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REGISTERED NUMBER: 12058179 (England and Wales)

| Group Strategic Report, |

| Report of the Directors and |

| Consolidated Financial Statements |

| for the Year Ended 30 November 2025 |

| for |

| Advanced Electric Machines Group Ltd |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Contents of the Consolidated Financial Statements

for the Year Ended 30 November 2025

Page |

| Company Information | 1 |

| Group Strategic Report | 2 |

| Report of the Directors | 4 |

| Report of the Independent Auditors | 6 |

| Consolidated Statement of Comprehensive Income | 10 |

| Consolidated Balance Sheet | 11 |

| Company Balance Sheet | 12 |

| Consolidated Statement of Changes in Equity | 13 |

| Company Statement of Changes in Equity | 14 |

| Consolidated Cash Flow Statement | 15 |

| Notes to the Consolidated Cash Flow Statement | 16 |

| Notes to the Consolidated Financial Statements | 17 |

| Advanced Electric Machines Group Ltd |

Company Information

for the Year Ended 30 November 2025

| DIRECTORS: | J Widmer

| A E Buchan

| N M Tierney

| G Debicki

| N A Pascoe

| J B D North

| REGISTERED OFFICE: | Teal House

| 10 Teal Farm Way

| Washington

| Tyne and Wear

| NE38 8BG

| REGISTERED NUMBER: | 12058179 (England and Wales)

| SENIOR STATUTORY AUDITOR: | Kevin Shotton BA BFP FCA

| AUDITORS: | Clive Owen LLP

| Chartered Accountants

| & Statutory Auditors

| 140 Coniscliffe Road

| Darlington

| County Durham

| DL3 7RT

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Group Strategic Report

for the Year Ended 30 November 2025

The directors present their strategic report of the company and the group for the year ended 30 November 2025.

The principal activity of Advanced Electric Machines Group Limited ('the Group) during the year was the design and manufacture of highly sustainable electric motors, generators and integrated drivetrain technologies. Its core innovation is centred on rare-earth-free electric motor solutions, addressing structural industry challenges relating to cost, supply chain resilience and sustainability within the global electrification market. The Group's technology portfolio is being developed for application across commercial and passenger vehicles, off-highway equipment, rail and marine sectors.

The Group operates a business model combining customer-funded application programmes; early-stage commercial product supply and grant supported innovation. Its strategy is to transition from development-led activities toward scalable commercial production and long-term supply partnerships, while selectively unlocking value from differentiated technology platforms through strategic transactions and partnerships with established industry participants.

REVIEW OF BUSINESS

Total income for the year, including commercial revenue, grant income and other operating income, was £2.77 million (2024: £3.11 million). This is consistent with the previous year and reflects the timing and mix of development programmes and the Group's transition from development activity toward commercial deployment. The Group reported a loss before tax of £4.75 million (2024: £8.34 million), with the year-on-year improvement driven by the absence of exceptional costs (2024: £2.40 million) in the current period and a lower operating cost base following restructuring actions undertaken in response to earlier programme changes; and reflecting continued investment in product development and manufacturing capability.

Operations

Operationally, the Group made significant progress across its core product families;

• HDRM is a robust, scalable, magnet-free traction platform optimised for cost, durability and integration across largely heavy-duty and industrial applications; serving commercial vehicles, off-highway and the industrial segment

• SSRD is a high-speed, ultra-high-performance platform principally targeted at passenger cars

In the period under review, the HDRM150 motor successfully completed validation and the Production Part Approval Process (PPAP), with initial production deliveries commencing in the fourth quarter of 2025 to a well-established European Tier 1 Commercial Vehicle supplier. Development of the HDRM300 platform continued, alongside expansion of the associated commercial pipeline. The performance of this product has been significantly enhanced by the integration of AEM's patented compressed coil technology; re-engineering of its thermal management system; and increasing its voltage capability in line with market trends.

The Group also progressed the development and strategic positioning of SSRD a next-generation electric drivetrain concept targeted at passenger vehicle applications. SSRD remains in the development phase, with ongoing engineering work focused on design maturation, validation planning and alignment with potential customer requirements.

During the year, the Group entered into a contract to with a global Tier 1 supplier to develop a motor for an application within a European OEM's premium vehicle programme. In addition, the Group has engaged with several other Tier 1 suppliers and OEMs who have expressed interest in the underlying technology and its potential application across future electrified platforms.

The Directors consider SSRD to represent a strategically significant element of the Group's technology portfolio with potential applicability across multiple use cases. Further work is required to progress the platform through validation and into commercial readiness; however, its technical approach and alignment with industry requirements are expected to support continued engagement with potential partners.

As part of its broader strategy, the Group continues to evaluate options for the future development and commercialisation of both its technology platforms. In the case of SSRD, this includes ongoing engagement with industry participants to assess potential collaboration structures that could support its further development, validation and eventual deployment. Given the capital requirements and industrial capabilities needed to bring such a platform to market at scale, the Directors believe that partnership with, or involvement from, an established industry participant may represent an effective route to accessing high volume passenger car markets, accelerating its development and maximising long-term shareholder value.

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Group Strategic Report

for the Year Ended 30 November 2025

The Directors monitor the performance of the Group through a combination of financial and operational indicators, including total income, operating profits/losses, cash utilisation, programme delivery milestones and progression of the commercial pipeline. At the current stage of development, priority is given to the successful execution of customer programmes; validation of technology under real-world application conditions; and the conversion of development activity into sustainable commercial revenue streams.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have considered the Group's key risks and uncertainties and have adopted policies to minimise these risks. Key risks identified are as follows:

Supply chain

The Group operates within a market characterised by evolving customer demand, technological complexity and competitive intensity. Principal risks include variability in the timing and scale of electrification across end markets, execution challenges associated with scaling manufacturing capability, and supply chain optimisation. The Group continues to mitigate these risks through disciplined programme management, close collaboration with customers and the development of broader and more resilient supplier relationships, including longer-term arrangements with key partners.

Funding

The Group has historically relied on external funding to support its development and growth. After the year end, the Group secured £10.9 million of Series B equity funding including £3 million of convertible loan notes issued in November 2025 and now converted into Series B shares. This funding strengthens the Group's financial position and provides the resources required to continue execution of its development, industrialisation and commercialisation strategy. The Group has also secured £5 million of government backed debt.

Going concern

In light of this funding, the Directors are satisfied that the Group has adequate resources to meet its liabilities as they fall for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis.

Looking ahead, the Group's strategic focus is on scaling production of the HDRM platform by converting its commercial pipeline into contracted revenues. In addition, the Group will continue to evaluate opportunities to realise value from the SSRD platform through engagement with OEMs and Tier 1 suppliers, with the objective of accelerating its deployment and ensuring it is supported by the scale, infrastructure and market access required for successful commercialisation.

The Directors believe that the Group is well positioned within an evolving and growing market, supported by strong demand drivers for sustainable and rare earth free propulsion solutions and by increasing engagement with global vehicle ecosystem participants.

ON BEHALF OF THE BOARD:

J Widmer - Director

8 July 2026

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Report of the Directors

for the Year Ended 30 November 2025

The directors present their report with the financial statements of the company and the group for the year ended 30 November 2025.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the research and development, design and manufacture of the business' unique, patented and highly sustainable electric motor, generator and transmission products.

DIVIDENDS

No dividends were distributed for the year ended 30 November 2025.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 December 2024 to the date of this report.

J Widmer

A E Buchan

N M Tierney

G Debicki

N A Pascoe

Other changes in directors holding office are as follows:

A Steven - resigned 9 September 2025

N E Daly - resigned 31 January 2025

K R Pillai - appointed 31 January 2025 - resigned 22 May 2025

J B D North was appointed as a director after 30 November 2025 but prior to the date of this report.

DISCLOSURE IN THE STRATEGIC REPORT

Future developments and financial risk management objectives and policies, which would otherwise be disclosed in the directors' report, are instead disclosed in the strategic report, as permitted by section 414C(11) of the Companies Act 2006.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Report of the Directors

for the Year Ended 30 November 2025

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 group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Clive Owen LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.

ON BEHALF OF THE BOARD:

J Widmer - Director

8 July 2026

Report of the Independent Auditors to the Members of

Advanced Electric Machines Group Ltd

Opinion

We have audited the financial statements of Advanced Electric Machines Group Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 November 2025 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 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 group's and of the parent company affairs as at 30 November 2025 and of the group's loss 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.

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 group 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 group's and the parent 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.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group 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 Group 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 Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Report of the Independent Auditors to the Members of

Advanced Electric Machines Group Ltd

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

- | the parent company 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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.

Report of the Independent Auditors to the Members of

Advanced Electric Machines Group Ltd

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:

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, to detect material misstatements in respect of irregularities, including fraud. Our audit must be alert to the risk of manipulation of the financial statements and seek to understand the incentives and opportunities for management to achieve this.

We undertake the following procedures to identify and respond to these risks of non-compliance:

- Understanding the key legal and regulatory frameworks that are applicable to the group. We communicated identified laws and regulations throughout the audit team and remained alert to any indications of non-compliance throughout the audit. We determined the most significant of these to be financial reporting legislation, taxation legislation, health & safety, employment law, company law and ISO9001 regulations.

- Enquiry of directors and management as to policies and procedures to ensure compliance and any known instances of non-compliance.

- Review of board minutes and correspondence with regulators.

- Enquiry of directors and management as to areas of the financial statements susceptible to fraud and how these risks are managed.

- Challenging management on key estimates, assumptions and judgements made in the preparation of the financial statements. These key areas of uncertainty are detailed within note 2 of these financial statements.

- Identifying and testing unusual journal entries, with a particular focus on manual journal entries.

Through these procedures, we did not become aware of actual or suspected non-compliance.

We planned and performed our audit in accordance with auditing standards but owing to the inherent limitations of procedures required in these areas, there is an unavoidable risk that we may not have detected a material misstatement in the accounts. The further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve concealment, collusion, forgery, misrepresentations, or override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

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

Advanced Electric Machines Group Ltd

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.

Kevin Shotton BA BFP FCA (Senior Statutory Auditor)

for and on behalf of Clive Owen LLP

Chartered Accountants

& Statutory Auditors

140 Coniscliffe Road

Darlington

County Durham

DL3 7RT

8 July 2026

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Consolidated

Statement of Comprehensive

Income

for the Year Ended 30 November 2025

| 2025 |  | 2024

| Notes | £ | £ |

TURNOVER | 3 | 2,629,028 |  | 2,883,292 |  |

Cost of sales | (2,153,460 | ) | (1,848,490 | ) |

GROSS PROFIT | 475,568 |  | 1,034,802 |  |

Administrative expenses | (5,400,293 | ) | (7,325,559 | ) |

(4,924,725 | ) | (6,290,757 | ) |

Other operating income | 138,679 |  | 224,217 |  |

OPERATING LOSS | 5 | (4,786,046 | ) | (6,066,540 | ) |

Exceptional costs | 6 | - |  | (2,394,808 | ) |

(4,786,046 | ) | (8,461,348 | ) |

Interest receivable and similar income | 7 | 59,592 |  | 51,100 |  |

(4,726,454 | ) | (8,410,248 | ) |

Interest payable and similar expenses | 8 | (22,281 | ) | (33,702 | ) |

LOSS BEFORE TAXATION | (4,748,735 | ) | (8,443,950 | ) |

Tax on loss | 9 | 883,208 |  | - |  |

LOSS FOR THE FINANCIAL YEAR | (3,865,527 | ) | (8,443,950 | ) |

OTHER COMPREHENSIVE INCOME | - |  | - |  |

TOTAL COMPREHENSIVE INCOME FOR THE YEAR | (3,865,527 | ) | (8,443,950 | ) |

Loss attributable to:

Owners of the parent | (3,865,527 | ) | (8,443,950 | ) |

Total comprehensive income attributable to:

Owners of the parent | (3,865,527 | ) | (8,443,950 | ) |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Consolidated Balance Sheet

30 November 2025

| 2025 |  | 2024

| Notes | £ | £ |

FIXED ASSETS

Intangible assets | 11 | 758,186 |  | 404,229 |  |

Tangible assets | 12 | 377,213 |  | 559,746 |  |

Investments | 13 | - |  | - |  |

1,135,399 |  | 963,975 |  |

CURRENT ASSETS

Stocks | 14 | 386,998 |  | 410,694 |  |

Debtors: amounts falling due within one year | 15 | 1,837,088 |  | 1,544,442 |  |

Cash at bank | 3,565,680 |  | 5,255,788 |  |

5,789,766 |  | 7,210,924 |  |

CREDITORS

Amounts falling due within one year | 16 | (1,729,919 | ) | (2,031,035 | ) |

NET CURRENT ASSETS | 4,059,847 |  | 5,179,889 |  |

TOTAL ASSETS LESS CURRENT LIABILITIES | 5,195,246 |  | 6,143,864 |  |

CREDITORS

Amounts falling due after more than one year (including convertible debt) | 17 | (2,755,199 | ) | - |  |

PROVISIONS FOR LIABILITIES | 21 | (122,284 | ) | (81,410 | ) |

NET ASSETS | 2,317,763 |  | 6,062,454 |  |

CAPITAL AND RESERVES

Called up share capital | 22 | 3,076,616 |  | 3,076,616 |  |

Share premium | 23 | 25,732,423 |  | 25,732,423 |  |

Other reserves | 23 | 220,226 |  | 99,390 |  |

Retained earnings | 23 | (26,711,502 | ) | (22,845,975 | ) |

SHAREHOLDERS' FUNDS | 2,317,763 |  | 6,062,454 |  |

The financial statements were approved by the Board of Directors and authorised for issue on 8 July 2026 and were signed on its behalf by:

J Widmer - Director

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Company Balance Sheet

30 November 2025

| 2025 |  | 2024

| Notes | £ | £ |

FIXED ASSETS

Intangible assets | 11 | - |  | - |  |

Tangible assets | 12 | - |  | - |  |

Investments | 13 | 30,273,883 |  | 27,926,139 |  |

30,273,883 |  | 27,926,139 |  |

CURRENT ASSETS

Debtors: amounts falling due within one year | 15 | 38,318 |  | 8,083 |  |

Cash at bank | 1,201,285 |  | 807,823 |  |

1,239,603 |  | 815,906 |  |

CREDITORS

Amounts falling due within one year | 16 | (151,513 | ) | (19,194 | ) |

NET CURRENT ASSETS | 1,088,090 |  | 796,712 |  |

TOTAL ASSETS LESS CURRENT LIABILITIES | 31,361,973 |  | 28,722,851 |  |

CREDITORS

Amounts falling due after more than one year | 17 | (2,755,199 | ) | - |  |

NET ASSETS | 28,606,774 |  | 28,722,851 |  |

CAPITAL AND RESERVES

Called up share capital | 22 | 3,076,616 |  | 3,076,616 |  |

Share premium | 23 | 25,732,423 |  | 25,732,423 |  |

Other reserves | 23 | 220,226 |  | 99,390 |  |

Retained earnings | 23 | (422,491 | ) | (185,578 | ) |

SHAREHOLDERS' FUNDS | 28,606,774 |  | 28,722,851 |  |

Company's loss for the financial year | (236,913 | ) | (19,356 | ) |

The financial statements were approved by the Board of Directors and authorised for issue on 8 July 2026 and were signed on its behalf by:

J Widmer - Director

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Consolidated Statement of Changes in Equity

for the Year Ended 30 November 2025

| Called up |

| share |  | Retained |  | Share |  | Other |  | Total

| capital |  | earnings |  | premium |  | reserves |  | equity

£ | £ | £ | £ | £ |

Balance at 1 December 2023 | 3,076,616 |  | (14,402,025 | ) | 25,732,423 |  | 136,935 |  | 14,543,949 |  |

Changes in equity

Total comprehensive income | - |  | (8,443,950 | ) | - |  | - |  | (8,443,950 | ) |

Grant share option | - |  | - |  | - |  | (37,545 | ) | (37,545 | ) |

Balance at 30 November 2024 | 3,076,616 |  | (22,845,975 | ) | 25,732,423 |  | 99,390 |  | 6,062,454 |  |

Changes in equity

Total comprehensive income | - |  | (3,865,527 | ) | - |  | - |  | (3,865,527 | ) |

Equity component of

convertible loan | - |  | - |  | - |  | 103,265 |  | 103,265 |  |

Grant share option | - |  | - |  | - |  | 17,571 |  | 17,571 |  |

Balance at 30 November 2025 | 3,076,616 |  | (26,711,502 | ) | 25,732,423 |  | 220,226 |  | 2,317,763 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Company Statement of Changes in Equity

for the Year Ended 30 November 2025

| Called up |

| share |  | Retained |  | Share |  | Other |  | Total

| capital |  | earnings |  | premium |  | reserves |  | equity

£ | £ | £ | £ | £ |

Balance at 1 December 2023 | 3,076,616 |  | (166,222 | ) | 25,732,423 |  | 136,935 |  | 28,779,752 |  |

Changes in equity

Total comprehensive income | - |  | (19,356 | ) | - |  | - |  | (19,356 | ) |

Grant share option | - |  | - |  | - |  | (37,545 | ) | (37,545 | ) |

Balance at 30 November 2024 | 3,076,616 |  | (185,578 | ) | 25,732,423 |  | 99,390 |  | 28,722,851 |  |

Changes in equity

Total comprehensive income | - |  | (236,913 | ) | - |  | - |  | (236,913 | ) |

Equity component of

convertible loan | - |  | - |  | - |  | 103,265 |  | 103,265 |  |

Grant share option | - |  | - |  | - |  | 17,571 |  | 17,571 |  |

Balance at 30 November 2025 | 3,076,616 |  | (422,491 | ) | 25,732,423 |  | 220,226 |  | 28,606,774 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Consolidated Cash Flow Statement

for the Year Ended 30 November 2025

| 2025 |  | 2024

| Notes | £ | £ |

Cash flows from operating activities

Cash generated from operations | 1 | (4,645,295 | ) | (8,425,813 | ) |

Interest paid | (22,281 | ) | (33,702 | ) |

Tax credit | 883,208 |  | - |  |

Net cash from operating activities | (3,784,368 | ) | (8,459,515 | ) |

Cash flows from investing activities

Purchase of intangible fixed assets | (18,968 | ) | - |  |

Purchase of tangible fixed assets | (169,242 | ) | (554,875 | ) |

Development costs incurred | (496,948 | ) | - |  |

Interest received | 59,592 |  | 51,100 |  |

Net cash from investing activities | (625,566 | ) | (503,775 | ) |

Cash flows from financing activities

Loan repayments in year | (138,638 | ) | (393,652 | ) |

New loans net of issue costs | 2,858,464 |  | 63,140 |  |

Net cash from financing activities | 2,719,826 |  | (330,512 | ) |

Decrease in cash and cash equivalents | (1,690,108 | ) | (9,293,802 | ) |

Cash and cash equivalents at beginning of year | 2 | 5,255,788 |  | 14,549,590 |  |

Cash and cash equivalents at end of year | 2 | 3,565,680 |  | 5,255,788 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Cash Flow Statement

for the Year Ended 30 November 2025

1. | RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

| 2025 |  | 2024

£ | £ |

| Loss before taxation | (4,748,735 | ) | (8,443,950 | ) |

| Depreciation charges | 513,734 |  | 270,989 |  |

| Share option charge | 17,571 |  | (37,545 | ) |

| Finance costs | 22,281 |  | 33,702 |  |

| Finance income | (59,592 | ) | (51,100 | ) |

(4,254,741 | ) | (8,227,904 | ) |

| Decrease in stocks | 23,696 |  | 378,971 |  |

| Increase in trade and other debtors | (292,646 | ) | (243,999 | ) |

| Decrease in trade and other creditors | (121,604 | ) | (332,881 | ) |

| Cash generated from operations | (4,645,295 | ) | (8,425,813 | ) |

2. | CASH AND CASH EQUIVALENTS

| The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

| Year ended 30 November 2025

| 30.11.25 |  | 1.12.24

£ | £ |

| Cash and cash equivalents | 3,565,680 |  | 5,255,788 |  |

| Year ended 30 November 2024

| 30.11.24 |  | 1.12.23

£ | £ |

| Cash and cash equivalents | 5,255,788 |  | 14,549,590 |  |

3. | ANALYSIS OF CHANGES IN NET FUNDS/(DEBT)

| At 1.12.24 | Cash flow | At 30.11.25

£ | £ | £ |

| Net cash |

| Cash at bank | 5,255,788 |  | (1,690,108 | ) | 3,565,680 |  |

5,255,788 |  | (1,690,108 | ) | 3,565,680 |  |

| Debt

| Debts falling due within 1 year | (694,837 | ) | 138,638 |  | (556,199 | ) |

| Debts falling due after 1 year | - |  | (2,755,199 | ) | (2,755,199 | ) |

(694,837 | ) | (2,616,561 | ) | (3,311,398 | ) |

| Total | 4,560,951 |  | (4,306,669 | ) | 254,282 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements

for the Year Ended 30 November 2025

1. | STATUTORY INFORMATION

| Advanced Electric Machines Group Ltd is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2. | ACCOUNTING POLICIES

| Basis of preparing the financial statements

| These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

| There were no material departures from that standard.

| The principal accounting policies adopted in the preparation of the financial statements are set out below.

| Reduced disclosures

| FRS 102 allows a qualifying entity certain disclosure exemptions. The company meets the definition of a qualifying entity in respect of its separate (non-group) financial statements and has taken advantage of the exemptions relating to disclosure of key management personnel compensation and the preparation of a cash flow statement. The equivalent information on a consolidated basis is included within these financial statements.

| Basis of consolidation

| The group consolidated financial statements include the financial statements of the company and all of its subsidiary undertakings. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

| Going concern

| The group is scaling and moving into series production. It has historically met its day to day working capital requirements through loan facilities and the support of equity investors.

| Post year end, funding of £6.45m has been received and the group is in discussions with new and existing investors for further funding. The directors believe it is likely that the funds to meet the group's financial obligations for the foreseeable future will be secured.

| The company has undertaken to continue to provide sufficient financial support to its subsidiaries following investment by shareholders and has no intention to request repayment of the creditor balance in the 12 months following date of approval of the financial statements.

| Whilst there is no certainty in relation to these matters the directors believe it is appropriate to prepare the accounts on the basis of a going concern.

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

2. | ACCOUNTING POLICIES - continued

| Significant judgements and estimates

| In the application of the group's accounting policies, management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

| Significant judgements in applying the group's accounting policies

| In preparing these financial statements the directors do not consider there were any significant areas of judgement that were required in applying the group's accounting policies.

| Key sources of estimation uncertainty

| The estimates and assumptions that have a significant or increased risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

| Stock provision (note 14)

| Stock is recognised at the lower of cost and net realisable value. Provisions are included where stock is deemed to be impaired. Management applies procedures to identify defective, slow moving, and obsolete stock.

| Warranty provision (note 21)

| This is calculated at a rate of 2% of the gross sales. As the company's products are new to the market and there is no historical statistics to determine the provision rate, management estimation was applied. There have been no material claims from prior year sales.

| Impairment of assets, goodwill and investments (notes 11, 12, 13)

| The group assesses annually whether assets are impaired. This requires estimating future cash flows based on budgets, forecasts and appropriate discount rates. These estimates involve judgement and changes in assumptions could affect the impairment outcome. The group does not consider the investment in subsidiary impaired as at balance sheet date.

| Convertible loan notes (note 17)

| The allocation of the proceeds between the debt and equity components requires an estimate of the market rate of interest for an equivalent non-convertible instrument. Management has assessed a market rate based on conditions at the issue date which determines the initial liability recognised and the related equity component.

| Other estimates included within these financial statements include depreciation and amortisation charges, capitalisation of intangible assets, asset impairments such as provisions against debtors and other provisions held and the valuation of share options issued to employees. None of these estimates are considered to carry significant estimation uncertainty, or to bear significant risk of causing a material misstatement to the carrying amounts of assets and liabilities within the next financial year.

| Turnover

| Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

| Turnover is a combination of commercial income to private customers and grant funding towards development of the company's products.

| Income recognition

| Commercial income is recognised when goods have been delivered or made available to the customer or by reference to the stage of completion of services being rendered. Grant funding is recognised as costs are incurred in line with the scope of the agreed project.

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

2. | ACCOUNTING POLICIES - continued

| Goodwill on consolidation

| Goodwill is the difference between consideration paid on acquisition of a business and the fair value of the identifiable assets and liabilities. This was the amount paid in connection with the acquisition of the subsidiaries in 2019, it is being amortised evenly over its estimated useful life of ten years.

| 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 amortised over a period of 1-3 years depending on the individual assets estimated useful life. Development costs are amortised over a period of 3 years.

| Tangible fixed assets

| Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful

| life.

| Long leasehold |  | - 20% - 33% on cost |  |

| Plant and machinery |  | - 33% - 50% on cost |  |

| Assets under construction |  | - no charge |  |

| Computer equipment |  | - 33% - 50% on cost |  |

| Compound financial instruments

| Compound financial instruments issued by the group comprise convertible loan notes that

| can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.

| The liability component of a compound financial instrument is initially recognised at the fair value of a similar liability that does not have an equity conversion option.

| The equity component is initially recognised as the difference between the fair value of

| the compound financial instrument as a whole and the fair value of the liability component.

| Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

| Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.

| Stocks

| Stocks are valued at the lower of cost and estimated selling price less costs to complete and sell.

| Financial instruments

| Basic financial instruments are recognised at amortised cost with changes recognised in profit or loss.

| Taxation

| Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it 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.

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

2. | ACCOUNTING POLICIES - continued

| 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.

| Hire purchase and leasing commitments

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

| Pension costs and other post-retirement benefits

| The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

| Foreign currencies

| Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet 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.

| Share options

| Certain employees of the group receive remuneration in the form of share-based payments from the parent company, whereby employees render services as consideration for equity instruments.

| The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using the Black Scholes model.

| That cost would be recognised as wages costs, together with a corresponding increase in equity, over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the parent company's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

| Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the parent company's best estimate of the number of equity instruments that will ultimately vest.

3. | TURNOVER

| The turnover and loss before taxation are attributable to the one principal activity of the group.

| An analysis of turnover by class of business is given below:

| 2025 |  | 2024

£ | £ |

| Commercial income | 689,862 |  | 1,080,807 |  |

| Innovate grant funding | 1,939,166 |  | 1,802,485 |  |

2,629,028 |  | 2,883,292 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

4. | EMPLOYEES AND DIRECTORS

| 2025 |  | 2024

£ | £ |

| Wages and salaries | 2,995,090 |  | 3,937,505 |  |

| Social security costs | 381,540 |  | 430,934 |  |

| Other pension costs | 146,702 |  | 283,895 |  |

3,523,332 |  | 4,652,334 |  |

| The average number of employees during the year was as follows:

| 2025 |  | 2024

| Engineering and manufacturing | 36 |  | 48 |  |

| Admin and central functions | 10 |  | 17 |  |

| Directors | 6 |  | 8 |  |

4 |  | - |  |

56 |  | 73 |  |

| Included within wages and salaries for the year is an amount of £nil (2024: £17,789) relating to reorganisation costs which are considered to be exceptional items (see note 6).

| 2025 |  | 2024

£ | £ |

| Directors' remuneration | 404,942 |  | 290,580 |  |

| Directors' pension contributions to money purchase schemes | 113,896 |  | 38,293 |  |

| The number of directors to whom retirement benefits were accruing was as follows:

| Money purchase schemes | 5 |  | 4 |  |

| Information regarding the highest paid director is as follows:

| 2025 |  | 2024

£ | £ |

| Emoluments etc | 142,545 |  | 147,777 |  |

| Pension contributions to money purchase schemes | 15,000 |  | 10,625 |  |

5. | OPERATING LOSS

| The operating loss is stated after charging/(crediting):

| 2025 |  | 2024

£ | £ |

| Other operating leases | 233,393 |  | 213,871 |  |

| Depreciation - owned assets | 351,775 |  | 187,039 |  |

| Goodwill amortisation | 82,107 |  | 82,107 |  |

| Development costs amortisation | 55,368 |  | - |  |

| Computer software amortisation | 24,484 |  | 1,843 |  |

| Auditors' remuneration | 28,500 |  | 27,500 |  |

| Foreign exchange differences | (7,371 | ) | (19,604 | ) |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

6. | EXCEPTIONAL ITEMS

| During the financial year, the Group incurred no exceptional charges (2024: £2,394,809). In the prior year, a provision of £1,935,800 was recognised against components acquired for a specific customer order. The customer subsequently entered bankruptcy before completion of the order, rendering the components unusable and unsaleable in their current form.

| In addition, in the prior year, the Group recognised a reorganisation provision of £459,008. This charge arose following the loss of the above customer and the resulting requirement to review and realign the Group's strategic priorities.

| The prior year provisions were considered unusual and non-recurring in nature and were therefore classified as exceptional items. This classification was applied to provide transparency and to enable users of the financial statements to better understand their impact on the Group's financial performance.

7. | INTEREST RECEIVABLE AND SIMILAR INCOME |

| 2025 |  | 2024

£ | £ |

| Deposit account interest | 59,592 |  | 51,100 |  |

8. | INTEREST PAYABLE AND SIMILAR EXPENSES |

| 2025 |  | 2024

£ | £ |

| Bank interest | - |  | 4 |  |

| Enterprise Loan interest | 22,281 |  | 33,698 |  |

22,281 |  | 33,702 |  |

9. | TAXATION

| Analysis of the tax credit

| The tax credit on the loss for the year was as follows:

| 2025 |  | 2024

£ | £ |

| Current tax:

| UK corporation tax | (883,208 | ) | - |  |

| Tax on loss | (883,208 | ) | - |  |

| During the year, the Group transitioned to the R&D intensive scheme, under which the R&D credit is recognised within corporation tax rather than operating income. This results in a corporation tax balance arising from the revised presentation of the credit in the financial statements.

10. | INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME

| As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the parent company is not presented as part of these financial statements.

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

11. | INTANGIBLE FIXED ASSETS

| Group

| Development |  | Computer |

| Goodwill |  | costs |  | software |  | Totals

£ | £ | £ | £ |

| COST

| At 1 December 2024 | 821,067 |  | - |  | 112,315 |  | 933,382 |  |

| Additions | - |  | 496,948 |  | 18,968 |  | 515,916 |  |

| At 30 November 2025 | 821,067 |  | 496,948 |  | 131,283 |  | 1,449,298 |  |

| AMORTISATION

| At 1 December 2024 | 437,903 |  | - |  | 91,250 |  | 529,153 |  |

| Amortisation for year | 82,107 |  | 55,368 |  | 24,484 |  | 161,959 |  |

| At 30 November 2025 | 520,010 |  | 55,368 |  | 115,734 |  | 691,112 |  |

| NET BOOK VALUE

| At 30 November 2025 | 301,057 |  | 441,580 |  | 15,549 |  | 758,186 |  |

| At 30 November 2024 | 383,164 |  | - |  | 21,065 |  | 404,229 |  |

12. | TANGIBLE FIXED ASSETS

| Group

| Assets |

| Long |  | under |  | Plant and |  | Computer |

| leasehold |  | construction |  | machinery |  | equipment |  | Totals

£ | £ | £ | £ | £ |

| COST

| At 1 December 2024 | 310,729 |  | 74,949 |  | 715,376 |  | 210,221 |  | 1,311,275 |  |

| Additions | 5,580 |  | 163,662 |  | - |  | - |  | 169,242 |  |

| Disposals | - |  | - |  | (8,500 | ) | - |  | (8,500 | ) |

| Reclassification/transfer | - |  | (169,821 | ) | 169,821 |  | - |  | - |  |

| At 30 November 2025 | 316,309 |  | 68,790 |  | 876,697 |  | 210,221 |  | 1,472,017 |  |

| DEPRECIATION

| At 1 December 2024 | 136,928 |  | - |  | 440,413 |  | 174,188 |  | 751,529 |  |

| Charge for year | 97,823 |  | - |  | 227,492 |  | 26,460 |  | 351,775 |  |

| Eliminated on disposal | - |  | - |  | (8,500 | ) | - |  | (8,500 | ) |

| At 30 November 2025 | 234,751 |  | - |  | 659,405 |  | 200,648 |  | 1,094,804 |  |

| NET BOOK VALUE

| At 30 November 2025 | 81,558 |  | 68,790 |  | 217,292 |  | 9,573 |  | 377,213 |  |

| At 30 November 2024 | 173,801 |  | 74,949 |  | 274,963 |  | 36,033 |  | 559,746 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

13. | FIXED ASSET INVESTMENTS

| Company |

2025 | 2024 |

£ | £ |

| Shares in group undertakings | 9,535,169 |  | 9,517,598 |  |

| Other loans | 20,738,714 |  | 18,408,541 |  |

30,273,883 |  | 27,926,139 |  |

| Additional information is as follows:

| Company

| Shares in

| group

| undertakings

£ |

| COST

| At 1 December 2024 | 9,517,598 |  |

| Additions | 17,571 |  |

| At 30 November 2025 | 9,535,169 |  |

| NET BOOK VALUE

| At 30 November 2025 | 9,535,169 |  |

| At 30 November 2024 | 9,517,598 |  |

| The group or the company's investments at the Balance Sheet date in the share capital of companies include the following:

| Subsidiaries

| Advanced Electric Machines Limited

| Registered office: Teal House, 10 Teal Farm Way, Washington, NE38 8BG

| Nature of business: Development of Electric Drivetrain Products

| %

| Class of shares: | holding |

| Ordinary | 100.00 |

| Advanced Electric Machines Research Limited

| Registered office: Teal House, 10 Teal Farm Way, Washington, NE38 8BG

| Nature of business: Manufacture of Electric Drivetrain Products

| %

| Class of shares: | holding |

| Ordinary | 100.00 |

| Company

| Other

| loans

£ |

| At 1 December 2024 | 18,408,541 |  |

| New in year | 3,503,300 |  |

| Repayment in year | (1,173,127 | ) |

| At 30 November 2025 | 20,738,714 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

14. | STOCKS

| Group |

2025 | 2024 |

£ | £ |

| Stocks | 386,998 |  | 410,694 |  |

| There is no significant difference between the replacement cost of stock and their carrying amounts. Stocks are stated after provisions for impairment of £2,480,720 (2024: £2,065,621).

15. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |

| Group |  | Company |

2025 | 2024 | 2025 | 2024 |

£ | £ | £ | £ |

| Trade debtors | 217,821 |  | 45,279 |  | - |  | - |  |

| Other debtors | 1,048,653 |  | 655,526 |  | 19,188 |  | 4,409 |  |

| Prepayments and accrued income | 570,614 |  | 843,637 |  | 19,130 |  | 3,674 |  |

1,837,088 |  | 1,544,442 |  | 38,318 |  | 8,083 |  |

16. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |

| Group |  | Company |

2025 | 2024 | 2025 | 2024 |

£ | £ | £ | £ |

| Other loans (see note 18) | 556,199 |  | 694,837 |  | - |  | - |  |

| Trade creditors | 264,350 |  | 196,243 |  | 27,000 |  | 3,000 |  |

| Taxation and social security | 110,993 |  | 123,715 |  | 11,346 |  | 11,346 |  |

| Other creditors | 26,422 |  | 42,036 |  | - |  | - |  |

| Accruals and deferred income | 771,955 |  | 974,204 |  | 113,167 |  | 4,848 |  |

1,729,919 |  | 2,031,035 |  | 151,513 |  | 19,194 |  |

17. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |

| Group |  | Company |

2025 | 2024 | 2025 | 2024 |

£ | £ | £ | £ |

| Other loans (see note 18) | 2,755,199 |  | - |  | 2,755,199 |  | - |  |

| Convertible loan notes

| The 18 month convertible loan notes were issued on 3 November 2025. Interest accrues on the principal amount of £3,000,000 at 12% per annum, payable in arrears. The debt is convertible into ordinary shares in Advanced Electric Machines Group Limited on maturity of the debt or in the event of a future equity event on a non-repayment basis.

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

18. | LOANS

| An analysis of the maturity of loans is given below:

| Group |  | Company |

2025 | 2024 | 2025 | 2024 |

£ | £ | £ | £ |

| Amounts falling due within one year or on | demand: |

| Other loans | 556,199 |  | 694,837 |  | - |  | - |  |

| Amounts falling due between one and two | years: |

| Other loans - 1-2 years | 2,755,199 |  | - |  | 2,755,199 |  | - |  |

19. | LEASING AGREEMENTS

| Minimum lease payments fall due as follows:

| Group

| Non-cancellable |

| operating leases |

2025 | 2024 |

£ | £ |

| Within one year | 198,037 |  | 209,204 |  |

| Between one and five years | 318,300 |  | 516,337 |  |

516,337 |  | 725,541 |  |

20. | SECURED DEBTS

| The following secured debts are included within creditors:

| Group |

2025 | 2024 |

£ | £ |

| Other loans | 556,199 |  | 694,837 |  |

| The amount held in other loans, is payable in quarterly installments commencing in February 2024 and carries fixed interest at 3.7%.

| The loans are secured by a fixed and floating charge over the assets of the group companies.

21. | PROVISIONS FOR LIABILITIES

| Group |

2025 | 2024 |

£ | £ |

| Other provisions

| Warranty provisions | 122,284 |  | 81,410 |  |

| Aggregate amounts | 122,284 |  | 81,410 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

21. | PROVISIONS FOR LIABILITIES - continued

| Group

| Warrantypr |

£ |

| Balance at 1 December 2024 | 81,410 |  |

| Provided during year | 114,681 |  |

| Credit to Statement of Comprehensive Income during year | (73,807 | ) |

| Balance at 30 November 2025 | 122,284 |  |

| A provision is recognised for expected warranty claims on products sold during the year, based on past experience of the level of repairs. It is expected that these costs will be incurred in the next financial year. Assumptions used to calculate the provision for warranties were based on current sales levels and current information available about claims based on the warranty period for all products sold. The provision is made at a rate of 2% of the sales.

22. | CALLED UP SHARE CAPITAL

| Allotted, issued and fully paid:

| Number: | Class: | Nominal | 2025 | 2024 |

| value: | £ | £ |

| 1,063,240 | Ordinary | £1 | 1,063,257 |  | 1,063,257 |  |

| 310,128 | Ordinary A | £1 | 310,128 |  | 310,128 |  |

| 1,703,231 | A preferred shares | £1 | 1,703,231 |  | 1,703,231 |  |

3,076,616 |  | 3,076,616 |  |

23. | RESERVES

| Group

| Retained |  | Share |  | Other |

| earnings |  | premium |  | reserves |  | Totals

£ | £ | £ | £ |

| At 1 December 2024 | (22,845,975 | ) | 25,732,423 |  | 99,390 |  | 2,985,838 |  |

| Deficit for the year | (3,865,527 | ) | (3,865,527 | ) |

| Equity component of

| convertible loan | - |  | - |  | 103,265 |  | 103,265 |  |

| Grant share option | - |  | - |  | 17,571 |  | 17,571 |  |

| At 30 November 2025 | (26,711,502 | ) | 25,732,423 |  | 220,226 |  | (758,853 | ) |

| Company

| Retained |  | Share |  | Other |

| earnings |  | premium |  | reserves |  | Totals

£ | £ | £ | £ |

| At 1 December 2024 | (185,578 | ) | 25,732,423 |  | 99,390 |  | 25,646,235 |  |

| Deficit for the year | (236,913 | ) | (236,913 | ) |

| Equity component of

| convertible loan | - |  | - |  | 103,265 |  | 103,265 |  |

| Grant share option | - |  | - |  | 17,571 |  | 17,571 |  |

| At 30 November 2025 | (422,491 | ) | 25,732,423 |  | 220,226 |  | 25,530,158 |  |

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

23. | RESERVES - continued

24. | PENSION COMMITMENTS

| The group operates a defined contributions pension scheme, The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £146,702 (2024: £283,895). Contributions totalling £24,428 (2024: £40,278) were payable to the fund at the balance sheet date and are included in creditors.

25. | CONTINGENT LIABILITIES

| The company has established a network of supply chain relationships. Some of the contracts pertaining to these relationships contain provisions for certain costs to be repayable to the supplier in the event that conditions within the agreement are not met. As of the date of this report, the Company estimates these potential liabilities to be £0.7m.

26. | CAPITAL COMMITMENTS

2025 | 2024 |

£ | £ |

| Contracted but not provided for in the

| financial statements | 17,744 |  | - |  |

27. | RELATED PARTY DISCLOSURES

| The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

| Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.

| During the year, the company incurred £19,826 (2024: £21,041) of consultancy fees and expenses from Sibley Consultants Ltd, a company with common directors. £1,500 (2024: £1,500) was outstanding at the year end and is included within accruals and deferred income.

| During the year the company received charges for monitoring fees and expenses totalling £375,405 (2024: £75,934) from its investors. At the balance sheet date, amounts totalling £111,667 (2024: £6,333) were outstanding in respect of these transactions and are included within accruals and deferred income.

| See note 4 for disclosure of the directors’ remuneration and key management compensation.

28. | ULTIMATE CONTROLLING PARTY

| The directors do not consider there to be an ultimate controlling party.

| Advanced Electric Machines Group Ltd (Registered number: 12058179) |

Notes to the Consolidated Financial Statements - continued

for the Year Ended 30 November 2025

29. | SHARE OPTIONS

| The group operates three EMI schemes under which share options have been granted to certain key individuals. Two of the schemes vest after 3 years and is exercisable at the next eligible event, and the other scheme vests equally at the end of the first 3 years and cannot be exercised until 12 months after the issued date. In addition, employees must have remained in employment. Share options are to be settled through equity. There is no cash-based alternative.

| The fair value recognised in the accounts for the year ended 30 November 2025 was a charge of £17,571 (2024: credit of £37,545).

| Movements during the year

| The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year:

|  | 2025 |  | 2025 |  | 2025 |  | 2025 |  |

|  | Number |  | WAEP |  | Number |  | WAEP |  |

| £ |  |  | £ |  |

| Balance brought forward |  | 51,138 |  | 8.92 |  | 85,221 |  | 8.92 |  |

| Granted during the period |  | 298,920 |  | - |  | - |  | - |  |

| forfeited during the period |  | (38,756 | ) | 8.92 |  | (34,083 | ) | 8.92 |  |

| Exercise during the period |  | - |  | - |  | - |  | - |  |

| Expired during the period |  | - |  | - |  | - |  | - |  |

| Balance carried forward |  | 311,302 |  | 8.92 |  | 51,138 |  | 8.92 |  |

| Exercisable |  | - |  | - |  | - |  | - |  |