Evtec Automotive Limited - Limited company accounts 23.2
Evtec Automotive Limited - Limited company accounts 23.2
| REGISTERED NUMBER: |
| Strategic Report, Report of the Directors and |
| Financial Statements |
| for the Year Ended 31 March 2023 |
| for |
| Evtec Automotive Limited |
| Evtec Automotive Limited (Registered number: 12650654) |
| Contents of the Financial Statements |
| for the Year Ended 31 March 2023 |
| Page |
| Company Information | 1 |
| Strategic Report | 2 |
| Report of the Directors | 4 |
| Report of the Independent Auditors | 5 |
| Statement of Profit or Loss and Other Comprehensive Income |
9 |
| Statement of Financial Position | 10 |
| Statement of Changes in Equity | 12 |
| Statement of Cash Flows | 13 |
| Notes to the Statement of Cash Flows | 14 |
| Notes to the Financial Statements | 15 |
| Reconciliation of Equity | 31 |
| Reconciliation of Profit | 34 |
| Evtec Automotive Limited |
| Company Information |
| for the Year Ended 31 March 2023 |
| DIRECTORS: |
| REGISTERED OFFICE: |
| REGISTERED NUMBER: |
| AUDITORS: |
| Chartered Certified Accountants and |
| Statutory Auditor |
| Leofric House |
| Binley Road |
| Coventry |
| CV3 1JN |
| BANKERS: |
| 4th Floor |
| Apex Plaza |
| Forbury Road |
| Reading |
| RG1 1AX |
| Evtec Automotive Limited (Registered number: 12650654) |
| Strategic Report |
| for the Year Ended 31 March 2023 |
| The directors present their strategic report for the year ended 31 March 2023. |
| Evtec Automotive Limited was incorporated in June 2020 and commenced trading in January 2021 following the purchase of the trade and assets of Arlington Engineered Systems Limited (in Administration). |
| The company operates from a single site in Coventry and provides the assembly, kitting and packing of multiple automotive sub-assembly components to supply OEM's, Tier One suppliers and Aftermarket parts providers. |
| We embrace individuality and around 30% of our workforce of 160 people are disabled. We are proud to work with disability schools and colleges in the local community, offering work experience and internships. |
| REVIEW OF BUSINESS |
| The year under review was against a backdrop of unprecedented difficulties, with Covid, Brexit, global semi-conductor shortages and the conflict in Ukraine all presenting challenges for the business to work through. |
| 2023 | 2022 |
| Revenue £'000 | 48,170 | 71,278 |
| EBITDA £'000 | 777 | 2,264 |
| (Loss)/Profit before Tax £'000 | (959) | 173 |
| The disruptions mentioned above were far more severe than expected, causing a drop in expected sales of c£15m. This resulted in a much reduced Ebitda and resulted in a pre-tax loss of £959k. |
| Whilst a disappointing result, we are reassured that business has resumed profitable trading in 2023 as microchip shortages, in particular, have eased. |
| Key Performance indicators |
| The company utilises a number of financial and non-financial key performance indicators to monitor business performance including: |
| - Stock, debtor and creditor days |
| - Customer Quality and Supply Scorecards |
| - Headcount and overtime |
| - RFQ conversions |
| - Overall Equipment Effectiveness (OEE) |
| Evtec Automotive Limited (Registered number: 12650654) |
| Strategic Report |
| for the Year Ended 31 March 2023 |
| PRINCIPAL RISKS AND UNCERTAINTIES |
| - Covid 19 |
| The Board and Management took steps to steer their way through the pandemic to reduce any adverse impact to the business whilst observing appropriate protocols to protect the health of the workforce. Whilst currently relaxed these protocols can be quickly re-introduced if required. |
| - Global semi-conductor shortages |
| The covid pandemic and ensuing lockdowns saw many automotive manufacturers around the globe pause production and then supply at reduced volumes as the ensuing semi-conductor shortages hit supply chains. It is only at the beginning of 2023 that we have seen a return to anticipated levels of sales. |
| - Global Supply Chain Pressures |
| Adverse weather, Covid 19, the war in Ukraine and a temporary blockage to the Suez canal have all contributed to making our supply chain more challenging. As we procure multiple components from Europe and the Far East, we co-operate closely with our suppliers, carriers and customers to ensure we can deal with any shortages or delays, with minimal impact. |
| - Foreign Currency |
| Evtec buy and sell in EUR and USD as well as GBP, leaving us open to foreign exchange gains and losses. The Board regularly reviews exchange rates so ensure that appropriate measures are taken to mitigate any risk |
| - Inflation |
| With inflation increasing at levels not seen in a number of years, upward pressure on costs is increasing and we monitor and report on this regularly to ensure that profit erosion is minimised |
| - Regulatory |
| We monitor all legislative change, with particular regard to HSE, to ensure we are compliant at all times |
| - Liquidity |
| The company's activities and debt financing expose it to liquidity risk. Strong working relationships are maintained with our banking partners, external funders and shareholders to facilitate the regular provision of compliance reporting, and oversight of key issues affecting the business. In addition, prudent financial management policies are applied that include the preparation of regular detailed cash flow forecasts to monitor liquidity and covenant compliance. |
| ON BEHALF OF THE BOARD: |
| Evtec Automotive Limited (Registered number: 12650654) |
| Report of the Directors |
| for the Year Ended 31 March 2023 |
| The directors present their report with the financial statements of the company for the year ended 31 March 2023. |
| DIVIDENDS |
| No dividends will be distributed for the year ended 31 March 2023. |
| EVENTS SINCE THE END OF THE YEAR |
| Information relating to events since the end of the year is given in the notes to the financial statements. |
| DIRECTORS |
| The directors shown below have held office during the whole of the period from 1 April 2022 to the date of this report. |
| STATEMENT OF DIRECTORS' RESPONSIBILITIES |
| The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
| Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with UK-adopted international accounting standards. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: |
| - | select suitable accounting policies and then apply them consistently; |
| - | make judgements and accounting estimates that are reasonable and prudent; |
| - | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
| The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
| STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
| So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
| AUDITORS |
| The auditors, Leigh Christou Ltd, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
| ON BEHALF OF THE BOARD: |
| Report of the Independent Auditors to the Members of |
| Evtec Automotive Limited |
| Opinion |
| We have audited the financial statements of Evtec Automotive Limited (the 'company') for the year ended 31 March 2023 which comprise the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the UK. |
| In our opinion the financial statements: |
| - | give a true and fair view of the state of the company's affairs as at 31 March 2023 and of its loss for the year then ended; |
| - | have been properly prepared in accordance with IFRSs as adopted by the UK; and |
| - | have been prepared in accordance with the requirements of the Companies Act 2006. |
| Basis for opinion |
| We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
| Conclusions relating to going concern |
| In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
| Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
| Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
| Key audit matters |
| Key audit matters are those matters that, in the auditor's professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. |
| This is not a complete list of all risks identified by our audit |
| • Going concern - availability of finance |
| • Going concern - reliability of management forecasts |
| • Recoverability of goodwill |
| • Valuation of freehold property |
| • Valuation of inventory |
| • Completeness of liabilities |
| • Revenue recognition |
| Report of the Independent Auditors to the Members of |
| Evtec Automotive Limited |
| Other information |
| The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
| Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. |
| In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. |
| Opinions on other matters prescribed by the Companies Act 2006 |
| In our opinion, based on the work undertaken in the course of the audit: |
| - | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
| - | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
| Matters on which we are required to report by exception |
| In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors. |
| We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
| - | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
| - | the financial statements are not in agreement with the accounting records and returns; or |
| - | certain disclosures of directors' remuneration specified by law are not made; or |
| - | we have not received all the information and explanations we require for our audit. |
| Responsibilities of directors |
| As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
| In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. |
| Report of the Independent Auditors to the Members of |
| Evtec Automotive Limited |
| Auditors' responsibilities for the audit of the financial statements |
| Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
| The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
| As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: |
| • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. |
| • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. |
| • Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. |
| • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
| We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. |
| A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
| Report of the Independent Auditors to the Members of |
| Evtec Automotive Limited |
| Use of our report |
| This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
| for and on behalf of |
| Chartered Certified Accountants and |
| Statutory Auditor |
| Leofric House |
| Binley Road |
| Coventry |
| CV3 1JN |
| Evtec Automotive Limited (Registered number: 12650654) |
| Statement of Profit or Loss and Other Comprehensive Income |
| for the Year Ended 31 March 2023 |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| Notes | £ | £ |
| CONTINUING OPERATIONS |
| Revenue | 3 |
| Cost of sales | ( |
) | ( |
) |
| GROSS PROFIT |
| Other operating income |
| Administrative expenses | ( |
) | ( |
) |
| OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS |
492,546 |
1,956,996 |
| Exceptional items | 5 |
| OPERATING PROFIT |
| Finance costs | 6 | (1,451,835 | ) | (1,817,983 | ) |
| (LOSS)/PROFIT BEFORE INCOME TAX | 7 | ( |
) |
| Income tax | 8 | ( |
) | ( |
) |
| (LOSS)/PROFIT FOR THE YEAR | ( |
) |
| OTHER COMPREHENSIVE INCOME | - | - |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
| Evtec Automotive Limited (Registered number: 12650654) |
| Statement of Financial Position |
| 31 March 2023 |
| 31.3.23 | 31.3.22 |
| Notes | £ | £ |
| ASSETS |
| NON-CURRENT ASSETS |
| Goodwill | 9 |
| Owned |
| Intangible assets | 10 |
| Property, plant and equipment | 11 |
| Right-of-use |
| Property, plant and equipment | 11, 19 |
| CURRENT ASSETS |
| Inventories | 12 |
| Trade and other receivables | 13 |
| Tax receivable |
| Cash and cash equivalents | 14 |
| TOTAL ASSETS |
| EQUITY |
| SHAREHOLDERS' EQUITY |
| Called up share capital | 15 |
| Capital contribution | 16 |
| Retained earnings | 16 | ( |
) |
| TOTAL EQUITY | (435,344 | ) | 94,459 |
| LIABILITIES |
| NON-CURRENT LIABILITIES |
| Trade and other payables | 17 |
| Financial liabilities - borrowings |
| Interest bearing loans and borrowings | 18 |
| Deferred tax | 20 | 67,037 | 28,871 |
| CURRENT LIABILITIES |
| Trade and other payables | 17 |
| Financial liabilities - borrowings |
| Interest bearing loans and borrowings | 18 |
| Tax payable |
| TOTAL LIABILITIES |
| TOTAL EQUITY AND LIABILITIES |
| The financial statements were approved by the Board of Directors and authorised for issue on |
| Evtec Automotive Limited (Registered number: 12650654) |
| Statement of Financial Position - continued |
| 31 March 2023 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Statement of Changes in Equity |
| for the Year Ended 31 March 2023 |
| Called up |
| share | Retained | Capital | Total |
| capital | earnings | contribution | equity |
| £ | £ | £ | £ |
| Balance at 1 January 2021 |
| Changes in equity |
| Total comprehensive income | - |
| Balance at 31 March 2022 | 100 | 94,359 | 94,459 |
| Changes in equity |
| Total comprehensive income | - | (777,209 | ) | (529,803 | ) |
| Balance at 31 March 2023 | ( |
) | ( |
) |
| Evtec Automotive Limited (Registered number: 12650654) |
| Statement of Cash Flows |
| for the Year Ended 31 March 2023 |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| Notes | £ | £ |
| Cash flows from operating activities |
| Cash generated from operations | 1 | ( |
) | ( |
) |
| Interest paid | ( |
) | ( |
) |
| Tax paid | ( |
) |
| Net cash from operating activities | ( |
) | ( |
) |
| Cash flows from investing activities |
| Purchase of goodwill | - | (1,618,086 | ) |
| Purchase of intangible fixed assets | ( |
) |
| Purchase of tangible fixed assets | ( |
) | ( |
) |
| Net cash from investing activities | ( |
) | ( |
) |
| Cash flows from financing activities |
| New loans in year |
| Loan repayments in year | ( |
) | ( |
) |
| Amount introduced by directors | - | 1,412,526 |
| Amount withdrawn by directors | - | (292,783 | ) |
| Capital contribution | 433,193 | - |
| Net cash from financing activities |
| Increase in cash and cash equivalents |
| Cash and cash equivalents at beginning of year |
2 |
- |
| Cash and cash equivalents at end of year | 2 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Statement of Cash Flows |
| for the Year Ended 31 March 2023 |
| 1. | RECONCILIATION OF (LOSS)/PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| (Loss)/profit before income tax | ( |
) |
| Depreciation charges |
| Finance costs | 1,451,835 | 1,817,983 |
| 776,807 | 2,264,167 |
| Increase in inventories | ( |
) | ( |
) |
| Decrease/(increase) in trade and other receivables | ( |
) |
| (Decrease)/increase in trade and other payables | ( |
) |
| Cash generated from operations | ( |
) | ( |
) |
| 2. | CASH AND CASH EQUIVALENTS |
| The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts: |
| Year ended 31 March 2023 |
| 31.3.23 | 1.4.22 |
| £ | £ |
| Cash and cash equivalents | 210,767 | 56,524 |
| Period ended 31 March 2022 |
| 31.3.22 | 1.1.21 |
| £ | £ |
| Cash and cash equivalents | 56,524 | - |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements |
| for the Year Ended 31 March 2023 |
| 1. | STATUTORY INFORMATION |
| Evtec Automotive Limited is a |
| The presentation currency of the financial statements is the Pound Sterling (£). |
| 2. | ACCOUNTING POLICIES |
| Basis of preparation |
| Transition to adopted IFRS |
| These financial statements have been prepared in accordance with International accounting standards in conformity with the requirements of the Companies Act 2006 ("IFRS") and applicable law. Consequently, IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. |
| The company has adopted IFRS in 2023, with an IFRS transition date of 1 January 2021. IFRS 1 grants certain exemptions from the full requirements of adopted IFRSs in the transition period. No exemptions have been taken in preparation of these financial statements |
| An explanation of how the transition to IFRSs has affected the reported financial position, financial performance, and cash flows of the company is provided in note 26. |
| Going Concern |
| The company acquired the manufacturing trade and certain assets from the administrators of Arlington Engineered Systems Limited, on 13th January 2021. A 24 month funding package was put in place, with capital repayments at various dates. The agreement was intended to be settled or refinanced by 12th April 2023. |
| At the year end, the lender agreed to roll-over the facility on a monthly basis, while negotiations over a revised funding package continued. |
| On 28th April 2023 a new funding package was agreed, providing certainty to the business for a further 24 month period. The agreement is intended to be settled or refinanced by 30th April 2025. |
| The directors acknowledge the poor results during the year, and the net liabilities position, which were largely due to a major customer experiencing production difficulties due to a shortage of semi-conductors. The directors note that sales volumes are increasing as the semi-conductor shortage eases. |
| Based on the new financing package in place, and indications that forecast sales volumes will be achieved, the directors consider the company to be a going concern for the foreseeable future. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 2. | ACCOUNTING POLICIES - continued |
| Critical accounting judgements and key sources of estimation uncertainty |
| The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. |
| Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The principal accounting estimates, assumptions and judgements employed in the preparation of these financial statements which could affect the carrying amounts of assets and liabilities at the balance sheet date are as follows: |
| Automotive revenue recognition. |
| The company manufactures, assembles and sells bespoke car parts, to blue chip car manufacturers. Sales are recognised when control of the products has transferred, being when the products are delivered to the client, or collected by them ex works. |
| Delivery occurs when the products have been collected or shipped to the specific location, and the risks of obsolescence and loss have been transferred to the client at this point, and either the client has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. |
| A receivable is recognised when the goods are delivered or collected ex works, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. |
| Sale are made on agreed credit terms, at a price determined by an agreed purchase order, linked to a client required delivery schedule (call off order). Client orders are also subject to general conditions of sale. |
| Estimates are required to attribute tooling revenue for certain specific clients, which have a periodic billing clause in their contract for tooling. Revenue is recognised based on management's estimate of the level of consumption of tooling, over the life of the contract. |
| Goodwill |
| The assessment of the future economic benefits generated form acquired goodwill, customer relationships, technology, and brands and the determination of the related amortisation profit involves a significant degree of judgement based on management estimation of future potential revenue and profit and the useful lives of the assets. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 2. | ACCOUNTING POLICIES - continued |
| Revenue recognition |
| IFRS 15 Revenue, requires revenue to be recognised under a 'five step' approach when a customer obtains control of goods or services in line with the performance obligations identified on the contract. Under IFRS 15, revenue recognition must reflect the standard's five-step approach which requires the following: |
| - Identification of the contract with the customer; |
| - Identification fo the performance obligations in the contract; |
| - Determination of the transaction price; |
| - Allocation of the transaction price to the performance obligations; |
| - Recognition of the revenue when (or as) each performance obligation is satisfied. |
| Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. |
| Revenue from the sale of goods and services in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns, trade discounts, and volume rebates. |
| Revenue is recognised on completion of each performance obligation and when control has been passed to the customer. For production revenue, this is recognised at a point in time upon provision of an executed sales agreement or purchase order which signify that control has been passed to the customer and recovery of the consideration is probable. |
| The Company issues discounts based on sales volumes which are recognised as a reduction in revenue. |
| Tooling and long term contract revenue is recognised over the period of the contact. The value of the contract work in progress comprises the costs incurred on contracts plus an appropriate proportion of overheads and attributable profit. Fees invoiced on account are deducted from the value of work in progress and the balance is separately disclosed in trade receivables as amounts recoverable on contract, unless such fees exceed the value of the work in progress on any contract, when the excess is separately disclosed in trade and other payables as fees invoiced in advance. Profit is recognised on a percentage completion basis, over time, taking into account costs to complete, and assessing the outcome of a contract or project result. Costs incurred before it becomes probable that a contract will be obtained are charged to expenses. Directly attributable costs incurred after that point are recognised in the balance sheet and charged to the income statement over the duration of the contract. |
| Production: automotive represents goods manufactured or assembled on site, to contract orders, typically for new car production. Production runs are aligned with client orders, and income is recognised at a point in time on dispatch. |
| Tooling: contracts are entered into in advance of production runs, and income may be recognised at a point in time (if the tool is to be delivered to a client), or over time (where the tool is to be held at Evtec Automotive's site). The treatment of tooling revenue recognition depends upon the terms of the client contract. |
| Cash and cash equivalents |
| Cash represents cash in hand and deposits held on demand with financial institutions. Cash equivalents are short-term, highly-liquid investments with original maturities of three months or less (as at their date of acquisition). Cash equivalents are readily convertible to known amounts of cash and subject to an insignificant risk of change in that cash value. |
| In the presentation of the Statement of Cash Flows, cash and cash equivalents also include bank overdrafts. Any such overdrafts are shown within borrowings under ‘current liabilities’ on the Statement of Financial Position. |
| Goodwill |
| Goodwill, being the amount paid in connection with the acquisition of a business in 2021, is being amortised evenly over its estimated life of ten years. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 2. | ACCOUNTING POLICIES - continued |
| Intangible assets |
| Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
| Computer software is being amortised evenly over its estimated useful life of three years. |
| Property, plant and equipment |
| Freehold property | - |
| Improvements to property | - |
| Plant and machinery | - |
| Computer equipment | - |
| Inventories |
| Inventory and work in progress is value at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. |
| Cost is calculated using the first-in, first-out method and includes all purchases, transport, and handling costs in bringing stocks to their present location and condition. |
| Taxation |
| Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that ir relates to items recognised in other comprehensive income or directly in equity. |
| Current or deferred taxation assets and liabilities are not discounted. |
| Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
| Deferred tax |
| Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
| Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
| Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
| Foreign currencies |
| Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 2. | ACCOUNTING POLICIES - continued |
| Leases |
| At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. Judgement is applied to determine whether consideration is incurred and other terms within such arrangements. |
| - Right-of-use assets |
| The Company recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-to-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. |
| Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. The lease term would only include periods covered by an option to extend if the Company is reasonably certain to exercise that option. Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36. The company has concluded that there is no residual value in any of the rental leases. |
| - Lease liabilities |
| At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate and any other payments to the lessor relating to the leased asset which are determined to be in substance lease payments. |
| In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g. changes to future payments resulting for a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. |
| - Short-term leases and leases of low value assets. |
| The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term. |
| Employee benefit costs |
| The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the income statement in the period to which they relate. |
| Capital contribution |
| During the year, a major customer provided an interest-free loan to Evtec Automotive Limited. The loan has been discounted at market rate, to the present value at the date of the loan advance. |
| An annual reserve transfer is made from the capital contribution reserve to the profit and loss reserve of an amount equal to the interest expense recognised under the amortised cost method. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 3. | REVENUE |
| Segmental reporting |
| The turnover and loss (2022 - profit) before taxation are attributable to the one principal activity of the company. |
| An analysis of turnover by class of business is given below: |
| Year Ended 31.3.23 | Period 1.1.21 to 31.3.22 |
| £ | £ |
| Production and assembled goods | 47,746,585 | 69,586,954 |
| Sales of tooling goods | 42,533 | 1,691,528 |
| 48,170,118 | 71,278,482 |
| An analysis of turnover by geographical market is given below: |
| Year Ended 31.3.23 | Period 1.1.21 to 31.3.22 |
| £ | £ |
| United Kingdom | 41,371,526 | 62,028,539 |
| Europe | 6,796,641 | 9,249,943 |
| United States of America | 1,951 | - |
| 48,170,118 | 71,278,482 |
| Revenue from contracts with customers |
| Revenue from the sale of goods and services in the ordinary course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns, trade discounts, and volume rebates. |
| 4. | EMPLOYEES AND DIRECTORS |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Wages and salaries |
| Social security costs |
| Other pension costs |
| The average number of employees during the year was as follows: |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| Production | 97 | 112 |
| Selling, Distribution and Administration | 44 | 41 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 4. | EMPLOYEES AND DIRECTORS - continued |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Directors' remuneration |
| Directors' pension contributions to money purchase schemes |
| The number of directors to whom retirement benefits were accruing was as follows: |
| Money purchase schemes |
| Information regarding the highest paid director is as follows: |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Emoluments etc |
| Pension contributions to money purchase schemes |
| 5. | EXCEPTIONAL ITEMS |
| Exceptional items relate to one-off items, as a result of the acquisition of the manufacturing business and certain assets from the administrators of Arlington Engineered Systems Limited, on 13th January 2021. |
| 6. | NET FINANCE COSTS |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Finance costs: |
| Bank loan interest |
| Loan arrangement fee | 226,100 | 267,285 |
| Discounting | 450,389 | 281,186 |
| Interest on participators loan | 55,987 | 53,615 |
| Other interest paid | 19,763 | 6,865 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 7. | (LOSS)/PROFIT BEFORE INCOME TAX |
| The loss before income tax (2022 - profit before income tax) is stated after charging/(crediting): |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Cost of inventories recognised as expense |
| Leases | 180,506 | 269,752 |
| Depreciation - owned assets |
| Depreciation - assets on hire purchase contracts or finance leases |
| Computer software amortisation |
| Auditors' remuneration | 32,275 | 18,425 |
| Auditors' remuneration for non audit work |
| Foreign exchange differences | ( |
) |
| 8. | INCOME TAX |
| Analysis of tax expense |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Current tax: |
| Tax | ( |
) |
| Deferred tax |
| Total tax expense in statement of profit or loss and other comprehensive income |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 8. | INCOME TAX - continued |
| Factors affecting the tax expense |
| The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| (Loss)/profit before income tax | ( |
) |
| (Loss)/profit multiplied by the standard rate of corporation tax in the UK of |
( |
) |
| Effects of: |
| Timing differences | 3,578 | - |
| Permanently disallowed | 45,435 | 56,021 |
| Capital allowances in advance of depreciation | (3,014 | ) | (10,184 | ) |
| Transitional adjustment | - | 124 |
| Unrelieved tax losses | 123,885 | - |
| Change in tax rates | 16,088 | - |
| Tax expense |
| The company has trading losses carried forwards of £556,755 (2022: £0) and non-trading losses carried forwards of £113,463 (2022: £53,615). A deferred tax asset has not been recognised in respect of these losses, as there is insufficient evidence that the asset will be recoverable within 12 months. |
| 9. | GOODWILL |
| £ |
| COST |
| At 1 April 2022 |
| and 31 March 2023 |
| AMORTISATION |
| At 1 April 2022 |
| Charge for year |
| At 31 March 2023 |
| NET BOOK VALUE |
| At 31 March 2023 |
| At 31 March 2022 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 10. | INTANGIBLE ASSETS |
| Computer |
| software |
| £ |
| COST |
| Additions |
| Reclassification/transfer |
| At 31 March 2023 |
| AMORTISATION |
| Amortisation for year |
| At 31 March 2023 |
| NET BOOK VALUE |
| At 31 March 2023 |
| 11. | PROPERTY, PLANT AND EQUIPMENT |
| Improvements |
| Freehold | to | Plant and | Computer |
| property | property | machinery | equipment | Totals |
| £ | £ | £ | £ | £ |
| COST |
| At 1 April 2022 |
| Additions |
| Reclassification/transfer | ( |
) | ( |
) |
| At 31 March 2023 |
| DEPRECIATION |
| At 1 April 2022 |
| Charge for year |
| At 31 March 2023 |
| NET BOOK VALUE |
| At 31 March 2023 |
| At 31 March 2022 |
| 12. | INVENTORIES |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Stocks |
| Work-in-progress |
| Finished goods |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 13. | TRADE AND OTHER RECEIVABLES |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Current: |
| Trade debtors |
| Called up share capital not paid |
| Prepayments |
| The company has entered into an agreement whereby a proportion of trade debtors have been discounted with a finance company, in return for which it receives advances against a proportion of the sums due. The value of trade debtors subject to invoice finance within trade debtors at 31st March 2023 is £1,023,830 (2022: £1,664,332). |
| 14. | CASH AND CASH EQUIVALENTS |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Cash in hand |
| Bank accounts |
| 15. | CALLED UP SHARE CAPITAL |
| Allotted, issued and fully paid: |
| Number: | Class: | Nominal | 31.3.23 | 31.3.22 |
| value: | £ | £ |
| Ordinary | £1 | 100 | 100 |
| 16. | RESERVES |
| Retained | Capital |
| earnings | contribution | Totals |
| £ | £ | £ |
| At 1 April 2022 |
| Deficit for the year | ( |
) | ( |
) |
| Discount on loan, recognition | - | 433,193 | 433,193 |
| Reserve transfer | 185,787 | (185,787 | ) | - |
| At 31 March 2023 | ( |
) | (435,444 | ) |
| Per note 18, a customer provided an unsecured, interest-free loan to the company during the period. |
| This loan was discounted to the present value using the market interest rate, creating a £433,193 capital contribution. |
| As the loan discount unwound, a reserve transfer was made equal to the discount expensed during the year. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 17. | TRADE AND OTHER PAYABLES |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Current: |
| Trade creditors |
| Social security and other taxes |
| Pension creditor | 31,327 | 28,881 |
| Other creditors |
| Accrued expenses | 1,001,357 | 1,129,953 |
| VAT | 1,568,045 | 2,581,168 |
| Non-current: |
| Accruals and deferred income |
| Directors' loan accounts | 1,119,743 | 1,119,743 |
| Aggregate amounts |
| 18. | FINANCIAL LIABILITIES - BORROWINGS |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Current: |
| Bank loans |
| Other loans | 2,226,815 | - |
| Leases (see note 19) | 32,101 | 7,337 |
| Non-current: |
| Other loans - 1-2 years | 425,779 | - |
| Leases (see note 19) | 109,911 | 9,556 |
| Terms and debt repayment schedule |
| 1 year or |
| less | 1-2 years | 2-5 years | Totals |
| £ | £ | £ | £ |
| Bank loans |
| Other loans | 2,226,815 | 425,779 | - | 2,652,594 |
| Leases | 32,101 | 28,419 | 81,492 | 142,012 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 18. | FINANCIAL LIABILITIES - BORROWINGS - continued |
| Bank loans are secured with a fixed and floating charge over the assets of the company, in favour of BZ Commercial Finance Dac. |
| In addition to the debenture, the financing of trade debtors is secured over the proportion of trade debtors that have been subject to invoice finance, in favour of BZ Commercial Finance Dac. |
| Other loans includes a customer provided unsecured, interest-free loan, to ensure a seamless supply of parts for the customer. The loan was discounted at the market rate of interest. |
| 19. | LEASING |
| Right-of-use assets |
| Property, plant and equipment |
| 31.3.23 | 31.3.22 |
| £ | £ |
| COST |
| At 1 April 2022 | 22,836 | - |
| Additions | 146,325 | 22,836 |
| 169,161 | 22,836 |
| DEPRECIATION |
| At 1 April 2022 | 6,599 | - |
| Charge for year | 27,036 | 6,599 |
| 33,635 | 6,599 |
| NET BOOK VALUE | 135,526 | 16,237 |
| At 31 March 2022, the company held three copier/printer leases for rental periods of more than one year. |
| During year ended 31 March 2023, the company signed an additional copier/printer lease, and a lease for plant and equipment (mainly forklift trucks). |
| The company has applied the short life exemption permitted by IFRS 16 to various other short term rentals. |
| With effect from 1 January 2021, the Company has adopted IFRS 16 Leases, which specifies how to recognise, measure, and present lease liabilities and the associated right-of-use assets. |
| Other leases |
| Period |
| 1.1.21 |
| Year Ended | to |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Short-term leases | 180,506 | 269,752 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 19. | LEASING - continued |
| Lease liabilities |
| Minimum lease payments fall due as follows: |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Gross obligations repayable: |
| Within one year | 51,156 | 9,280 |
| Between one and five years | 140,030 | 10,382 |
| 191,186 | 19,662 |
| Finance charges repayable: |
| Within one year | 19,055 | 1,943 |
| Between one and five years | 30,119 | 826 |
| 49,174 | 2,769 |
| Net obligations repayable: |
| Within one year | 32,101 | 7,337 |
| Between one and five years | 109,911 | 9,556 |
| 142,012 | 16,893 |
| 20. | DEFERRED TAX |
| 31.3.23 | 31.3.22 |
| £ | £ |
| Balance at 1 April | 28,871 | - |
| Accelerated capital allowances | 27,979 | 39,058 |
| Other timing differences | 10,187 | (10,187 | ) |
| Balance at 31 March |
| Deferred tax is calculated at 25% (2022: 19%), as this rate for future periods has been substantially enacted at the balance sheet date. |
| No deferred tax asset has been included on trading or non-trading losses, as there is insufficient evidence that the asset will be recoverable within 12 months. |
| 21. | CONTINGENT LIABILITIES |
| Evtec Aluminium Limited is a company controlled by the director, Mr D G Roberts. |
| On 24th June 2022, Evtec Aluminium Limited signed a new lease for the site at The Lye Forge, Stourport Road, Kidderminster. |
| Evtec Automotive Limited and Evtec Group Limited are guarantors for this lease agreement. At 31st March 2023, the outstanding undiscounted liability under this lease agreement was £3,440,000 (2022: £0). This liability is countered as Evtec Aluminium Limited are also in receipt of a full indemnity from a third party, in respect of rent and dilapidations. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 22. | DIRECTORS' ADVANCES, CREDITS AND GUARANTEES |
| Mr D G Roberts advanced money to the company. At the start of the period the company owed him £1,119,743, and at the end of the period the company owed by £1,119,743. Interest has accrued at 5% per annum. The loan and interest are repayable more than 12 months after the period end. |
| On acquisition of the trade and business from the administrators, a personal guarantee limited initially to £850,000 from Mr D G Roberts was put in place. At the period end, the personal guarantee remains in place. |
| 23. | AUDITOR LIABILITY LIMITATION AGREEMENT |
| Auditor liability is limited to a maximum of twenty five times the fee relating to the audit engagement. |
| The directors approved the agreement on 27 March 2023. |
| 24. | EVENTS AFTER THE REPORTING PERIOD |
| On 28th April 2023, the company refinanced with Breal Zeta, the existing lender. |
| The new loan arrangements currently run to 30th April 2025. |
| Under the financing package, an equity warrant has been granted to Breal Zeta allowing the holder special rights to subscribe to equity shares in the company. |
| Except in the event of a company or group sale, rights under the equity warrant were not expected to be exercised ahead of 30th April 2025. The warrantholder is entitled to exercise its subscriptions rights to 64.8% of the enlarged share capital. Alternatively, the warrantholder may elect to be paid the warrant cancellation fee (being the higher of £2,406,750, or 64.8% of the equity value as determined by an independent valuer). |
| At the year end, the liability of £2,406,750 is included within "bank loans" (financial liabilities - borrowings) in respect of the equity warrant in place at the balance sheet date. |
| Since the balance sheet date, the directors are in advanced negotiations to vary the terms of the equity warrant in place and possibly settle. |
| 25. | ULTIMATE CONTROLLING PARTY |
| Evtec Group Limited is regarded by the directors as being the company's ultimate parent company. |
| The registered office of Evtec Group Limited is 79 Torrington Avenue, Tile Hill, Coventry, CV4 9AQ. |
| At the balance sheet date, the ultimate controlling parties were Mr D G Roberts and Mrs J M Roberts, by virtue of their shareholdings in Evtec Group Limited. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31 March 2023 |
| 26. | EXPLANATION OF TRANSITION TO IFRS |
| These are the first financial statements prepare in accordance with UK adopted International Accounting Standard, collectively "IFRS". The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 2023, the comparative information presented in these financial statements for the period ended 31 March 2022 and in the preparation of an opening IFRS balance sheet as at 1 January 2021 being the date of transition. |
| A company is required to determine its IFRS accounting policies and apply these retrospectively to determine its opening balance sheet under IFRS. IFRS 1, First-time Adoption of International Financial Reporting Standards (as amended in 2008), allows companies adopting IFRS for the first time to take certain exemptions and exceptions from the full requirements of IFRS on the date of transition (i.e. 1 January 2021). The company has taken advantage of the transitional arrangement which permits the judgements applied to the 1 January 2021 opening balance sheet to be revisited for the benefit of hindsight. |
| In preparing its opening IFRS statements of financial position, the Company has adjusted the amounts previously reporting in its financial statements prepared in accordance with UK GAAP. The comparative information in the financial statements has been consistently applied in accordance with IFRS. This note explains the principal adjustments made by the Company in restating its UK GAAP financial statements, including the statement of financial position as at 1 January 2021 and the financial statements for the period ended 31 March 2022. |
| An explanation of how the transition from UK GAAP (being Financial Reporting Standard 102) to IFRS has affected the Company's financial position and financial performance is set out in the following notes. |
| IFRS adjustments include the following: |
| - IFRS 16: Leases |
| Reclassification and re-measurement adjustments relate to matters identified on conversion to IFRS |
| - including those relating to judgements applied to matters previously reported under UK GAAP |
| - including those to be revisited for both the benefit of hindsight and prior period error. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Reconciliation of Equity |
| 1 January 2021 |
| (Date of Transition to IFRSs) |
| Effect of |
| transition |
| FRS 102 | to IFRSs | IFRSs |
| £ | £ | £ |
| ASSETS |
| CURRENT ASSETS |
| Trade and other receivables | 100 | 100 |
| TOTAL ASSETS | 100 | 100 |
| SHAREHOLDERS' EQUITY |
| Called up share capital | 100 | 100 |
| TOTAL EQUITY | 100 | 100 |
| LIABILITIES |
| TOTAL LIABILITIES | - | - |
| TOTAL EQUITY AND LIABILITIES | 100 | 100 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Reconciliation of Equity - continued |
| 31 March 2022 |
| Effect of |
| transition |
| FRS 102 | to IFRSs | IFRSs |
| £ | £ | £ |
| ASSETS |
| NON-CURRENT ASSETS |
| Goodwill | 1,428,272 | 1,428,272 |
| Property, plant and equipment | 3,647,237 | 3,663,474 |
| 5,075,509 | 5,091,746 |
| CURRENT ASSETS |
| Inventories | 3,714,760 | 3,714,760 |
| Trade and other receivables | 5,160,948 | 5,160,948 |
| Cash and cash equivalents | 56,524 | 56,524 |
| 8,932,232 | 8,932,232 |
| TOTAL ASSETS | 14,007,741 | 14,023,978 |
| EQUITY |
| SHAREHOLDERS' EQUITY |
| Called up share capital | 100 | 100 |
| Retained earnings | 95,015 | ( |
) | 94,359 |
| TOTAL EQUITY | 95,115 | ( |
) | 94,459 |
| LIABILITIES |
| NON-CURRENT LIABILITIES |
| Trade and other payables | 1,173,358 | 1,173,358 |
| Financial liabilities - borrowings |
| Interest bearing loans and borrowings | - | 9,556 |
| Deferred tax | 28,871 | - | 28,871 |
| 1,202,229 | 1,211,785 |
| CURRENT LIABILITIES |
| Trade and other payables | 6,179,465 | 6,179,465 |
| Financial liabilities - borrowings |
| Interest bearing loans and borrowings | 6,480,927 | 6,488,264 |
| Tax payable | 50,005 | 50,005 |
| 12,710,397 | 12,717,734 |
| TOTAL LIABILITIES | 13,912,626 | 13,929,519 |
| TOTAL EQUITY AND LIABILITIES | 14,007,741 | 14,023,978 |
| Evtec Automotive Limited (Registered number: 12650654) |
| Reconciliation of Equity - continued |
| 31 March 2022 |
| Notes to the reconciliation of equity |
| There was no impact on the Company's profit/loss on transition to adopted IFRS at 1 January 2021, as the company has not yet commenced trading at that date. |
| The impact on the Company's loss on transition to adopted IFRS for the period ended 31 March 2022 is summarised below. |
| IFRS 16: Leases - Lease accounting |
| Conversion to IFRS |
| IFRS 16: Lease accounting under IFRS 16 does not distinguish between operating and finance leases, and under IFRS 16, leasees recognise almost all leases on the balance sheet as a "lease liability", with a corresponding "right-of-use" asset, though IFRS 16 permits an exemption for short term leases and leases of low value assets, which continue to be expensed over the lease term. |
| IFRS 16 requires all leases to be brought on the balance sheet at the lease commencement date as (i) a liability for all expected lease payments discounted to NPV and (ii) at a right to use asset which is equivalent to the NPV of the lease liabilities, which is then depreciated over the lease. Therefore, the transition to IFRS 16 has led to an increase in Property, plant and equipment as three copier/printer leases have been brought into fixed assets, and an increase in Lease Liabilities as the present value of future lease payments have been brought onto the balance sheet as a liability. The impact of IFRS 16 on these financial statements has been discussed in more detail in note 20. |
| Under FRS 102, for period ended 31st March 2022, other operating leases (administrative expenses) was £13,584. |
| Under IFRS, for period ended 31st March 2022, £8,433 of non-short term lease payments were reclassified. |
| £ |
| Lease payments reclassified | (8,433 | ) |
| Depreciation on right-of-use assets | 6,599 |
| Finance cost - leasing | 2,490 |
| Loss for period ended 31st March 2022, due to IFRS conversion | 656 |
| The effective interest rate on the date of initial application was 15%. |
| Evtec Automotive Limited (Registered number: 12650654) |
| Reconciliation of Profit |
| for the Period 1 January 2021 to 31 March 2022 |
| Effect of |
| transition |
| FRS 102 | to IFRSs | IFRSs |
| £ | £ | £ |
| Revenue | 71,278,482 | 71,278,482 |
| Cost of sales | (63,450,152 | ) | (63,450,152 | ) |
| GROSS PROFIT | 7,828,330 | 7,828,330 |
| Other operating income | 83,489 | 83,489 |
| Administrative expenses | (5,956,657 | ) | (5,954,823 | ) |
| Exceptional items | 34,222 | 34,222 |
| Finance costs | (1,815,493 | ) | ( |
) | (1,817,983 | ) |
| PROFIT BEFORE TAX | 173,891 | ( |
) | 173,235 |
| Income tax | (78,876 | ) | (78,876 | ) |
| PROFIT FOR THE YEAR | 95,015 | ( |
) | 94,359 |