Annual Results for year ended 31 December 2023

About this update from Strip Tinning Holdings Plc

[{"type":"text","content":"\n \n 30 April 2024   \n Strip Tinning Holdings plc \n (\"Strip Tinning\" or the \"Company\") \n Annual Results for year ended 31 December 2023 \n Financial performance in line with market expectations, with operational enhancements and strong sales pipeline leaving the Company well-positioned for accelerated growth \n Strip Tinning Holdings plc (AIM: STG), a leading supplier of specialist connection systems to the automotive sector, is pleased to announce its full year results for the year ended 31 December 2023.   \n   FY23 Financial highlights:   \n ·      Total Revenues of £10.8m (FY 22: £10.2m). \n ·      Renamed Battery Technologies division (formerly EV division) product sales of £1.1m (FY 22: £1.2m). \n ·      Glazing division product sales of £9.7m (FY 22: £8.9m). \n ·      Adjusted EBITDA of £0.1m (FY 22: loss of £2.2m). \n ·      £1.0m of cash generated from operating activities (2022: £4.2m outflow) with cash of £0.3m as of 31 December 2023 (2022: £1.3m). \n ·      £5.1m fund raise completed post-period end in January 2024, leaving the Battery Technologies division sufficiently capitalised. \n   \n FY23 Operational highlights:   \n ·      Battery Technologies division well-positioned for growth acceleration, with an increasing pipeline and sufficient funding to capture the significant market opportunity.    \n ·      Growth in Glazing division driven by improved margins and valuable new production supply nominations.   \n ·      Glazing division now cash generative and able to fund its own growth plans.   \n ·      Further improved products, new product launch and production processes to the benefit of both customers and the Group , with Glazing division Gross Margins improved from 3.6% in 2022 to 28.7% in 2023. \n ·      Maintained a strong commitment to responsible business practices with an A grade ESG rating for the third year running.   \n   \n Board Changes   \n ·      Two planned changes to the Company's Board which will be effective from 1 June, with the promotion of Mark Perrins, the Group MD, to Group CEO and the transition of current CEO, Richard Barton, to Deputy Chair.    \n   \n Outlook   \n ·      Strong momentum already demonstrated in 2024 with two significant new wins announced in the emerging \"smart\" glass market, in which Strip Tinning benefits from first mover advantage, with sales growth coming in 2025 once serial production commences. \n ·      The Company anticipates securing further major programmes across its Battery Technologies and Glazing product lines throughout 2024 , with a significant new Cell Contact System win for the Battery Technologies division expected in H1 2024, with sales from volume ramp up anticipated in Q4 2025.  \n   \n Adam Robson, Executive Chair of Strip Tinning, commented: \"We are delighted with the progress we have made in stabilising our operations during FY23, driven by the improvements and reorganisations implemented in 2022 and into 2023.   \n   \n We believe that 2024 will be a formative year for Strip Tinning, with the strong momentum across the business already demonstrated by our recent wins worth £18.6m. This year we are securing the nominations that will return us to growth from 2025, and we will maintain the investment needed to maximise our success in converting the strong Battery Technologies and Glazing sales pipelines we have before us.\" \n   \n   \n   \n Investor Presentation   \n Strip Tinning will be hosting a webinar for investors on Wednesday 1 st May 2024 at 12:00. If you would like to register for the webinar, please click the link below:    \n https://www.investormeetcompany.com/strip-tinning-holdings-plc/register-investor   \n   \n Enquiries:   \n   \n Strip Tinning Holdings plc Via Alma   \n Adam Robson, Executive Chairman   \n Richard Barton, Chief Executive Officer   \n Adam Le Van, Chief Financial Officer   \n   \n Singer Capital Markets (Nominated Adviser and Sole Broker) +44 (0) 20 7496 3000   \n Rick Thompson   \n James Fischer   \n   \n Alma (Financial PR)   [email protected] m   \n Josh Royston            +44 (0) 20 3405 0205   \n Joe Pederzolli   \n \n \n   \n Chairman's statement for the year ended 31 December 2023 \n 2023 has been a year of strong progress for Strip Tinning. I would like to start by thanking all employees of the Company who have worked exceptionally hard during the year. Together, we have been implementing an operational turnaround of the business and delivered a set of financial results which are in line with market expectations. Having invested in new capabilities and capacity, the business now finds itself on firm footing following the well-documented challenges we have contended with. Our quality of service has never been better and our customer base continues to reward us with a steady stream of new business opportunities and production nominations. \n   \n I would also like to thank our many shareholders who have supported our recent and successful fundraise. We are delighted to have raised gross proceeds of £5.1m post year-end which leaves us with a well-structured balance sheet and ensures that we are appropriately configured to capture the significant market opportunity across the Electric Vehicle (EV) Battery Technologies market. \n   \n Despite the headwinds we have faced during the last two years, there is no doubt that we have emerged as a leaner, higher performing organisation, with the right team to deliver on our significant market opportunity. Our people, capacity, and financial resources are in place to address the growing pipeline of new business opportunities we anticipate. As such, we look forward to 2024 as a period in which we expect to secure major programmes across both our EV Battery Technologies and Glazing product lines, which will underpin our sales growth for the years ahead.  Indeed, two record breaking Glazing wins have already been announced, which together have increased by 91% the total lifetime sales value of Strip Tinning's Connectors nominations, from £20.5 million at the end of 2023 to £39.1 million today. The total lifetime sales value of all nominations held by the Company is now £52.7 million. \n   \n We remain committed as a Board to maintaining high standards of Environmental and Social Governance (ESG) and we were pleased to receive confirmation from Integrum that we have maintained our best-in-class A grade ESG rating for the third year running. As an organisation we are proud of our growing contribution to the world's drive towards electrification, and advancing our ESG programme remains a key focus for the Group \n   \n The experience of our Board has proven to be of immense value during the year, helping us to maintain our focus on operational excellence and targeted markets, as well as our positioning us for the growth ahead. In order to maintain the positive momentum across the business, the Board has met at-least monthly throughout the year, and so I would like to thank the Board members for the commitment they have shown. \n   \n I am also pleased to announce two Board changes scheduled to take effect on 1 June 2024, marking the next step in our succession planning as we enter an exciting high-growth period.  We are promoting Mark Perrins, who has served as Managing Director for the past two years, to the title of Group Chief Executive Officer (CEO). Mark has played a pivotal role in leading the improvements of the business and positioning the Group for a return to growth, and is now ready for greater responsibilities for the leadership of the Group.  Richard Barton will transition to the role of Deputy Chair, where he will continue to focus on the Group's strategy and provide support to Mark and the sales team. Additionally, Richard has also chosen to extend his \"orderly market\" agreement in relation to his ordinary shares  for a further year.  My role as Executive Chair is unchanged. \n   \n Looking to the future, we are focused on securing our target new business programmes whilst continuing to enhance the core business processes, capabilities, and production capacity which will underpin our profitable growth. \n   \n Adam Robson \n Executive Chairman \n   \n   \n   \n   \n   \n   \n   \n   \n   \n Chief Executive Officer's statement for the year ended 31 December 2023 \n We are pleased to deliver a financial performance in line with market expectations, with significantly improved EBITDA performance in 2023 having primarily been driven by the prioritisation of increased gross margins and enhanced productivity. \n   \n We have invested in new production capabilities and in turn we are providing our customers with a quality of service that is better than ever, which has resulted in a growing pipeline of new nominations. We continue to hold a diverse customer base, formed partly by longstanding customers that we have worked with for many years, as well as new customers across both our traditional Automotive Glazing market, and from the Electric Vehicle (EV) Battery Technologies market.  \n   \n We have officially renamed our \"EV\" division to \"Battery Technologies\" effective immediately. This change is to provide clarity regarding the target markets of the two divisions. The Glazing Division remains focused on connectors used in association with automotive and occasionally non-automotive Glazing. A significant proportion of our Glazing sales are now intended for use in EVs, meaning the previous distinction between the EV and non-EV divisions is no longer applicable. At the same time, our former \"EV\" division has achieved success with a range of products all comprising subsystems within battery packs. These packs are not only utilised in EVs but also across a wide range of other applications including static storage. \n   \n Financial Results for 2023 \n   \n The Group's financial performance for the year has been much improved. Sales grew to £10.8m (FY22: £10.2m), with gross profit margins improving steadily throughout the year to 30.6% in 2023 (2022: 4.9%), as production of lower margin products ceased and as productivity enhancement measures and other cost reduction activities came into effect. Adjusted EBITDA has improved to £0.1m (FY22: loss of £2.2m) and is in line with market expectations, having significantly improved from the prior year's losses. Our reported EBITDA for 2023 would have been higher had we not chosen to use the extra income to fund increased investment into the enhancement of our team of managers, engineers, quality personnel, supply chain and programme managers, in order to respond effectively to the growing pipeline of Battery Technologies and Glazing sales opportunities. Our Net Profit also improved materially to a loss of £0.8m in 2023 (FY22: loss of £4.9m) assisted by R&D Tax Credit claims and Grant Income. This continued loss reflects both the lower margins achieved during part of the year in the Glazing business as the operational improvements were progressively enacted, as well as the significant investments we are making to grow our Battery Technologies business.  \n   \n Business Environment \n   \n Our Battery Technologies business line is focussed on the sale of Flexible Printed Circuits (FPC) and Cell Contact Systems (CCS), key components which operate within EV battery packs. We target the sale of these products into the Mid-Market, which we broadly define as vehicles with production volumes under 50,000 units per annum.  Typical applications are sports and luxury cars, trucks, off-highway vehicles, new vehicle types such as autonomous shuttles, motorcycles, and even Electric Vertical Take Off and Landing (eVTOL) aircraft.  We also include static power solutions such as mobile battery packs which replace mobile gensets.  \n   \n The scale of the Battery Technologies opportunity we are addressing in the Mid-Market is considerable. We recently completed a market study conducted by FEV, the German automotive consultancy, which quantified the total addressable market in Europe and North America for CCS alone in the Mid-Market. The study identified that our addressable market will be worth £220m in 2030 and £420m in 2035. \n   \n The Group's Glazing products are predominantly used in the production of all classes of automotive light vehicles, of which the majority are passenger cars manufactured in Europe, where the European Automobile Manufacturers' Association (ACEA) reported that car sales increased by 13.9% in 2023. This notes a substantial improvement after the supply chain difficulties of 2022, but one which still leaves the industry selling 19% fewer vehicles compared to 2019. Industry consensus expects vehicle production to see modest growth continuing into 2024, but for growth in EV and Hybrid Electric vehicle sales to be higher, having respectively achieved an annual growth in 2023 of 37% and 29.5%. We estimate that 40% of our sales in 2023 were onto EV and Hybrid platforms, providing us with good exposure to higher growth markets and reflecting our focus on supplying parts for innovative and higher value vehicles.  \n   \n For our Glazing connector products, we are experiencing higher growth than that in the underlying vehicle production market, driven by innovation, functionality, value add and product pricing. Key to our marketing strategy is focusing on the product areas with high levels of innovation. Our own market model suggests that the innovation lead Automotive Glazing market is growing at 6.3% per annum worldwide. The European automotive industry has historically been a leader in adopting new technologies. We see this most clearly today in the \n   \n adoption of \"smart\" glass, primarily based on using polymer-dispersed liquid crystals (PDLC). Glass containing PDLC requires a new generation of electrical connectors, and we are proud to have been one of the first suppliers in 2022 to support a volume production launch into this new segment.  We have since won two further high-volume nominations and between all our PDLC programmes we forecast annual sales of £3.7m, ramping up from Q4 2025. Our leading pedigree in the automotive sector has also positioned us well to serve the newly emerging volume glazing market for architectural glass. \n   \n Sales progress during 2023 \n   \n In January 2023, with the support of our customers, we raised our Glazing product prices to reflect the pressures felt by all businesses trading internationally. Customers engaged constructively with our price increases, and appreciated Strip Tinning's commitment to remaining a strong, long-term supplier in the Glazing market. That said, with a strong focus on profitable production, it has not made sense to continue to supply all the products previously manufactured in 2022 and our customers have phased out purchasing of these products during 2023.  As a result of price increases, our gross margins have improved and we have returned the business to operating on a sustainable basis. Although sales volumes declined throughout the year, total Glazing sales in 2023 stood at £9.7m ahead of the £9.2m achieved in 2022 but off much lower volumes. Continuing sales in the last quarter at £2.2m left us at an annualised run rate of £8.8m as we entered 2024.  \n   \n A further consequence of the price increase was that during the first half of 2023 our customers were predominantly focussed on digesting the price increases rather than discussing new business opportunities with us.  In the second half of the year we noted a significant increase in our Glazing sales pipeline, having won valuable new production supply nominations. The most significant of these was the supply of glazing connectors to a range of leading global automotive Original Equipment Manufacturers (OEMs) including Mercedes, Volkswagen, Toyota and Skoda for a number of battery and combustion engine-based vehicle programmes. Supply will commence in Q2 2024 and will continue for between two and five years, depending on the end of production dates of the individual programmes, with an estimated lifetime sales value of c.€3.0m. Based on this and a notable pipeline of other awards we expect to secure, we are optimistic that Glazing sales will recover towards their 2022 levels in 2024. Beyond 2024, based on our strong pipeline of sales opportunities, which includes a number of large and exciting PDLC smart glass programmes, we expect to return to growth in 2025. \n   \n We continued to make strong progress in the Battery Technologies Mid-Market during 2023. Throughout 2023, we developed a larger pipeline of opportunities which today stands at 13 new programmes coming from 9 new customers on which we are particularly focussed. Over half of these programmes were unknown to us 12 months ago, showing the speed at which our pipeline is developing.  We were delighted to have announced, in November 2023 a production nomination for the supply of FPCs to a leading European manufacturer of advanced battery systems, who are a new customer to us. The FPCs are for a mobile battery application used across a range of sectors, including the catering, construction, and film industries. The contract started in December 2023 and will run until the end of 2025, with a forecast lifetime sales value of $1.0m. Strip Tinning is replacing a non-European supplier part way through the product life cycle, hence the nomination's shorter than normal duration.  Looking ahead, we are confident there will be further opportunities within the \"smart\" glass sector and we anticipate a significant new Cell Contact System win for our Battery Technologies division in H1. \n   \n Operational Review \n   \n We continue to strengthen our capabilities across the business with the objectives of improving quality and supply effectiveness and reducing costs and waste.  Notable advances have been:  \n   \n ·      Strengthened Management team - our soon to be CEO, Mark Perrins, who joined us in early 2022 as a Managing Director, has continued to develop his Senior Leadership Team from existing and new managers. This team has driven through the improvements already achieved and is now taking the business forward towards growth and improving margins. We are particularly pleased to have Rob Smith join us as Chief Technology Officer (CTO), who returns to the UK having spent 8 years in China with Tata Engineering Services, working on new electric programmes for Chinese and Vietnamese car makers. We are also pleased to welcome Damian Lee as Supply Chain Director who joins us having had a 30-year career with international automotive Tier 1s; \n ·      Further improved products, product launch and production processes to the benefit of both customers and the Group; \n ·      Upgraded FPC production line installed and in production. Laser Weld line for CCS is on order and will start production in June 2024. To date we have invested £5m in our Battery Technologies production processes which has benefitted from our £1.4m grant from the Advanced Propulsion Centre (APC) Scale-up Readiness Validation (SuRV) fund.   We are hopeful that we can secure further funds for the continued expansion of this line and for further development and innovation in our product capabilities; \n   \n ·      New SAP B1 ERP (SAP Business One Enterprise Resource Management system) went live on 1 January 2024; \n ·      Quality - we have successfully passed all customer audits during the year and our core process certifications are all up to date: \n o  ISO 9001 Quality Management System \n o  ISO 14001 Environmental Management System \n o  IATF 16949 Automotive Quality Management System \n o  OHSAS 18001, Occupational Health and Safety Management Systems \n ·      Productivity has risen significantly during the year with average sales per production employee rising by 39% from £76,343 in 2022 to £106,137 in 2023. \n ·      Working Capital - we have improved Working Capital management throughout the year such that Debtors reduced from £3.4m to £2.7m despite the increase in sales over the year, with a targeted effort at resolving any invoice queries as well as being firm on payment to credit terms. Trade Creditors also reduced from £3m to £2.2m on the back of improved material purchasing and maintaining good supplier relationships. Stock opened at £1.8m at the beginning of 2023 and had been managed down to £1.3m by 2023 year end. The business is targeting a further £0.3m stock reduction over 2024, building on the initiatives pursued in 2023 and the benefits of the SAP B1 ERP system. \n   \n ESG \n   \n As mentioned, we were pleased to receive confirmation from Integrum that we have maintained our best-in-class A grade ESG rating for the third year running. We are proud of our growing contribution to the world's electrification drive and advancing our ESG programmes remains a key focus for the Group.  \n   \n Fund Raise and Cash Management \n   \n We were pleased to complete our £5.1m fund raise in January 2024 when it received shareholder approval.  We raised £4.0m in Convertible Loan Notes from our three leading VCT fund shareholders, £1.0m from other existing shareholders, including £0.1m from management, and £0.1m from private investors.  This raise was in line with our target and provides our Battery Technologies business with the funds it needs to accelerate its growth over the next two years. Our Glazing business is now cash generative and able to fund its own growth plans and together we expect the entire Group to be cash generative in 2026.   \n   \n This addition to our cash reserves comes after a strong operating cash performance in 2023, with £1m of cash generated from operating activities (2022: £4.2m outflow), closing the year with £0.3m in the bank after investments of £1.7m during the period.  \n   \n Outlook \n   \n Following the improvements and reorganisations implemented in 2023, 2024 we are preparing to return to growth, underpinned by the two new PDLC Glazing Connector production nominations we have already announced in the current year, as well as a pipeline of other potential nominations across both Battery Technologies and Glazing. Given the lead time of our projects, most of these wins will see their production start dates fall in 2025, and will therefore have limited impact on 2024 sales, except for the supply of samples which for Battery Technologies can be of material value.  We also start the year at a low point in expected sales, with the products discontinued in 2023 now out of the system and the new products won only entering production from April onwards. The net effect is that whilst on a quarterly basis we expect to see growth from the Q1 2024 low point, net sales across the year are expected to be in line with those of 2023.  \n   \n EBITDA will benefit from improving trends in gross margins but will be countered by further increases in our overheads, as we carry the full year costs of our expanded business growth team and the falling away of our APC grant which contributed £1.1m to EBITDA in 2023. The net effect is that we expect to see a small EBITDA loss made in 2024, with the profits generated on the Glazing side being offset by our significant investment in the Battery Technologies opportunity.   \n   \n On the cash side our net debt is expected to show a £1.6m change as we continue our investment in Battery Technologies production assets and cover the on-going start-up costs of the Battery Technologies business. \n   \n We believe that 2024 will be a formative year for the business with a strong focus on preparing for profitable delivery of the nominations already received as they ramp up in in 2025 and maintaining the investment needed to maximise our success in converting the strong Battery Technologies and Glazing sales pipeline we have before us to secure the nominations that will return us to significant growth from 2025. \n   \n I would also like to welcome Mark Perrins to his new Board role as Group CEO.  Mark has made a very impressive start to his career at Strip Tinning over the last two years, delivering great successes in operations and sales growth.  I am very confident that Mark is the right person to lead the company into this high growth period under the continued leadership of Adam Robson as Executive Chair. In my capacity as Deputy Chair, I look forward to focusing on the Company's growth strategy and sales execution, and to supporting Adam and Mark in their roles.                       \n   \n Richard  Barton \n Chief Executive Officer \n   \n \n \n   \n Consolidated statement of comprehensive income \nfor the year ended 31 December 2023 \n \n \n \n \n \n \n \n Note \n \n \n      2023 \n \n \n 2022 \n \n \n \n \n \n \n \n \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Revenue \n \n \n 3 \n \n \n 10,826 \n \n \n 10,230 \n \n \n \n \n Cost of sales \n \n \n \n \n \n (7,517) \n \n \n (9,731) \n \n \n \n \n Gross profit \n \n \n \n \n \n 3,309 \n \n \n 499 \n \n \n \n \n Other operating income \n \n \n 4 \n \n \n 1,364 \n \n \n 439 \n \n \n \n \n Administrative expenses \n \n \n 5 \n \n \n (6,075) \n \n \n (5,864) \n \n \n \n \n Impairment loss \n \n \n 5 \n \n \n - \n \n \n (577) \n \n \n \n \n Operating loss \n \n \n 5 \n \n \n (1,402) \n \n \n (5,503) \n \n \n \n \n Finance expense \n \n \n 8 \n \n \n (331) \n \n \n (147) \n \n \n \n \n Loss before taxation \n \n \n \n \n \n (1,733) \n \n \n (5,650) \n \n \n \n \n Taxation \n \n \n 9 \n \n \n 962 \n \n \n 725 \n \n \n \n \n Loss and total comprehensive expense for the financial year \n \n \n \n \n \n (771) \n \n \n (4,925) \n \n \n \n \n \n Basic and diluted loss per share (pence) \n \n \n \n 10 \n \n \n \n (5.0) \n \n \n \n (33.7) \n \n \n \n \n   \n All amounts relate to continuing operations. \n   \n There is no other comprehensive income in either the current or prior year. \n   \n Under the merger accounting principles applied the statement includes the results of the company and its subsidiary as if they had been combined throughout the prior year. \n   \n \n \n \n Consolidated statement of financial position as at 31 December 2023 \n \n \n \n \n \n \n \n Note \n \n \n   \n \n \n  31 December 2023 \n       \n \n \n 31 \n  December \n 2022 \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Assets \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Non current assets \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Intangible assets \n \n \n 11 \n \n \n   \n \n \n 1,643 \n \n \n 1,277 \n \n \n \n \n Right-of-use assets \n \n \n 12 \n \n \n   \n \n \n 1,090 \n \n \n 1,151 \n \n \n \n \n Property, plant and equipment \n \n \n 13 \n \n \n   \n \n \n 3,233 \n \n \n 2,950 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n 5,966 \n \n \n 5,378 \n \n \n \n \n Current assets \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Inventories \n \n \n 15 \n \n \n   \n \n \n 1,287 \n \n \n 1,848 \n \n \n \n \n Trade and other receivables \n \n \n 16 \n \n \n   \n \n \n 2,685 \n \n \n 3,381 \n \n \n \n \n Tax recoverable \n \n \n \n \n \n   \n \n \n 991 \n \n \n 559 \n \n \n \n \n Cash at bank and in hand \n \n \n \n \n \n   \n \n \n 343 \n \n \n 1,290 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n 5,306 \n \n \n 7,078 \n \n \n \n \n Total assets \n \n \n \n \n \n   \n \n \n 11,272 \n \n \n 12,456 \n \n \n \n \n Liabilities \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Trade and other payables \n \n \n 17 \n \n \n   \n \n \n (2,197) \n \n \n  (3,045) \n \n \n \n \n Borrowings \n \n \n 18 \n \n \n   \n \n \n (973) \n \n \n (553) \n \n \n \n \n Lease liabilities \n \n \n 19 \n \n \n   \n \n \n (201) \n \n \n (182) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n (3,371) \n \n \n (3,780) \n \n \n \n \n Non current liabilities \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Accruals and deferred income \n \n \n 17 \n \n \n   \n \n \n (11) \n \n \n (37) \n \n \n \n \n Borrowings \n \n \n 18 \n \n \n   \n \n \n (798) \n \n \n (992) \n \n \n \n \n Lease liabilities \n \n \n 19 \n \n \n   \n \n \n (936) \n \n \n (995) \n \n \n \n \n Provisions \n \n \n 23 \n \n \n   \n \n \n (360) \n \n \n (227) \n \n \n \n \n Deferred taxation \n \n \n 24 \n \n \n   \n \n \n - \n \n \n - \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n (2,105) \n \n \n (2,251) \n \n \n \n \n Total liabilities \n \n \n \n \n \n   \n \n \n (5,476) \n \n \n (6,031) \n \n \n \n \n Net assets \n \n \n \n \n \n   \n \n \n 5,796 \n \n \n 6,425 \n \n \n \n \n Equity \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Called up share capital \n \n \n 25 \n \n \n   \n \n \n 154 \n \n \n 154 \n \n \n \n \n Share premium account \n \n \n 25 \n \n \n   \n \n \n 6,966 \n \n \n 6,966 \n \n \n \n \n Merger reserve \n \n \n 25 \n   \n \n \n   \n \n \n (100) \n \n \n (100) \n \n \n \n \n Other reserve \n \n \n 25 \n \n \n   \n \n \n (3) \n \n \n (3) \n \n \n \n \n Accumulated loss \n \n \n \n \n \n   \n \n \n (1,221) \n \n \n (592) \n \n \n \n \n Total equity \n \n \n \n \n \n   \n \n \n 5,796 \n \n \n 6,425 \n \n \n \n \n   \n \n \n \n Company statement of financial position as at 31 December 2023 \n \n \n \n \n \n \n \n Note \n \n \n   \n \n \n  31 December 2023 \n       \n \n \n  31 December 2022 \n       \n \n \n \n \n \n \n \n \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Assets \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Non current assets \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Investments \n \n \n 14 \n \n \n   \n \n \n 3,983 \n \n \n 3,841 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Current assets \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Trade and other receivables \n \n \n 16 \n \n \n   \n \n \n 5,579 \n \n \n 5,791 \n \n \n \n \n Cash at bank and in hand \n \n \n \n \n \n   \n \n \n - \n \n \n 414 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n 5,579 \n \n \n 6,205 \n \n \n \n \n Total assets \n \n \n \n \n \n   \n \n \n 9,562 \n \n \n 10,046 \n \n \n \n \n Liabilities \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Trade and other payables \n \n \n 17 \n \n \n   \n \n \n (199) \n \n \n (67) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Total liabilities \n \n \n \n \n \n   \n \n \n (199) \n \n \n (67) \n \n \n \n \n Net assets \n \n \n \n \n \n   \n \n \n 9,363 \n \n \n 9,979 \n \n \n \n \n Equity \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Called up share capital \n \n \n 25 \n \n \n   \n \n \n 154 \n \n \n 154 \n \n \n \n \n Share premium account \n \n \n 25 \n \n \n   \n \n \n 6,966 \n \n \n 6,966 \n \n \n \n \n Merger reserve \n \n \n 25 \n \n \n   \n \n \n 3,645 \n \n \n 3,645 \n \n \n \n \n Other reserve \n \n \n 25 \n \n \n   \n \n \n (3) \n \n \n (3) \n \n \n \n \n Accumulated loss \n \n \n \n \n \n   \n \n \n (1,399) \n \n \n (783) \n \n \n \n \n Total equity \n \n \n \n \n \n   \n \n \n 9,363 \n \n \n 9,979 \n \n \n \n \n As permitted by section 408 of the Companies Act 2006, the parent Company's profit and loss account has not been included in these financial statements. The Company recorded a loss for the year of £758,000 (from incorporation to 31 December 2022: loss of £879,000). \n   \n   \n   \n   \n   \n   \n   \n   \n Consolidated statement of changes in equity for the year ended 31 December 2023 \n \n \n \n \n \n \n \n   \n Called up share capital \n £'000 \n \n \n Share premium account \n £'000 \n \n \n Merger reserve \n   \n £'000 \n \n \n Other reserve \n   \n £'000 \n \n \n   \n Accumulated loss \n £'000 \n \n \n   \n Total \n  Equity \n £'000 \n \n \n \n \n Balance as at 1 January 2022 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 4,237 \n \n \n 4,237 \n \n \n \n \n Loss and total comprehensive expense for the financial year \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (4,925) \n \n \n (4,925) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share based payment (note 25, 26) \n \n \n - \n \n \n - \n \n \n - \n \n \n (3) \n \n \n 96 \n \n \n 93 \n \n \n \n \n Capital reorganisation (note 25) \n \n \n 100 \n \n \n - \n \n \n (100) \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Issue of share capital (note 25) \n \n \n 54 \n \n \n 6,966 \n \n \n - \n \n \n - \n \n \n - \n \n \n 7,020 \n \n \n \n \n Total contributions by owners \n \n \n 54 \n \n \n 6,966 \n \n \n - \n \n \n (3) \n \n \n 96 \n \n \n 7,113 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Balance as at 31 December 2022 \n \n \n 154 \n \n \n 6,966 \n \n \n (100) \n \n \n (3) \n \n \n (592) \n \n \n 6,425 \n \n \n \n \n Loss and total comprehensive expense for the financial year \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (771) \n \n \n (771) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share based payment (note 26) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 142 \n \n \n 142 \n \n \n \n \n Total contributions by owners \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 142 \n \n \n 142 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Balance as at 31 December 2023 \n \n \n 154 \n \n \n 6,966 \n \n \n (100) \n \n \n (3) \n \n \n (1,221) \n \n \n 5,796 \n \n \n \n \n   \n Company statement of changes in equity for the year ended 31 December 2023 \n \n \n \n \n \n \n \n   \n Called up share capital \n £'000 \n \n \n Share premium account \n £'000 \n \n \n Merger reserve \n   \n £'000 \n \n \n Other reserve \n   \n £'000 \n \n \n Accumulated loss \n £'000 \n \n \n Total equity \n £'000 \n \n \n \n \n On incorporation \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Loss and total comprehensive expense for the financial year \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (879) \n \n \n (879) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Issue of share capital in exchange for Strip Tinning Limited shares (note 25) \n \n \n 100 \n \n \n - \n \n \n 3,645 \n \n \n - \n \n \n - \n \n \n 3,745 \n \n \n \n \n Issue of share capital (note 25) \n \n \n 54 \n \n \n 6,966 \n \n \n - \n \n \n - \n \n \n - \n \n \n 7,020 \n \n \n \n \n Share based payment (note 25, 26) \n \n \n - \n \n \n - \n \n \n - \n \n \n (3) \n \n \n 96 \n \n \n 93 \n \n \n \n \n Total contributions by owners \n \n \n 154 \n \n \n 6,966 \n \n \n 3,645 \n \n \n (3) \n \n \n - \n \n \n 10,858 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Balance as at 31 December 2022 \n \n \n 154 \n \n \n 6,966 \n \n \n 3,645 \n \n \n (3) \n \n \n (783) \n \n \n 9,979 \n \n \n \n \n Loss and total comprehensive expense for the financial year \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (758) \n \n \n (758) \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Share based payment (note 26) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 142 \n \n \n 142 \n \n \n \n \n Balance as at 31 December 2023 \n \n \n 154 \n \n \n 6,966 \n \n \n 3,645 \n \n \n (3) \n \n \n (1,399) \n \n \n 9,363 \n \n \n \n \n \n \n \n Consolidated cash flow statement for the year ended 31 December 2023 \n \n \n \n \n \n \n \n \n \n \n 2023 \n \n \n 2022 \n \n \n \n \n \n \n \n \n \n \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Cash flow from operating activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Loss for the financial year \n \n \n \n \n \n (771) \n \n \n (4,925) \n \n \n \n \n Adjustment for: \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Depreciation of property, plant and equipment \n \n \n 13 \n \n \n 828 \n \n \n 592 \n \n \n \n \n Depreciation of right-of-use assets \n \n \n 12 \n \n \n 225 \n \n \n 203 \n \n \n \n \n Amortisation of intangible assets \n \n \n 11 \n \n \n 173 \n \n \n 180 \n \n \n \n \n Impairment of intangible fixed assets \n \n \n 11 \n \n \n - \n \n \n 577 \n \n \n \n \n Loss on disposal of tangible fixed assets \n \n \n \n \n \n - \n \n \n 55 \n \n \n \n \n Foreign exchange movements \n \n \n \n \n \n - \n \n \n (9) \n \n \n \n \n Amortisation of government grants \n \n \n \n \n \n (88) \n \n \n (49) \n \n \n \n \n IPO financing related costs in administrative expenses \n \n \n \n \n \n - \n \n \n 314 \n \n \n \n \n Share based payment \n \n \n 26 \n \n \n 142 \n \n \n 96 \n \n \n \n \n Finance costs \n \n \n 8 \n \n \n 331 \n \n \n 147 \n \n \n \n \n Taxation credit \n \n \n 9 \n \n \n (962) \n \n \n (725) \n \n \n \n \n Changes in working capital : \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Decrease in inventories \n \n \n 15 \n \n \n 561 \n \n \n 166 \n \n \n \n \n Decrease in trade and other receivables \n \n \n 16 \n \n \n 696 \n \n \n 397 \n \n \n \n \n Decrease in trade and other payables \n \n \n 17 \n \n \n (665) \n \n \n (1,309) \n \n \n \n \n Cash generated from/(used in) operations \n \n \n \n \n \n 470 \n \n \n (4,290) \n \n \n \n \n Income tax received relating to R&D tax credits \n \n \n \n \n \n 530 \n \n \n 107 \n \n \n \n \n Net cash generated from/(used in) operating activities \n \n \n \n \n \n 1,000 \n \n \n (4,183) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Purchase of property, plant and equipment \n \n \n 13 \n \n \n (1,113) \n \n \n (508) \n \n \n \n \n Proceeds on disposal of intangible fixed assets \n \n \n \n \n \n - \n \n \n 15 \n \n \n \n \n Proceeds on disposal of tangible fixed assets \n \n \n \n \n \n 2 \n \n \n - \n \n \n \n \n Purchase of intangible assets \n \n \n 11 \n \n \n (539) \n \n \n (488) \n \n \n \n \n Net cash used in investing activities \n \n \n \n \n \n (1,650) \n \n \n (981) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash flows from financing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Issue of share capital \n \n \n 25 \n \n \n - \n \n \n 8,094 \n \n \n \n \n Share issue costs paid \n \n \n 25 \n \n \n - \n \n \n (1,077) \n \n \n \n \n IPO financing related costs paid \n \n \n \n \n \n - \n \n \n (314) \n \n \n \n \n Interest paid \n \n \n \n \n \n (319) \n \n \n (147) \n \n \n \n \n Payment of lease liabilities \n \n \n \n \n \n (204) \n \n \n (199) \n \n \n \n \n Invoice discounting finance advanced \n \n \n \n \n \n 492 \n \n \n - \n \n \n \n \n Asset backed finance received \n \n \n \n \n \n 297 \n \n \n 311 \n \n \n \n \n Loan repayments \n \n \n \n \n \n (53) \n \n \n (73) \n \n \n \n \n Repayment of capital element of asset backed finance contracts \n \n \n \n \n \n (510) \n \n \n (487) \n \n \n \n \n Net cash generated (used in)/from financing activities \n \n \n \n \n \n (297) \n \n \n 6,108 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Net (decrease)/increase in cash and cash equivalents \n \n \n \n \n \n (947) \n \n \n 944 \n \n \n \n \n Cash and cash equivalents at the beginning of the year \n \n \n \n \n \n 1,290 \n \n \n 337 \n \n \n \n \n Foreign exchange movements \n \n \n \n \n \n - \n \n \n 9 \n \n \n \n \n Cash and cash equivalents at the end of the year (all cash at bank and in hand) \n \n \n \n \n \n 343 \n \n \n 1,290 \n \n \n \n \n \n \n \n Notes to the financial statements \nfor the year ended 31 December 2023 \n 1.   Corporate information \n Strip Tinning Holdings plc is a public company incorporated in the United Kingdom and listed on AIM. The registered address of the Company is Arden Business Park, Arden Road, Frankley Birmingham, West Midlands, B45 0JA. \n   \n The principal activity of the Company is as a holding company for a subsidiary which manufactures automotive busbar, ancillary connectors and flexible printed circuits (together the 'Group'). \n   \n 2.   Accounting policies \n Basis of preparation \n The Group financial statements have been prepared in accordance with UK adopted international accounting standards (\"IFRS\") and in accordance with the requirements of the Companies Act 2006. \n   \n The parent Company financial statements have been prepared under applicable United Kingdom Financial Reporting Standards 101: Reduced Disclosure Framework (\"FRS101\") and the requirements of the Companies Act 2006. The following FRS 101 disclosure exemptions have been taken in respect of the parent Company only information: \n ·      IAS 7 Statement of cash flows; \n ·      IFRS 7 Financial instruments disclosures and; \n ·      IAS 24 Key management remuneration. \n   \n The principal accounting policies applied in the preparation of these consolidated and separate financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The IASB has published the following amendments which were implemented by the group on 1 January 2023 but which have not had any significant impact on the group's financial statements: \n ·      Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates \n ·      Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statements 2: Disclosure of Accounting Policies. \n ·      IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction. \n   \n The financial statements have been prepared under the historical cost convention. The financial statements and the accompanying notes are presented in thousands of pounds sterling ('£'000'), the functional and presentation currency of the Company, except where otherwise indicated. \n   \n Going concern \n After making appropriate enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. In adopting the going concern basis for preparing the financial statements, the directors have considered a base case going concern model and then modelled a series of severe but plausible downside scenarios: \n ·      All Glazing Connector Sales not already under contract or in the pipeline have been excluded from sales forecasts despite the track record of the Group in winning new business; \n ·      All Sales into the Battery Technologies division other than those covered by a Purchase Order have been pushed back into 2025 to simulate possible delays; \n ·      All forecast Battery Technologies division sales in 2026 have been pushed back into 2027 to simulate a full year delay. \n   \n Despite the removal of over £4m of sales from 2024 and 2025 via these scenarios, the adverse cash impact would still be more than covered by the reserves provided by the January 2024 fund raise and the financing arrangements the Group already has in place in the form of a £1.5m working capital facility. This working capital facility is currently undrawn. \n   \n Further, the Group would take mitigation actions to alleviate the loss of non-contracted sales, including: \n ·      Substantially reducing planned Battery Technologies CAPEX spend (up to £1.5m possible if Sales delayed) \n ·      Deferring recruitment to align with Sales being pushed to the right to achieve a very conservative total saving of £0.4m spread across 2024 and 2025. \n   \n Implementing the mitigating actions would mean the Group did not need to utilise its working capital facility during the Going Concern assessment period. \n   \n Under these scenarios, the financing arrangements available to the business and / or realistic mitigating actions that can be taken to respond to results that are not as planned mean the directors still have a reasonable expectation that the Group have adequate resources to continue in operational existence for the going concern model period, which is in excess of twelve months from the date of approval of the financial statements. Beyond this period, the directors remain confident that the product offering of the Group is attractive to the market and augurs well for future prospects.  \n   \n Standards, amendments and interpretations in issue but not yet effective \n Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after 1 January 2024 and which the Group has chosen not to adopt early. These include the following standards which may be relevant to the Group: \n - Amendment to IAS 1 regarding the classification of liabilities being based on an entity's rights at the end of a reporting period and disclosure in respect of post period end covenants that have to be met in the 12 months post period end; \n - IAS 7/IFRS 7 amendments in respect of supplier finance arrangements and disclosures that allow an investor to understand the nature of these; \n - IFRS 16 Amendments to clarify how a seller-lessee subsequently measures sale and leaseback transactions \n As a result of initial review of the new standards, interpretations and amendments which are not yet effective in these financial statements, none are expected to have a material effect on the Company or Group's future financial statements. \n Use of estimates and judgments \n   \n The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience, as well as expectations of future events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. \n   \n Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. \n   \n Intangible assets \n Judgement \n The capitalisation of development costs set out in note 11 is subject to a degree of judgement in respect of the point when the commercial viability of new technology and know-how is reached, supported by the results of testing and customer trials. The carrying values are shown in note 11. Once the trigger point is reached costs that can be reliably measured and directly relate to the development of relevant projects are capitalised. These include payroll costs, 3rd party invoices for subcontract cost and materials cost in excess of the bill of materials. The other judgement used in intangible assets is the Weight Average Cost of Capital (WACC) used in the impairment review's discounted cashflow model. A CAPM formula has been used for this, with management judgement used in the risk premium factor. \n   \n Estimation \n Capitalisation criteria in respect of financial recoverability involves estimated forecasts of future sales and margins with assumptions based on experience and trends when they are prepared which may change over time. These capitalised development costs include £0.7m of costs incurred in developing the technologies, processes, and products for the FPC and CCS capability of the business. As at accounting period end, the Directors were very confident that the extensive development programmes conducted with customers over multiple accounting period ends would translate into nominations for serial volume production, resulting in a significant contribution to revenue. As at Balance Sheet signing date two major FPC nominations had been received but the outcome of two major CCS nominations was still awaited. Of the two CCS nominations, one had a detailed contract with the Tier 1 customer agreed, but not signed, as launch remained subject to sign-off by the ultimate OEM customer \n   \n and the other had been delayed by the customer due to design changes. The Directors remain confident that at least one, if not both, of the major CCS nominations will be secured imminently based on how far advanced the programmes are and the level of engagement with the customers. In the absence of signed contracts in particular, there is always a risk that revenues will not accrue in a manner expected by the directors. Should actual or expected revenues be significantly short of those currently forecast , it will be necessary to reassess the carrying value of this intangible asset. \n   \n Amortisation commences once management consider that the asset is available for use, i.e. when it is judged to be in the location and condition necessary for it to be capable of operating in the manner intended by management and the cost is amortised over the estimated 5 to 8 year useful life of the know-how based on experience of and future expected customer product cycles and lives. \n   \n Right-of-use assets \n Judgement \n The application of IFRS 16 involves an estimation of the appropriate incremental borrowing rate and judgement of the relevant lease period. The rate is reviewed in conjunction with the rates on similar borrowings and a judgement has been made where there are break options by reference to business plans and the most likely outcome. \n   \n Property, plant and equipment \n Estimation \n Property, plant and equipment as set out in note 13 is depreciated over the estimated useful lives of the assets. Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which may cause the estimate to be revised. If the estimated life was increased by a year, annual depreciation charges would be approximately £75,000 less. \n   \n Impairment of investment \n Estimate \n Investments are tested for impairment in accordance with IAS 36 'Impairment of Assets'. Investments have separately identifiable cashflows. Key inputs into the estimation uncertainty are the discount rates reflecting the asset specific risks and the future cashflows from the investment. Carrying values of the investment can be seen in note 14. A discounted cashflow model shows a recoverable value with headroom of £1,775,000 above the investment amount. Sensitivities have been applied to this amount, with a 1% increase in the discount rate reducing the headroom by £806,000 and a £100,000 reduction in final year cashflows from the investment reducing the headroom by £424,000. \n   \n Expected credit losses on intercompany receivables \n Estimate \n The intercompany receivable has been assessed for expected credit losses in accordance with IFRS 9 'Financial Instruments'. The receivable relates to a loan amount with no conditions attached, it is therefore assumed to be repayable on demand with no interest charged. The loan is partially offset every year via settlement by Strip Tinning Limited of Strip Tinning Holdings PLC staff costs with the outstanding balance being repaid once Strip Tinning Limited moves to Free Cash Flow. The recoverability has been assessed on the basis of the future cashflows of Strip Tinning Limited and therefore the key input into the estimate are the future cashflows of Strip Tinning Limited. Discounting has not been considered as the loan is interest free and repayable on demand. To estimate these future cashflows, management have used their base case model, which external investors have relied on, which estimates that Strip Tinning Limited would be able to repay the balance in full by 2028. The same extreme sensitivity used for the impairment assessment of the investment in Strip Tinning Limited has been used. The sensitised model estimates that Strip Tinning Limited will be able to repay the balance in full by 2031, even assuming no new contracts were won going forward (so that revenues were solely from existing contracted work) versus the management base case model. Under both scenarios Strip Tinning Holdings plc would be willing to allow the loan to be paid over this period, and so it is concluded that no expected credit loss need be recognised. \n   \n Deferred taxation \n Judgement \n The recognition of deferred tax assets involves the assessment of forecasts in respect of future results and taxable profits and judgement as to the likelihood that these will be achieved and realise the assets. \n   \n   \n   \n Inventory \n Judgement \n The calculation of net realisable value provisions against inventory requires, in particular, an assessment of whether materials or components can be utilised in future production. Management identify stock for provision based on a combination of the past 12 month usage and the forecast next 12 month usage of the item code, \n Estimate \n Stock which is identified as having more than one years usage in stock is provided for on a sliding scale of 20%-90%. This has resulted in new provisions of £254,000 being made in the year, this stock has not been physically written off or scrapped, however we have decreased its net realisable value to reflect its likely future use in the business. An sensitivity is applied to provide 100% for all stock with more than one years usage in stock, this would increase the provision applied by £160,000, however management believe that this stock does have some residual value and alternative usages, so the sliding scale is more appropriate. \n   \n Basis of consolidation \n   \n The Company was incorporated on 6 January 2022 with one £0.01 ordinary share and on 2 February 2022, became the Group parent Company when it issued 9,999,999 £0.01 ordinary shares in exchange for all the ordinary shares in Strip Tinning Limited. In addition, options over ordinary shares in Strip Tinning Limited were converted, on equivalent terms, to options over 813,045 shares in the Company. This is considered not to be a business combination and outside the scope of IFRS3 Business Combinations. This is a key judgement and, as  a transaction where there was no change in the shareholders or holdings, is accordingly accounted for using merger accounting with no change in the book values of assets and liabilities with no fair value accounting applied. \n The consolidated financial statements present the results of the Company and its subsidiary as if they have always formed a single group. Intercompany transactions and balances between Group companies are therefore eliminated in full. The share capital presented is that of Strip Tinning Holdings plc from the date of the capital reorganisation in 2022 with the difference on elimination of Strip Tinning Limited's capital being shown as a merger reserve. \n The consolidated statement of comprehensive income reflects the consolidated results for the full comparative financial year ended 31 December 2022, inclusive of the results of the newly incorporated parent entity, plc, from 6 January 2022 onwards. \n A subsidiary is an entity over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. \n   \n   \n Revenue \n Revenue principally comprises income from the sale of automotive glazing components comprising busbar, ancillary connectors and flexible printed circuits, excluding VAT and trade discounts. \n There are framework agreements with major customers including pricing per component and purchase orders are then received from customers for each delivery. Revenue is recognised to the extent that the performance obligations, being the agreement to transfer the product meeting the technical specifications is satisfied, which is when the customer obtains control of the product. This recognition occurs at a point in time. The transfer takes place in accordance with the terms agreed with each customer, either at the point in time the goods are despatched to or received by the customer. Product is tested before dispatch, but any product returned by the customer as faulty is treated as a reduction in revenue. \n When an amount has been invoiced or payment received in advance of the associated performance obligations being fulfilled, any amounts due are recognised as trade receivables and deferred income is recorded for the sales value of the performance obligations that have not been provided.  \n Grants \n Income based grants \n Income based grants are recognised in other operating income based on the specific terms related to them as follows: \n ·      A grant is recognised in other operating income when the grant proceeds are received (or receivable) provided that the terms of the grant do not impose future performance-related conditions. \n ·      If the terms of a grant impose performance-related conditions including incurring related expenditure,  then the grant is only recognised in income as the related performance conditions are met. \n ·      Any grants that are received before the revenue recognition criteria are met are recognised in the statement of financial position as an other creditor within liabilities. \n Capital grants \n Grants received relating to tangible and intangible fixed assets are treated as deferred income and released to the income statement on a straight line basis over 10 years. \n   \n   \n Employee benefits \n The Group operates a defined contribution pension scheme. Contributions are recognised in the statement of comprehensive income in the year in which they become payable in accordance with the rules of the scheme. \n Share based payment \n The Company operates an equity-settled share-based compensation plan in which the Group receives services from employees as consideration for share options. The fair value is established at the point of grant using an appropriate pricing model and then the cost is recognised as an expense in administrative expenses in the statement of comprehensive income, together with a corresponding increase directly in equity over the period in which the services are fulfilled. This is the estimated period to vesting in respect of employees. The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. As an example, if Performance Conditions attached to the share based compensation plan can no longer be met, no expense would be recognised. \n Deferred tax credits in respect of the potential future tax deduction from exercise of options are initially included in the tax in the statement of comprehensive income. To the extent the potential corporate tax deduction exceeds the share based payment charges, the deferred tax is taken directly to retained earnings in equity in accordance with IAS12. \n Income tax \n Current income tax assets and/or liabilities comprise obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid/due at the reporting date. Current tax is payable on taxable profits, which may differ from profit or loss in the financial statements. Calculation of current tax is based on the tax rates and tax laws that have been enacted or substantively enacted at the reporting period. \n Deferred taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). \n Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. \n Computer software \n Computer software assets are capitalised at the cost of acquiring and bringing into use the software. Subsequent to initial recognition it is stated at cost less accumulated amortisation and accumulated impairment. Software is amortised on a straight line basis over its estimated useful life of two years. Amortisation on all intangible assets is recognised in administrative expenses in the Statement of Comprehensive Income. \n Research and development costs \n An internally generated intangible asset arising from development (or the development phase) of an internal project to improve the efficiency, design or capability of the Group's product range is recognised if, and only if, all of the following have been demonstrated: \n   \n ·      It is technically feasible to complete the development such that it will be available for use, sale or licence; \n ·      There is an intention to complete the development; \n ·      There is an ability to use, sell or licence the resultant asset; \n ·      The method by which probable future economic benefits will be generated is known; \n ·      There are adequate technical, financial and other resources required to complete the development; \n ·      There are reliable measures that can identify the expenditure directly attributable to the project during its development. \n The amount recognised is the expenditure incurred from the date when the project first meets the recognition criteria listed above. Expenses capitalised consist of employee costs incurred on development and direct costs including material or testing. \n Where the above criteria are not met, research and development expenditure is charged to the income statement in the period in which it is incurred. \n Capitalised development costs are initially measured at cost. After initial recognition, they are recognised at cost less any accumulated amortisation and any accumulated impairment losses. \n The depreciable amount of a development cost intangible asset with a finite useful life is amortised on a straight line basis over its useful life, currently expected to range from 5 to 8 years. Amortisation begins when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. \n The amortisation period and the amortisation method for the assets with a finite useful life is reviewed at least each financial year-end. If the expected useful life of the asset is different from previous estimates, the amortisation period is changed accordingly.      \n Patent costs \n Patent cost assets are initially measured at cost. After initial recognition, they are recognised at cost less any accumulated amortisation and any accumulated impairment losses. The costs are amortised over a 5 year estimated useful life. \n Property plant and equipment \n Property, plant and equipment is recognised as an asset only if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. An item of property, plant and equipment that qualifies for recognition as an asset is measured at its cost. Cost of an item of property, plant and equipment comprises the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. \n After recognition, all property, plant and equipment (including plant, computer equipment and fixtures) is carried at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is provided at rates calculated to write down the cost of assets, less estimated residual value, over their expected useful lives on the following basis: \n Leasehold improvements                                           straight line over life of lease \n Plant and machinery                                                   2-15 year straight line \n Office equipment                                                         2 year straight line \n Tooling                                                                         5 year straight line \n The residual value and the useful life of an asset is reviewed at least at each financial year-end and if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors . \n Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying value of the asset and are recognised in profit or loss. \n Right-of-use assets and lease liabilities \n   \n Assets and liabilities arising from a lease with a duration of more than one year are initially measured at the present value of the lease payments and payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments including any expected dilapidation  payments are discounted using the interest rate implicit in the lease or the incremental borrowing rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. \n Lease payments are allocated between repayments of the discounted liability, presented as a separate category within liabilities, and the lease liability finance charges. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received and any initial direct costs and are presented as a separate category within tangible fixed assets. \n Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.   \n Any payments associated with short-term leases of equipment and all leases of low-value assets would be recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. There have been no significant short lease costs in the reporting period. Associated costs of all leases, such as maintenance, service charges and insurance, are expensed as incurred. \n   \n   \n Impairment of intangible assets, right-of-use assets and property, plant and equipment \n For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash flows. As a result, some assets are tested individually for impairment and some are tested at the overall Group level. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the \"cash-generating unit\"). Two cash-generating units have been used in our impairment testing, being the Glazing and Battery Technologies divisions of the business, these have largely separably identifiable cashflows, and so the Battery Technologies cash-generating unit as a whole has been assessed for impairment. \n All individual assets or cash-generating units are reviewed for indicators of impairment at the end of each period and tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. \n An asset or cash-generating unit is impaired when its carrying amount exceed its recoverable amount. The recoverable amount is measured as the higher of fair value less cost of disposal and value in use. The value in use is calculated as being net projected cash flows based on financial forecasts discounted back to present value. The impairment loss is allocated to reduce the carrying amount of the asset pro-rata on the basis of the carrying amount of each asset in the unit. Non-financial assets that suffered an impairment are reviewed for a possible reversal of the impairment at the end of each reporting period. An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount. \n Inventories \n Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value.  Cost comprises all costs of purchase of raw materials or bought in manufacturing components on a first in first out basis, costs of conversion and an appropriate proportion of fixed and variable overheads incurred in bringing the finished goods inventories to their present location and condition. Net realisable value represents the estimated selling price less costs to complete and sell. Where necessary, provision is made to reduce cost to no more than net realisable value having regard to the nature and condition of inventory, as well as its anticipated utilisation and saleability. \n Financial instruments \n Financial assets \n Financial assets are recognised in the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instrument and are classified based upon the purpose for which the asset was acquired. The Group's business model is to hold all assets recognised within these financial statements to collect the cash flows. \n Financial assets are initially recognised at fair value, which is usually the cost, plus directly attributable transaction costs. These comprise trade and other receivables and cash and cash equivalents. Financial assets are subsequently measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. \n The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss ('ECL') provision for trade receivables.  The Group measures loss allowances at an amount equal to lifetime ECL, which is estimated using past experience of the historical credit losses experienced over the three year period prior to the period end. Historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers, such as inflation rates. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. \n Amounts owed by group undertakings are unsecured, interest free and have no fixed repayment date. Management do not intend to recall these balances within twelve months. Expected credit losses on these balances are assessed differently to trade receivables, with an impairment assessment being carried out on the balance as outlined in the Critical Judgements and Estimates section above. \n The Group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost. \n A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and reward are transferred. \n   \n Financial liabilities \n Financial liabilities include loans, borrowings secured on fixed assets, lease liabilities, trade and other payables. Financial liabilities are obligations to pay cash or other financial assets and are recognised in the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instrument. \n Trade and other payables are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. Loans and asset backed finance borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument and subsequently carried at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. \n A financial liability is derecognised only when the contractual obligation is extinguished, that is, when the obligation is discharged, cancelled or expires. \n The Group utilises asset based borrowings to fund tangible fixed assets, drawing down finance against individual assets or bundles of assets, which may directly finance the asset purchase or be drawn down retrospectively. Control does not pass to the finance provider and therefore the borrowings are recognised under IFRS 9 as financing liabilities. The related asset is recognised and measured in accordance with the tangible fixed asset policy with initial cost being the fair value of the asset. A corresponding asset backed finance liability.is recognised in respect of the capital repayments to be made. These interest-bearing liabilities are then measured at amortised cost with the interest, under the effective interest method, expensed over the repayment period at a constant rate. \n Cash and cash equivalents \n Cash and cash equivalents comprise cash on hand and demand deposits, together with other short term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value. \n Staff and key management categories \n Categories for the staff and key management average employee numbers have been changed for the current year. The prior year numbers totals remain unchanged but have been restated to reflect the categories now used by management within the business \n Foreign currencies \n Transactions entered into by the Group in a currency other than the functional currency of sterling are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the income statement in administrative expenses. \n Provisions \n Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an economic outflow will occur and a reliable estimate  can be made including any additional evidence from post period end events.  Where the timing of the estimate  represents a relatively certain amount it is provided for within accruals. \n Equity and reserves \n Share capital represents the nominal value of shares that have been issued. Share premium represents the excess consideration received over the nominal value of share capital upon the sale of shares, less any incidental costs of issue. The company's merger reserve arises from the fair value attributed to the shares issued in exchange for the subsidiary's shares as no share premium account is recognised under Companies Act merger relief. On consolidation a merger reserve arises as a result of the difference between the nominal value of the parent company shares issued in exchange for subsidiary shares and the nominal value of those subsidiary shares, however this was capped at net assets of Strip Tinning Limited on the merger date. Retained earnings include all current and prior period retained profits. \n Presentation of non statutory measures \n The Group classifies certain one-off charges or credits that have a material impact on the financial results but are not related to the core underlying trading as 'exceptional' or 'non-recurring' items. These are disclosed separately in note 4 and adjusted results to provide further understanding of the financial performance of the Group. \n   \n   \n   \n   \n 3. Segmental reporting \n   \n IFRS 8, Operating Segments, requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Group's chief operating decision maker. The chief operating decision maker is considered to be the executive Directors. \n   \n The operating segments are monitored by the chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results. All assets, liabilities and revenues are located in, or derived in, the United Kingdom. The Group has commenced the development and sales of specialised connectors for electric vehicle battery systems (the Battery Technologies segment) which are expected to grow to be a material segment. Separate management reporting and information is prepared at a revenue and gross profit level only for a Glazing segment (sale of specialist automotive busbar and electrical connectors typically housed in vehicle glazing) and Battery Technologies as follows: \n \n \n \n \n   \n \n \n Glazing \n \n \n Battery Technologies \n \n \n Total \n \n \n \n \n Year ended 31 December 2023 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n 9,706 \n \n \n 1,121 \n \n \n 10,826 \n \n \n \n \n Cost of sales \n \n \n (6,922) \n \n \n (596) \n \n \n (7,517) \n \n \n \n \n Gross profit \n \n \n 2,784 \n \n \n 525 \n \n \n 3,309 \n \n \n \n \n Other operating income \n \n \n   \n \n \n   \n \n \n 1,364 \n \n \n \n \n Administrative expenses \n \n \n   \n \n \n   \n \n \n (6,075) \n \n \n \n \n Finance expense \n \n \n   \n \n \n   \n \n \n (331) \n \n \n \n \n Taxation \n \n \n   \n \n \n   \n \n \n 962 \n \n \n \n \n Loss for the year \n \n \n   \n \n \n   \n \n \n (771) \n \n \n \n \n   \n   \n \n \n \n \n   \n \n \n Glazing \n \n \n Battery Technologies \n \n \n Total \n \n \n \n \n Year ended 31 December 2022 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n 8,977 \n \n \n 1,253 \n \n \n 10,230 \n \n \n \n \n Cost of sales \n \n \n (8,650) \n \n \n (1,081) \n \n \n (9,731) \n \n \n \n \n Gross profit \n \n \n 327 \n \n \n 172 \n \n \n 499 \n \n \n \n \n Other operating income \n \n \n \n \n \n \n \n \n 439 \n \n \n \n \n Administrative expenses \n \n \n \n \n \n \n \n \n   (5,864) \n \n \n \n \n Impairment loss (in EV) \n \n \n \n \n \n \n \n \n (577) \n \n \n \n \n Finance expense \n \n \n \n \n \n \n \n \n (147) \n \n \n \n \n Taxation \n \n \n \n \n \n \n \n \n 725 \n \n \n \n \n Loss for the year \n \n \n \n \n \n \n \n \n (4,925) \n \n \n \n \n   \n Turnover with the largest customers (including customer groups) representing in excess of 10% of total revenue in the year for 3 customers (2022: 3 customers) has been as follows: \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n Year ended 31     December   2023 \n \n \n   \n \n \n Year ended 31 December 2022 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n Customer A \n \n \n \n \n \n \n \n \n 3,090 \n \n \n \n \n \n 2,062 \n \n \n \n \n Customer B \n \n \n \n \n \n \n \n \n 1,384 \n \n \n \n \n \n 1,709 \n \n \n \n \n Customer C \n \n \n \n \n \n \n \n \n 1,298 \n \n \n \n \n \n 867 \n \n \n \n \n Customer D \n \n \n \n \n \n \n \n \n 773 \n \n \n \n \n \n 1,189 \n \n \n \n \n   \n   \n   \n   \n   \n   \n   \n   \n   \n All revenue arises at a point in time and relates to the sale of automotive busbar, ancillary connectors and flexible printed circuit product. Turnover by geographical destination is as follows: \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n Year ended 31 December 2023 \n \n \n   \n \n \n Year ended 31 December 2022 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n UK \n \n \n \n \n \n \n \n \n 1,224 \n \n \n \n \n \n 967 \n \n \n \n \n Rest of Europe \n \n \n \n \n \n \n \n \n 4,792 \n \n \n \n \n \n 5,571 \n \n \n \n \n Rest of the World \n \n \n \n \n \n \n \n \n 4,810 \n \n \n \n \n \n 3,692 \n \n \n \n \n \n \n \n \n \n \n \n \n \n 10,826 \n \n \n \n \n \n 10,230 \n \n \n \n \n   \n 4. Other operating income \n   \n The operating loss is stated after charging/(crediting): \n \n \n \n \n \n \n \n          2023 \n £'000 \n \n \n 2022 \n £'000 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Other operating income comprising: \n \n \n   \n \n \n \n \n \n \n \n   Amortisation of deferred government capital grant income \n \n \n (88) \n \n \n (49) \n \n \n \n \n   Government revenue grant income in respect of development work \n \n \n (1,146) \n \n \n (389) \n \n \n \n \n   Income relating to claim settlement with a customer \n \n \n (130) \n \n \n - \n \n \n \n \n   Government job retention scheme income \n \n \n - \n \n \n (1) \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n A major government grant was awarded to the group to reimburse employment, depreciation, subcontract and other revenue costs related to the scale up of its Battery Technologies production line and process. \n \n \n \n \n   \n   \n 5. Operating loss \n   \n \n \n \n \n The operating loss is stated after charging/(crediting): \n   \n \n \n          2023 \n £'000 \n \n \n 2022 \n £'000 \n \n \n \n \n Amortisation of intangible assets \n \n \n 173 \n \n \n 180 \n \n \n \n \n Depreciation of property, plant and equipment \n \n \n 828 \n \n \n 592 \n \n \n \n \n Depreciation of right-of-use assets \n \n \n 225 \n \n \n 203 \n \n \n \n \n Loss on disposal of fixed assets \n \n \n - \n \n \n 55 \n \n \n \n \n Cost of inventory sold \n \n \n 4,174 \n \n \n 5,092 \n \n \n \n \n Research and development expenditure expensed in the year \n \n \n 1,120 \n \n \n 925 \n \n \n \n \n Short term lease rentals \n \n \n - \n \n \n 22 \n \n \n \n \n Foreign exchange losses/(gains) \n \n \n 18 \n \n \n (45) \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Exceptional or non-recurring costs \n \n \n   \n \n \n \n \n \n \n \n    IPO preparation related costs \n \n \n - \n \n \n 381 \n \n \n \n \n    Restructuring related costs \n \n \n - \n \n \n 529 \n \n \n \n \n    Contract termination costs \n \n \n - \n \n \n 382 \n \n \n \n \n    Impairment of intangible fixed assets \n \n \n - \n \n \n 577 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Auditor's remuneration \n \n \n   \n \n \n \n \n \n \n \n For audit \n \n \n 110 \n \n \n 85 \n \n \n \n \n Additional fees for prior year audit \n \n \n 20 \n \n \n - \n \n \n \n \n   \n £232,000 of fees payable to the auditors in respect of IPO reporting accountants related services were expensed or included in costs taken to the share premium account in 2022. \n   \n   \n   \n   \n   \n   \n 6. Adjusted EBITDA \n   \n In reporting financial information, the Group presents an alternative performance measure (APM), which is not defined or specified under the requirements of IFRS. The Group believes that this APM, provides understanding to the users of the financial statements to allow for further assessment of the underlying performance of the Group. The Group's primary results measure, which is considered by the directors of the Group to represent the underlying and continuing performance of the Group, is adjusted EBITDA as set out below, in which earnings are stated before net finance income, tax, amortisation and depreciation and non-recurring items. \n   \n \n \n \n \n   \n \n \n 2023 \n \n \n 2022 \n \n \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Operating loss \n \n \n (1,402) \n \n \n (5,503) \n \n \n \n \n Depreciation \n \n \n 1,053 \n \n \n 795 \n \n \n \n \n Loss on disposal of fixed assets \n \n \n - \n \n \n 55 \n \n \n \n \n Amortisation and impairment \n \n \n 173 \n \n \n 757 \n \n \n \n \n Capital grant amortisation \n \n \n - \n \n \n (49) \n \n \n \n \n EBITDA \n \n \n (176) \n \n \n (3,945) \n \n \n \n \n Foreign exchange \n \n \n 18 \n \n \n (45) \n \n \n \n \n Share based payments \n \n \n 142 \n \n \n 96 \n \n \n \n \n R&D tax credit fees \n \n \n 92 \n \n \n - \n \n \n \n \n IPO related non-recurring costs \n \n \n - \n \n \n 381 \n \n \n \n \n Non-recurring staff expenses \n \n \n - \n \n \n 247 \n \n \n \n \n Factory move costs \n \n \n - \n \n \n 282 \n \n \n \n \n Contract termination costs \n \n \n - \n \n \n 382 \n \n \n \n \n R&D stock obsolescence \n \n \n - \n \n \n 353 \n \n \n \n \n Adjusted EBITDA \n \n \n 76 \n \n \n (2,249) \n \n \n \n \n   \n   \n   \n   \n   \n   \n   \n 7. Staff and key management \n   \n \n \n \n \n   \n Average monthly number of employees \n \n \n   \n \n \n   \n \n \n Year ended 31 December 2023 \n \n \n   \n \n \n Year ended 31 December 2022 \n \n \n \n \n (2022 split restated for consistency with categories now used by the business) \n \n \n   \n \n \n   \n \n \n Number \n \n \n   \n \n \n Number \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Management \n \n \n \n \n \n \n \n \n 14 \n \n \n \n \n \n 15 \n \n \n \n \n Engineering, administration and support \n \n \n \n \n \n \n \n \n 21 \n \n \n \n \n \n 19 \n \n \n \n \n Production, quality and distribution \n \n \n \n \n \n \n \n \n 102 \n \n \n \n \n \n 134 \n \n \n \n \n \n \n \n \n \n \n \n \n \n 137 \n \n \n \n \n \n 168 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Payroll costs \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n Gross salaries \n \n \n \n \n \n \n \n \n 4,392 \n \n \n \n \n \n 4,577 \n \n \n \n \n Social security costs \n \n \n \n \n \n \n \n \n 436 \n \n \n \n \n \n 511 \n \n \n \n \n Share based payment \n \n \n \n \n \n \n \n \n 142 \n \n \n \n \n \n 96 \n \n \n \n \n Contributions to money purchase pension schemes \n \n \n \n \n \n \n \n \n 300 \n \n \n \n \n \n 318 \n \n \n \n \n \n \n \n \n \n \n \n \n \n 5,270 \n \n \n \n \n \n 5,502 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n In view of the size and nature of the Group, the Key Management Personnel in the period is considered to comprise only the directors of the parent and subsidiary companies. The Company directors' remuneration was as follows: \n   \n   \n   \n   \n   \n   \n \n \n \n \n Year ended 31 December 2023 \n \n \n Salary \n \n \n   \n \n \n Bonus \n \n \n Benefits in kind \n \n \n   \n \n \n Share based payment \n \n \n   \n \n \n Pension \n \n \n   \n \n \n Total \n \n \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n R W Barton \n \n \n - \n \n \n   \n \n \n - \n \n \n 7 \n \n \n   \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n 7 \n \n \n \n \n P George \n \n \n 40 \n \n \n   \n \n \n - \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n 40 \n \n \n \n \n A Le Van \n \n \n 144 \n \n \n   \n \n \n 60 \n \n \n 5 \n \n \n   \n \n \n 18 \n \n \n   \n \n \n 7 \n \n \n   \n \n \n 234 \n \n \n \n \n A D Robson \n \n \n 130 \n \n \n   \n \n \n 49 \n \n \n 6 \n \n \n   \n \n \n 16 \n \n \n   \n \n \n - \n \n \n   \n \n \n 201 \n \n \n \n \n M Taylor \n \n \n 40 \n \n \n   \n \n \n - \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n 40 \n \n \n \n \n \n \n \n 354 \n \n \n   \n \n \n 109 \n \n \n 18 \n \n \n   \n \n \n 34 \n \n \n   \n \n \n 7 \n \n \n   \n \n \n 522 \n \n \n \n \n   \n   \n \n \n \n \n Year ended 31 December 2022 \n \n \n Salary \n \n \n   \n \n \n Bonus \n \n \n Benefits in kind \n \n \n   \n \n \n Share based payment \n \n \n   \n \n \n Pension \n \n \n   \n \n \n Total \n \n \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n R W Barton \n \n \n 15 \n \n \n   \n \n \n - \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n 15 \n \n \n \n \n P George \n \n \n 37 \n \n \n   \n \n \n - \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n 37 \n \n \n \n \n A Le Van \n \n \n 140 \n \n \n   \n \n \n - \n \n \n 4 \n \n \n   \n \n \n 12 \n \n \n   \n \n \n 8 \n \n \n   \n \n \n 164 \n \n \n \n \n A D Robson \n \n \n 86 \n \n \n   \n \n \n - \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n 86 \n \n \n \n \n M Taylor \n \n \n 37 \n \n \n   \n \n \n - \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n - \n \n \n   \n \n \n 37 \n \n \n \n \n \n \n \n 315 \n \n \n   \n \n \n - \n \n \n 4 \n \n \n   \n \n \n 12 \n \n \n   \n \n \n 8 \n \n \n   \n \n \n 339 \n \n \n \n \n   \n Retirement benefits were accruing to 1 director in respect of defined contribution schemes (2022: 1). \n Key management remuneration was £1,044,000 (2022: £941,000) including £22,000 of pension contributions (2022: £23,000). \n   \n Highest paid director received remuneration of £234,000 (2022: £164,000) including pension contributions of £7,000 (2022: 8,000). \n   \n   \n 8. Finance costs \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n Year ended 31 December 2023 \n \n \n   \n \n \n Year ended 31 December 2022 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Interest payable on asset backed finance obligations \n \n \n \n \n \n \n \n \n 119 \n \n \n \n \n \n 55 \n \n \n \n \n Bank interest \n \n \n \n \n \n \n \n \n 133 \n \n \n \n \n \n 26 \n \n \n \n \n Unwinding of discount on provisions \n \n \n \n \n \n \n \n \n 12 \n \n \n \n \n \n - \n \n \n \n \n Lease liability finance charges \n \n \n \n \n \n \n \n \n 67 \n \n \n \n \n \n 66 \n \n \n \n \n \n \n \n \n \n \n \n \n \n 331 \n \n \n \n \n \n 147 \n \n \n \n \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n 9. Income tax \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n Year ended 31 December 2023 \n \n \n   \n \n \n Year ended 31 December 2022 \n \n \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n \n \n Current tax: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n UK corporation tax \n \n \n \n \n \n \n \n \n (222) \n \n \n \n \n \n (308) \n \n \n   \n \n \n \n \n Adjustment for prior periods \n \n \n \n \n \n \n \n \n (740) \n \n \n \n \n \n (79) \n \n \n   \n \n \n \n \n Total current tax credit \n \n \n \n \n \n \n \n \n (962) \n \n \n \n \n \n (387) \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Deferred tax: \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Origination and reversal of temporary differences \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n (349) \n \n \n   \n \n \n \n \n Adjustment for prior periods \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n 11 \n \n \n   \n \n \n \n \n Total deferred tax credit \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n (338) \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Total tax credit \n \n \n \n \n \n \n \n \n (962) \n \n \n \n \n \n (725) \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n The tax rate used for the reconciliation is the average corporate tax rate of 23.5% (2022: 19%) payable by corporate entities in the UK on taxable profits under UK tax law. An increase to 25% from April 2023 was substantively enacted and, as the expected period of reversal, is accordingly applied to deferred tax balances at 31 December 2022 and 2023. \n The credit for the year can be reconciled to the loss for the year as follows: \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n Year ended 31 December 2023 \n \n \n   \n \n \n Year ended 31 December 2022 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Loss before taxation \n \n \n \n \n \n \n \n \n (1,733) \n \n \n \n \n \n (5,650) \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Income tax calculated at 23.5% (2022: 19%) \n \n \n \n \n \n \n \n \n (407) \n \n \n \n \n \n (1,074) \n \n \n \n \n Expenses not deductible \n \n \n \n \n \n \n \n \n (11) \n \n \n \n \n \n 92 \n \n \n \n \n Enhanced research and development allowances \n \n \n \n \n \n \n \n \n (256) \n \n \n \n \n \n (132) \n \n \n \n \n Surrender of losses for R&D credit \n \n \n \n \n \n \n \n \n 265 \n \n \n \n \n \n - \n \n \n \n \n Enhanced capital allowances \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n (29) \n \n \n \n \n Deduction on exercise of share options \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n (34) \n \n \n \n \n Differing deferred and corporate tax rates \n \n \n \n \n \n \n \n \n (12) \n \n \n \n \n \n (83) \n \n \n \n \n Deferred tax not recognised in respect of losses \n \n \n \n \n \n \n \n \n 199 \n \n \n \n \n \n 603 \n \n \n \n \n Adjustment for prior periods \n \n \n \n \n \n \n \n \n (740) \n \n \n \n \n \n (68) \n \n \n \n \n Total tax credit \n \n \n \n \n \n \n \n \n (962) \n \n \n \n \n \n (725) \n \n \n \n \n   \n   \n   \n 10. Earnings per share \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n Year ended 31 December 2023 \n \n \n   \n \n \n Year ended 31 December 2022 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Loss used in calculating earnings per share (£'000) \n \n \n \n \n \n \n \n \n (771) \n \n \n \n \n \n (4,925) \n \n \n \n \n Weighted average number of shares ('000) \n \n \n \n \n \n \n \n \n 15,459 \n \n \n \n \n \n 14,612 \n \n \n \n \n Basic and diluted loss per share (pence) \n \n \n \n \n \n \n \n \n (5.0) \n \n \n \n \n \n (33.7) \n \n \n \n \n   \n Earnings per share has been calculated based on the share capital of the parent company. There are options in place over 1,214,959 (2022: 254,051) shares that were anti-dilutive at the year end but which may dilute future earnings per share. Post year end the group completed a fundraise in part equity part convertible loan notes which resulted in an issu...

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