Company registration number 07948437 (England and Wales)
HYPERDRIVE INNOVATION LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
HYPERDRIVE INNOVATION LTD
COMPANY INFORMATION
Directors
M S Karim
M Cox
(Appointed 28 October 2022)
Company number
07948437
Registered office
Future Technology Centre
Barmston Court
Nissan Way
Sunderland
SR5 3NY
Auditor
Sumer Auditco Limited
Unit 2
Gosforth Park Avenue
Newcastle Upon Tyne
NE12 8EG
Bankers
National Westminster Bank Plc
16 Northumberland Street
Newcastle upon Tyne
Tyne & Wear
NE1 7EL
Solicitors
Ward Hadaway
Sandgate House
102 Quayside
Newcastle upon Tyne
NE1 3DX
HYPERDRIVE INNOVATION LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 25
HYPERDRIVE INNOVATION LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Review of the business
The principal activity of the company is the development of low carbon vehicle technology.
The company has continued to make progress in the period, with turnover increasing to £25.8m in the year (9 months to Dec-21 - £18.6m). Continued investment, aided by the new ultimate parent, helps to develop the growth aspirations of the company. As a result, Hyperdrive is now profit making and cash generative.
Future developments
It is now very clear that electrification is accelerating across the world, driven by government directives, environmental concerns and rapid improvement in battery cell technology, although this brings about a more competitive landscape and marketplace.
Principal risks and uncertainties
The management of the business and the execution of the company's strategy are subject to a number of risks. The board reviews these risks and puts in place policies to mitigate them.
The key business and financial risks are:
Price risk
The principal risk to the business is price risk through the fluctuation of supplier prices. The directors manage price risk on an ongoing basis to ensure they remain competitive within the market.
Employees
The supply of skilled engineers is a risk for the company as demand can fluctuate depending on the number of contracts. The directors are closely involved with the required staffing levels which helps to manage this risk.
Environment, health and safety incidents
Appropriate measures are implemented to ensure the risk of any environmental and health and safety issues are minimised.
Liquidity risk
The directors regularly monitor the financial information to ensure that any risks in this area are considered on a timely basis ensuring the company has sufficient working capital.
Credit risk
The directors regularly monitors debtors to ensure that any risks of bad and doubtful debts are provided for on a timely basis.
Key performance indicators
The directors consider turnover, gross profit margin, and EBITDA (earnings before interest, tax, depreciation and amortisation) to be key measures of the company's performance:
*The percentages have been calculated on a pro-rata basis for a more accurate reflection of the like-for-like movements given the fact that 2021 was an 9 month period
The profit after tax for the period was £635,364 (2021 - £477,825) and the net assets position at the period end was £2,156,931 (2021 - £1,521,567).
The directors consider the company's results to be satisfactory in light of current market conditions.
HYPERDRIVE INNOVATION LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
M S Karim
Director
26 March 2024
HYPERDRIVE INNOVATION LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
C R Pennison
(Resigned 31 December 2023)
M S Karim
R J Morris
(Resigned 8 October 2023)
R Shakoori
(Resigned 28 October 2022)
M Cox
(Appointed 28 October 2022)
Auditor
The auditor, Sumer Auditco Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of principal risks and future developments.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
HYPERDRIVE INNOVATION LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
On behalf of the board
M S Karim
Director
26 March 2024
HYPERDRIVE INNOVATION LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HYPERDRIVE INNOVATION LTD
- 5 -
Opinion
We have audited the financial statements of Hyperdrive Innovation Ltd (the 'company') for the year ended 31 December 2022 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 Auditor's 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
HYPERDRIVE INNOVATION LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HYPERDRIVE INNOVATION LTD
- 6 -
Matters on which we are required to report by exception
In 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 and the directors' report.
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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and take advantage of the small companies exemption from the requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, 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 is 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.
Auditor's 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 an auditor's report 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.
HYPERDRIVE INNOVATION LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HYPERDRIVE INNOVATION LTD
- 7 -
Capability of the audit in detecting irregularities, including fraud
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
Those laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards, Company Law, Tax and Pensions legislation, and distributable profits legislation.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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 an auditor's report 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.
Stephen Slater
Senior Statutory Auditor
For and on behalf of Sumer Auditco Limited
Statutory Auditor
Unit 2
Gosforth Park Avenue
Newcastle Upon Tyne
NE12 8EG
28 March 2024
HYPERDRIVE INNOVATION LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
Year
Period
ended
ended
31 December
31 December
2022
2021
Notes
£
£
Turnover
3
25,823,072
18,596,237
Cost of sales
(19,835,582)
(14,549,888)
Gross profit
5,987,490
4,046,349
Administrative expenses
(5,473,198)
(3,611,047)
Other operating income
30,926
77,215
Operating profit
4
545,218
512,517
Interest receivable and similar income
132,411
2,891
Interest payable and similar expenses
(48,301)
(28,052)
Profit before taxation
629,328
487,356
Tax on profit
7
6,036
(9,531)
Profit for the financial year
635,364
477,825
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HYPERDRIVE INNOVATION LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
Year
Period
ended
ended
2022
2021
£
£
Profit for the year
635,364
477,825
Other comprehensive income
-
-
Total comprehensive income for the year
635,364
477,825
HYPERDRIVE INNOVATION LTD
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
8
13,725
55,879
Tangible assets
9
621,823
641,019
635,548
696,898
Current assets
Stocks
10
2,246,914
3,500,676
Debtors falling due after more than one year
11
633,630
778,753
Debtors falling due within one year
11
9,267,591
4,459,111
Cash at bank and in hand
582,800
3,923,023
12,730,935
12,661,563
Creditors: amounts falling due within one year
12
(6,489,680)
(8,615,720)
Net current assets
6,241,255
4,045,843
Total assets less current liabilities
6,876,803
4,742,741
Provisions for liabilities
Provisions
13
4,719,872
3,221,174
(4,719,872)
(3,221,174)
Net assets
2,156,931
1,521,567
Capital and reserves
Called up share capital
16
136,079
136,079
Share premium account
5,500,100
5,500,100
Profit and loss reserves
(3,479,248)
(4,114,612)
Total equity
2,156,931
1,521,567
The financial statements were approved by the board of directors and authorised for issue on 26 March 2024 and are signed on its behalf by:
M S Karim
Director
Company registration number 07948437 (England and Wales)
HYPERDRIVE INNOVATION LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Share premium account
Other reserves
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 April 2021
136,079
5,500,100
247,617
(5,065,689)
818,107
Period ended 31 December 2021:
Profit and total comprehensive income
-
-
-
477,825
477,825
Transfers
-
-
225,635
225,635
Other movements
-
-
(473,252)
473,252
-
Balance at 31 December 2021
136,079
5,500,100
-
(4,114,612)
1,521,567
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
-
635,364
635,364
Balance at 31 December 2022
136,079
5,500,100
-
(3,479,248)
2,156,931
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information
Hyperdrive Innovation Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Future Technology Centre, Barmston Court, Nissan Way, Sunderland, SR5 3NY.
1.1
Reporting period
The prior reporting period was shortened to 31 December 2021 for commercial reasons. The prior period presents the financial statements of the company for the 9 months from 1 April 2021 to 31 December 2021 and as such the current year financial statements (including related notes) for the 12 months from 1 January 2022 to 31 December 2022 are not entirely comparable.
1.2
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared on the historical cost convention.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’: basis of determining fair values;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Turntide Transport Limited. These consolidated financial statements are available from its registered office, Turntide Drives Eighth Avenue, Team Valley Trading Estate, Gateshead, United Kingdom, NE11 0QA.
1.3
Going concern
The financial statements have been prepared on the going concern basis. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, taking into account future cash flow forecasts as well as current economic conditions. The Board has concluded that the going concern assumption is appropriate in preparing these financial statements. true
1.4
Turnover
Turnover represents the amounts derived from the provision of goods to customers net of value added tax and trade discounts.
Revenue from the sale of batteries is recognised when the significant risks and rewards of ownership of the batteries have passed to the buyer (usually on despatch of the battery), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.5
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.6
Intangible fixed assets other than goodwill
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
33.3% straight line
Development costs
20% straight line
1.7
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
6.7% straight line
Plant and machinery
20% straight line
Fixtures, fittings and equipment
33.3% straight line
Computer equipment
20% straight line
Motor vehicles
33.3% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.8
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
1.9
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received, if considered material to the financial statements.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.17
Government grants
Grants, where entitlement is not conditional on the delivery of a specific performance by the company, are recognised when the company becomes unconditionally entitled to the grant. Grants related to performance and specific deliverables are accounted for as the company earns the right to consideration by its performance.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
1.18
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Assessing indicators of impairment
In assessing whether there have been any indicators of impairment in non-financial assets, the directors have considered both external and internal sources of information such as market conditions and experience of recoverability. Impairment reviews were undertaken both at 31 December 2021 and 31 December 2022. The company has one CGU, being the design, manufacture and sale of ion lithium batteries and battery related technology.
At both dates the recoverable amounts of the CGU were assessed as being in excess of the carrying values and therefore no impairments have been recognised in either year. The assessment was based on value in use calculations using 5 year approved forecasts. For the purposes of this impairment test these forecasts assume significant revenue growth over a 5 year period with only inflationary growth thereafter.
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Provision for battery disposal costs
The company is required under UK Laws and Regulations to take back, free of charge from the end user, waste batteries that it has previously supplied and then to ensure that all waste batteries taken back are delivered for treatment and recycling to an authorised battery treatment facility or to an approved exporter for treatment outside of the UK. The company makes provision for these estimated future costs of disposal. The provision involves a significant amount of estimation as it takes into account the expected life of the batteries, expected cost of disposal, and the number of batteries expected to be returned for disposal each year. This estimate is based on past experience of the performance of similar projects. The carrying value of this provision is £3,855,216 (2021 - £2,415,072) as disclosed in note 13. This provision is based upon current legislation and disposal technologies. Any future changes in legislation or technologies could impact the quantum of this provision.
Warranty provision
The company provides warranties on sales of batteries for a 2 year period following completion of the sale, unless additional warranty periods are specifically agreed in line with the user application. The directors have estimated the likely cost of these warranties based on historic experience of warranty claims. This is based on historical experience of costs incurred relating to historical sales. The carrying value of this provision is £379,517 (2021 - £277,296).
Rectification provision
The company has provided for estimated rectification costs on certain battery packs currently in the field. The nature of the work required means that the timing and likely cost is uncertain. The estimate costs include expected shipping and labour costs. The costs are expected to be incurred within the next 2 years. The carrying value of this provision is £485,139 (2021 - £528,806).
Deferred tax asset
Deferred tax assets are recognised to the extent that it is probable that they will be recovered against future taxable profits. The carrying amount of deferred tax assets is reviewed at each reporting end date and requires the directors to estimate the level of future profits expected to be recovered. The carrying value of the deferred tax asset is £633,630 (2021 - £778,753). Although the business has been historically loss making the directors consider that there is convincing evidence at 31 December 2021 and 31 December 2022 that the company will generate sufficient future taxable profits to utilise these deferred tax assets.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Battery sales
25,823,072
18,596,237
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
3
Turnover and other revenue
(Continued)
- 18 -
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
19,206,847
17,257,485
Europe
5,563,340
800,814
Rest of World
1,052,885
537,938
25,823,072
18,596,237
2022
2021
£
£
Other revenue
Interest income
132,411
2,891
Grants received
-
9,000
Grant income includes £Nil (2021 - £9,000) received in relation to the coronavirus job retention scheme.
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
5,417
(1,098)
Fees payable to the company's auditor for the audit of the company's financial statements
15,000
15,000
Depreciation of owned tangible fixed assets
165,936
11,534
Profit on disposal of tangible fixed assets
(500)
-
Amortisation of intangible assets
61,904
199,863
Share-based payments
-
225,635
Operating lease charges
103,996
75,867
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Administration and management
21
21
Production and engineering
55
50
Directors
4
3
Total
80
74
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
5
Employees
(Continued)
- 19 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
3,222,994
3,228,201
Social security costs
453,275
319,127
Pension costs
169,770
103,606
3,846,039
3,650,934
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
606,169
Amounts receivable under long term incentive schemes
443,073
Company pension contributions to defined contribution schemes
-
25,809
1,075,051
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
n/a
175,571
7
Taxation
2022
2021
£
£
Current tax
Adjustments in respect of prior periods
(151,159)
Deferred tax
Changes in tax rates
47,865
Adjustment in respect of prior periods
(54,316)
Tax losses carried forward
151,574
9,531
Total deferred tax
145,123
9,531
Total tax (credit)/charge
(6,036)
9,531
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
7
Taxation
(Continued)
- 20 -
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
629,328
487,356
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
119,572
92,598
Tax effect of expenses that are not deductible in determining taxable profit
32,001
48,026
Adjustments in respect of prior years
(54,316)
Effect of change in corporation tax rate
47,866
(140,350)
Research and development tax credit
(151,159)
Share based payment charge
9,063
Other
194
Taxation (credit)/charge for the year
(6,036)
9,531
8
Intangible fixed assets
Software
Development costs
Total
£
£
£
Cost
At 1 January 2022
1,420,128
1,420,128
Additions
19,750
19,750
Transfers
6,777
6,777
At 31 December 2022
26,527
1,420,128
1,446,655
Amortisation and impairment
At 1 January 2022
1,364,249
1,364,249
Amortisation charged for the year
6,035
55,869
61,904
Transfers
6,777
6,777
At 31 December 2022
12,812
1,420,118
1,432,930
Carrying amount
At 31 December 2022
13,715
10
13,725
At 31 December 2021
55,879
55,879
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
9
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures, fittings and equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2022
754,078
394,202
13,995
1,162,275
Additions
1,375
87,331
55,776
2,258
146,740
Disposals
(2,163)
(2,163)
Transfers
(310,415)
303,638
(6,777)
At 31 December 2022
1,375
839,246
139,563
305,896
13,995
1,300,075
Depreciation and impairment
At 1 January 2022
289,861
229,296
2,099
521,256
Depreciation charged in the year
25
104,555
14,034
44,523
2,799
165,936
Eliminated in respect of disposals
(2,163)
(2,163)
Transfers
(169,014)
162,237
(6,777)
At 31 December 2022
25
392,253
74,316
206,760
4,898
678,252
Carrying amount
At 31 December 2022
1,350
446,993
65,247
99,136
9,097
621,823
At 31 December 2021
464,217
164,906
11,896
641,019
10
Stocks
2022
2021
£
£
Finished goods and goods for resale
2,246,914
3,500,676
11
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
3,796,152
2,406,093
Corporation tax recoverable
176,209
109,439
Amounts owed by group undertakings
4,520,364
1,502,891
Other debtors
36,042
41,003
Prepayments and accrued income
738,824
399,685
9,267,591
4,459,111
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
11
Debtors
(Continued)
- 22 -
2022
2021
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 14)
633,630
778,753
Total debtors
9,901,221
5,237,864
12
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
1,692,976
1,227,614
Amounts owed to group undertakings
3,239,143
3,238,144
Taxation and social security
107,257
206,480
Deferred income
917,021
3,232,675
Other creditors
25,173
667
Accruals and deferred income
508,110
710,140
6,489,680
8,615,720
13
Provisions for liabilities
2022
2021
£
£
Battery disposal provision
3,855,216
2,415,072
Battery warranty provision
379,517
277,296
Rectification provision
485,139
528,806
4,719,872
3,221,174
Movements on provisions:
Battery disposal provision
Battery warranty provision
Rectification provision
Total
£
£
£
£
At 1 January 2022
2,415,071
277,296
528,806
3,221,173
Additional provisions in the year
1,402,556
176,356
181,003
1,759,915
Utilisation of provision
(10,712)
(74,135)
(224,670)
(309,517)
Unwinding of discount
48,301
-
-
48,301
At 31 December 2022
3,855,216
379,517
485,139
4,719,872
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
13
Provisions for liabilities
(Continued)
- 23 -
Battery disposal provision
The company is required under UK Laws and Regulations to take back, free of charge from the end user, waste batteries that it has previously supplied and then to ensure that all waste batteries taken back are delivered for treatment and recycling to an authorised battery treatment facility or to an approved exporter for treatment outside of the UK. The company makes provision for these estimated future costs of disposal. The provision involves a significant amount of estimation as it takes into account the expected life of the batteries, expected cost of disposal, and the number of batteries expected to be returned for disposal each year. One of the key assumptions used is that all batteries sold will be returned to the company for disposal at the end of their useful lives. To date there is insufficient history of battery returns to support any different returns assumption. As better evidence of returns becomes available in the future the provision may be amended accordingly. Additionally the company has assumed that it will use third parties to dispose of the batteries. As technologies develop it could be possible in the future that improved methods of disposal become available. This could impact the quantum of the provision in future years.
See also key judgements and sources of estimation uncertainty (note 2).
The unwinding of the discount is classified as interest payable in the profit and loss account.
Battery warranty provision
The company provides warranties on sales of batteries for a 2 year period following completion of the sale, unless additional warranty periods are specifically agreed in line with the user application. The directors have estimated the likely cost of these warranties based on historic experience of warranty claims. The nature of the warranties mean that the amount and timing of payments is uncertain, however costs are expected to be realised within a period of not more than 2 years in most cases.
Rectification provision
The company has provided for estimated rectification costs on certain battery packs currently in the field. The nature of the work required means that the timing and likely cost is uncertain. The estimate costs include expected shipping and labour costs. The costs are expected to be incurred within the next 2 years.
14
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Assets
Assets
2022
2021
Balances:
£
£
Fixed asset timing differences
(140,294)
(146,700)
Tax losses
727,724
879,253
R&D expenditure credit
46,200
46,200
633,630
778,753
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
14
Deferred taxation
(Continued)
- 24 -
2022
Movements in the year:
£
Asset at 1 January 2022
(778,753)
Charge to profit or loss
145,123
Asset at 31 December 2022
(633,630)
The deferred tax asset set out above is not expected to reverse within 12 months as it relates to the utilisation of tax losses against future expected profits over the next 5 years. As such the asset has been classified as non-current on the balance sheet.
15
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
169,770
103,606
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
16
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 0.1p each
136,079,043
136,079,043
136,079
136,079
The company has one class of ordinary shares which carry no right to fixed income.
17
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
110,308
105,083
Between two and five years
336,522
442,830
In over five years
252,282
256,282
699,112
804,195
HYPERDRIVE INNOVATION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 25 -
18
Ultimate controlling party
The company's parent undertaking is Hyperdrive Innovation Holdings Limited, a company incorporated in England and Wales.
The company's ultimate UK parent undertaking is Turntide Transport Limited, a company incorporated in England and Wales and its registered office is Turntide Drives Eighth Avenue, Team Valley Trading Estate, Gateshead, United Kingdom, NE11 0QA.
The company's ultimate controlling party is Turntide Technologies Inc, a company incorporated in the United States of America and its registered office is 1295 Forgewood Ave., Sunnyvale, CA 94089.
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