.01	18,555,643	0.01	-

The presentation in the comparative period included options presented over A Ordinary shares. Following IPO this has been restated to present as options over Ordinary shares only.

		1 June 2022	19 July 2022	25 July 2022		2022
Option pricing model used		Black Scholes	Black Scholes	Black Scholes		Black Scholes
Weighted average share price (pence)		4.25	4.25	4.25		3,012
Exercise price (pence)		0.01	9	0.01		0.000001
Weighted average contractual life (years)		10	5.7	2		1
Expected volatility		50.79%	50.79%	50.79%		50.79%
Risk-free interest rate		1.940%	1.940%	1.940%		0.612%
					2023		2022
					£'s		£'s
Equity-settled schemes recognised in the profit or loss for the year					475,321		574,227
					475,321		574,227

30.  Capital commitments

Group and Company had capital commitments as follows:

	Group 2023		Group 2022
	£'s		£'s
Contracted for but not provided in these financial statements	676,082		66,267
	676,082		66,267

31.  Pension commitments

The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £112,266 (2022: £88,286). Contributions totalling £34,992 (2022: £20,642) were payable to the fund at the balance sheet date and are included in creditors.

32.  Commitments under operating lease

The Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following years:

	Group 2023		Group 2022
	£'s		£'s
Not later than 1 year	430,886		205,130
Later than 1 year and not later than 5 years	241,932		512,635
	672,818		717,765

33.  Related party transactions

As permitted by FRS102 paragraphs 1.12e and 33.1a, the Company has taken advantage of the exemption from disclosing the transactions entered into between two or more members of a group as all subsidiary undertakings are wholly-owned by a member of that group.

The Key Management Personnel of Equipmake Limited are the same as Equipmake Holdings Plc, being the Directors.

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

The balance brought forward on the director loan account was £70 (2022: £4,192). During the year there were drawings of £4,443 (2022: £1,242) and repayments of £4,512 (2022: £5,364) with a carry forward balance owed to the Company of £1 (2022: £70). No interest was charged during the year (2022: £Nil).

34.  Post balance sheet events

There are no other post balance sheet events that require adjustment or disclosure in these financial statements.

 

35.  Controlling Party

The Directors do not consider there to be one ultimate controlling party.

The ultimate controlling party of the Group, by virtue of his majority shareholding, was Ian Foley as at 31 May 2022. As at 31st May 2023, Ian Foley controlled 39.55% (2022: 75%) of the shareholding.