TIDMMNO
RNS Number : 9973C
Maestrano Group PLC
26 October 2020
26 October 2020
Maestrano Group PLC ("Maestrano" or the "Company")
Results for the year ended 30 June 2020
Publication of Annual Report and Accounts
The Company announces that its Annual Report and Accounts are
being posted to shareholders today and will be made available on
the Group's website: www.maestrano.com . Key extracts from the
report and accounts are presented below.
The Company also announces that the Annual General Meeting of
the Company will be held at 9.00am on 19 November, 2020 at the
offices of Memery Crystal LLP, 165 Fleet Street, London, EC4A
2DY.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries:
Maestrano Group plc
Ian Buddery, Chairman c/o Arden Partners
Grant Thornton (Nominated Adviser)
Jamie Barklem / Niall McDonald +44 (0)20 7383 5100
Arden Partners (Broker)
Ruari McGirr / Ciaran Walsh +44 (0)20 7614 5900
About Maestrano
Maestrano offers a patented cloud-based platform for master data
management and business analytics , together with specialist
hardware and software for capturing, analysing and reporting on
large datasets within the transport sector, employing sophisticated
artificial intelligence algorithms.
Further information on the Company is available at:
www.maestrano.com
STRATEGIC REPORT
The directors present their strategic report on the consolidated
entity (referred to hereafter as the 'Group') consisting of
Maestrano Group plc (referred to hereafter as 'Maestrano', 'the
Company' or ' the parent entity') and the entities it controlled at
the end of, or during, the year ended 30 June 2020.
The strategic report includes the following sections:
1. Company Overview
2. Chairman's statement
3. Review of operations by the Chief Executive Officer
4. Principal risks and uncertainties
5. People
Cautionary statement regarding forward-looking statements
This document contains certain forward-looking statements. These
forward-looking statements include references to matters that are
not historical facts or are statements regarding the Company's
intentions, beliefs or current expectations concerning, among other
things, the Group's results of operations, financial condition,
liquidity, prospects, growth, strategies, and the industries in
which the Group operates. Forward-looking statements are based on
the information available to the directors at the time of
preparation of this document and will not be updated subsequent to
the issue of this document. The directors can give no assurance
that these expectations will prove to be correct. Due to inherent
uncertainties, including both economic and business risk factors
underlying such forward-looking information, actual results may
differ materially from those expressed or implied by these
forward-looking statements.
Principal activities
Maestrano is a United Kingdom ('UK') incorporated software
company with operations in Australia (main country of operation),
USA and the UK. Maestrano offers a patented cloud-based platform
for master data management and business analytics, together with
specialist hardware and software for capturing, analysing and
reporting on large datasets within the transport sector, employing
sophisticated artificial intelligence algorithms.
1. COMPANY OVERVIEW
Maestrano's cloud-based platforms, used in the transportation,
infrastructure and banking sectors, connect data and turn it into
actionable insights to help manage business operations in new
ways.
The Maestrano Group operates subsidiaries in the UK, Australia
and the USA, under the brands Corridor Technology, Nextcore and
Airsight. These deliver respectively products and services for
transport corridor asset management, drone based LiDAR (Light
Detection And Ranging) systems and aerial surveying.
The Group is a leader in infrastructure monitoring through
automation and machine learning. The flagship Corridor solution is
currently focused on the rail industry, seeking to establish a
strong business before expanding into road and energy transport
infrastructure. The Group has a key 'anchor' customer for Corridor
in Australian Rail Track Corporation (ARTC), a growing channel and
customer base for Nextcore and also a small but solid customer base
for Airsight.
Whilst our current priority and focus is on realising the
significant opportunities for Corridor and Nextcore, we maintain a
watching brief on the banking platforms market and for other
opportunities to exploit the products developed earlier by
Maestrano.
The Market
The markets for Corridor and Nextcore, which are large in size
and global in extent, today include the UK, Australia, Japan and
the USA. The aerial surveying market for Airsight is small and
localised in Australia.
Corridor
Managing infrastructure assets is a major component of the
overall railway management system market, which is projected to
grow strongly. Global Market Insights Inc estimates that the market
was over US$33 billion in 2017 and set to grow at a CAGR of over
10% between 2018 and 2024 to reach US$64 billion. Within this the
growth of support and maintenance spend will be higher across the
same period, at 16% CAGR. ( GMI Report, December 2018 ). Technavio
is also reporting strong growth in the railway management system
market, at 9% CAGR between 2019 and 2023. ( Technavio Report,
February 2019 ). More broadly the global machine learning market
was valued at $1.58 billion in 2017 and is expected to reach $20.83
billion in 2024, growing at a CAGR of 44.06% between 2017 and 2024.
( Roundup Of Machine Learning Forecasts And Market Estimates, 2020
; Forbes, January 2020).
The Corridor offering is a new entrant into this growth
environment and aims to take market share away from older, less
effective approaches to asset infrastructure monitoring, as well as
take advantage of new budgets being allocated, as
innovation-oriented spend grows within the ongoing market
expansion.
Nextcore
There are multiple ways to measure the large available market
for Nextcore. The drone market itself is growing strongly in the
current period, with a CAGR of 20.5% it is set to reach US$43.1
billion by 2024 ( The Drone Market Report , March 2019). The LiDAR
drone market is projected to grow from US$133 million in 2020 to
US$392 million by 2025, at a CAGR of 24.2%. ( Markets and Markets ,
January 2020). Key factors fuelling the growth include easing of
regulations related to the use of commercial drones in different
applications, and growing demand for LiDAR equipped drones for use
in asset infrastructure monitoring, mapping, precision agriculture
and related applications.
The market for Nextcore within these strong overall trends is
based on certain discrete use cases and is harder to quantify
specifically. The specific use cases do have wide global
applicability and given the price points per device achievable the
effective available market is assumed to be a significant multiple
of US $millions already and growing.
2. CHAIRMAN'S STATEMENT
The financial year 201 9 - 20 saw dramatic change for the Group,
as we transitioned to an infrastructure management focus following
the successful acquisition of Airsight Holdings Pty Ltd on 1(st)
November 2019 .
The overall revenue result for the year was down slightly by 4%
compared to 201 8 -1 9, however more significant is the growth in
the Airsight business, which grew strongly by 74% compared to their
fiscal year 2019 result.
We believe that the opportunity for the Airsight business is
such that similar growth is possible in future years.
Expenses were driven by the delivery of customer contracts, plus
continuing investment in the Corridor Technology machine learning
platform and the Nextcore LiDAR system and were in line with our
business plan. T he Company is carefully managing expenditures to
achieve a balance between growth and maintaining cash reserves.
I would like to express the board's appreciation for the way
that the Airsight team have melded into Maestrano and their
exceptional dedication and hard work throughout 2019-20.
Our purpose is to build a strong and resilient business, growing
shareholder value through the consistent achievement of business
plan targets and the expansion of our recurring revenue customer
base. We have confidence in the long-term outlook and we thank our
shareholders for their continuing support.
Ian Buddery
Chairman
23 October 2020
3. REVIEW OF OPERATIONS BY THE CHIEF EXECUTIVE OFFICER
The Maestrano Group Plc ("the Group") cloud-based platforms,
used in the transportation, infrastructure and banking sectors,
connect data and turn it into actionable insights to help manage
business operations in new ways.
Following the acquisition of Airsight on 1 November 2019, the
Company focused on successfully merging the people and products and
continuing the strong growth of new customers . New contracts
secured included ARTC, Meitetsu in Nagoya, Japan and our first
engagement with Network Rail in the UK. The Nextcore LiDAR package
continued its strong performance, with highlights including the
signing of new distributors in the USA, Russia, India (who will
also address Saudi Arabia and the UAE markets), Australia and
Malaysia.
Overview of results
Revenue for the year was close to expectations, following the
Company taking a cautious view of outlook in prior trading
statements.
GBP 000's Twelve months Twelve months % Change % Change
to 30 June to 30 June constant
2020 2019 currency
Total revenue 872 905 (4%) (4%)
-------------- -------------- --------- ----------
Gross margin 537 529 2% 16%
-------------- -------------- --------- ----------
Total expenses 1,951 3,663 (53%) (49%)
-------------- -------------- --------- ----------
Grant income 442 777 (43%) (41%)
-------------- -------------- --------- ----------
Other income 2 29 (93%) (92%)
-------------- -------------- --------- ----------
Loss after income
tax (970) (2,328) 58% 59%
-------------- -------------- --------- ----------
Maestrano concluded its contract with a major USA bank customer
in September 2019 and subsequently downsized the people and
infrastructure involved to reduce our cost base, a trend which has
continued owing to the lower overheads of the acquired Airsight
businesses. Airsight had a strong 4 months pre-merger (1/7/19 to
31/10/19) and when this is substituted for Maestrano revenue in the
same period, we see the true trend in the business, with 74% year
on year growth in constant currency and only 28% increase in
expenses.
Strategy
The financial year FY21 is a key stage in terms of progression
as the Company plans to develop Airsight businesses outside
Australia, with a particular focus on the UK, North America and
Japan, in addition to continuing to grow its business in Australia,
its country of origin. Corridor and Nextcore will each have a
distinct go to market strategy and there will be an overarching
rebranding effort to ensure that the group of companies is
portrayed coherently.
The target market for Corridor in FY21 is major rail networks in
the form of infrastructure owners and related operators. The
approach is to continue to grow the Australian business, through
developing and increasing revenue from the key 'anchor' customer
ARTC , as well as acquiring further revenue generating customers
and in addition establishing " beachhead " customers in new
markets, specifically in the UK, North America and Japan.
The establishment of key partnerships will aid the sales
strategy by providing credibility, incremental solution value to
joint customers and introductions to key people in targeted new
customers. The main focus will be on building an effective
partnership relationship with ESRI (announced 6 July 2020), as well
as seeking to add further partnerships.
The target market for Nextcore is surveyors focused on the built
environment (bridges, towers and other infrastructure) and terrain
(landscape, mines and other land operations), and to reach this
market the Company is recruiting, training and managing a global
distribution network, to enable access to local markets on a
cost-efficient basis. The focus will be on expanding unit volume
and associated revenue with currently active distributors and in
addition recruiting and enabling effective distributors around the
world.
There will be product development investments to address the
targeted markets and emergent customer needs, for both Corridor and
Nextcore. The focus for Corridor will be on expanding processing
and insights offerings and building supporting capability, across
the dimensions of data capture, data processing and insights
generated , using our innovative machine learning approach.
Nextcore product development efforts will focus on expanding the
product range by bringing new model variations to market which
address different market needs and different price points.
Ongoing operations
As of 30 June 20 20 , the Company had cash and receivables
totalling GBP1,746,110. The Company operates from offices in
Newcastle, Australia while staff in the UK and USA work from home
offices, a model which has become widely accepted in the technology
industry following the Covid-19 pandemic and could be adopted in
Australia if needed . T he Company will recruit new employees as
part of expanding the business and management will focus on
motivating a strong and committed team whilst ensuring efficient
and careful use of available resources.
We will ensure effective global communications across time zones
by way of good use of communications technology, particularly video
conferencing. Ensuring alignment across functional teams will be
critical, and we will work hard to preserve and enhance the current
culture of energy, hard work, commitment, enjoyment and fulfillment
. We have deployed robust systems and processes for financial
management, customer support and product development management ,
in preparation for scaling the company.
Outlook
The Company is confident of continuing our current growth trend
in FY21, acquiring new customers for Corridor and leveraging our
developing distribution network to drive increased Nextcore unit
sales. We look forward to growing the value of our company for our
shareholders.
Andrew Pearson
Chief Executive Officer
23 October 2020
4. PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's
growth strategies are subject to a number of risks which could
adversely affect the Group's future development. The following is
not an exhaustive list or explanation of all risks and
uncertainties associated with the Group, but those considered by
management to be the principal risks:
Risks relating to the Group and the industry in which it
operates
Dependence on major clients
The Group's future growth relies on new sales to rail and road
network owners in multiple countries. These owners typically have
complex procurement arrangements which include product trials and
competitive tenders. This risk is mitigated by the Group's plan to
enter into reseller agreements with Engineering Consulting firms,
who will in effect become the clients.
Business strategy
Although the Group has a clearly defined strategy, there can be
no guarantee that its objectives will be achieved or that the Group
will achieve the level of success that the Company's directors
expect. Therefore, the Group may decide to change aspects of its
strategy as needed. The Group's ability to implement its business
strategy successfully may be adversely impacted by factors that the
Group cannot currently foresee, such as unanticipated market
forces, costs and expenses or technological factors. Should it be
unsuccessful in implementing its strategy or should it take longer
than expected to implement, the future financial results of the
Group could be negatively impacted. This risk is mitigated by the
continual review of the business performance to its plan and that
changes are made to ensure the Group has sufficient liquidity to
pursue its current plan.
Technological changes
Generally, product markets are exposed to rapid technological
change, changes in use, changes to customer requirements and
preferences, and services employing new technologies and the
emergence of new industry standards and practices. The Group
operates in a market with such changes which have the potential to
render the Group's existing technology and products competitively
impaired.
To successfully remain competitive, the Group will ensure
continued product improvement, and the development of new markets
and capabilities to maintain a pace congruent with changing
technology. This added strain may stretch the Group's capital
resources which may adversely impact the revenues and profitability
of the Group. The Group's success is dependent on the ability to
effectively respond and adapt to technological changes and changes
to customer preferences. There can be no assurance that the Group
will be able to effectively anticipate future technological changes
or changes in customer preferences. Furthermore, there is also no
assurance that the Group will have sufficient financial resources
to effectively respond in a timely manner if such a change is
anticipated.
Competition
There is no guarantee against new entrants or current
competitors providing superior technologies, products or services
to the market. There is no certainty that new entrants or current
competitors will not provide equivalent products for a lower price.
The Group may be forced to make changes to one or more of its
products or to its pricing strategy to effectively respond to
changes in customer preferences in order to remain competitive.
This may impact negatively on the Group's financial performance.
The Group will continue to review its competitive position and
adjust its business plan to maintain relevance to its customers'
requirements.
Inability to contract with customers on the most favourable
terms to the Group
The Group contracts with a wide variety of companies and
partners, many of which are in strong negotiating positions and
have greater financial resources than the Group. The Group may in
the future have limited scope for negotiation of the price or
contract terms with some of its major clients.
The Group's software may not perform as expected and the Group
could be at risk of defects which adversely affect its
customers
There is no guarantee that the Group's platforms will perform as
intended. Costs spent on developing the Platform may therefore not
be recouped and this may result in reduced profitability for the
Group. As the Group's platforms are complex, they may contain
defects or vulnerabilities which may not be detected until after
its deployment to major customers. To mitigate this risk the Group
has implemented applicable internal code review and testing
processes. The software is then subject to customer acceptance
testing and an ongoing high level of technical support.
Data security and data privacy
The Group is subject to data and privacy regulations,
particularly General Data Protection Regulation ('GDPR'). Failure
to comply with legal or regulatory requirements relating to data
security or data privacy in the course of the Group business
activities, results in reputational damage, fines or other adverse
consequences, including criminal penalties and consequential
litigation, adverse impact on the Group's financial results or
unfavourable effects on the Group's ability to do business. To
mitigate this risk the Group has implemented policies and processes
to ensure data is held securely and privacy is maintained.
Dependence on key executives and personnel
The Group is dependent on a small number of key executives. In
addition, the future performance of the Group will, to some extent,
be dependent on its ability to retain the services and personal
connections or contacts of key executives and to attract, recruit,
motivate and retain other suitably skilled, qualified and industry
experienced personnel to form a high calibre management team. Such
key executives are expected to play an important role in the
development and growth of the Group in particular, by maintaining
good business relationships with regulatory and governmental
departments and essential partners, contractors and suppliers. The
failure to appoint or retain such people could adversely affect the
Group.
Ability to recruit and retain skilled personnel
The Group believes that it has the appropriate incentive
structures to attract and retain the calibre of employees necessary
to ensure the efficient management and development of the Group.
However, any difficulties encountered in hiring appropriate
employees and the failure to do so, or a change in market
conditions that renders current incentive structures ineffective,
may have a detrimental effect upon the trading performance of the
Group. The ability to attract new employees with the appropriate
expertise and skills cannot be guaranteed.
Financial controls and internal reporting procedures
The Group's future growth and prospects will depend on its
ability to manage growth and to continue to maintain, expand and
improve operational, financial and management information systems
on a timely basis, whilst at the same time maintaining effective
cost controls. Any damage to, failure of or inability to maintain,
expand and upgrade effective operational, financial and management
information systems and internal controls in line with the Group's
growth could have a material adverse effect on the Group's
business, financial condition and results of operations. The Group
mitigates this through the implementation of internal controls as
well as the review of monthly financial performance by the
Board.
Economic uncertainty
Any economic downturn either globally or locally in any area in
which the Group operates may have an adverse effect on demand for
the Group's products. A more prolonged downturn may lead to an
overall decline in sales. Economic uncertainty might have an
adverse impact on the Group's operations and business results. To
mitigate this risk the Group will monitor both the Group's
performance and general market conditions on a monthly basis. The
Group will also maintain adequate liquidity to sustain short term
fluctuations in market conditions.
Brexit
Brexit is the withdrawal of the UK from the European Union
('EU'), following a referendum held in 2016. Failure to prepare for
the UK's departure from the EU causes disruption to and creates
uncertainty around the Group's business including: the ability to
recruit; as well as impacting the Group's relationships with
existing and future customers, suppliers and colleagues. These
disruptions and uncertainties could have an adverse effect on the
Group's business, financial results and operations. Given the vast
majority of the Group's operations were outside UK and indeed the
EU and similarly those of Airsight are as well, the directors do
not believe Brexit will have a significant impact on the Group.
Covid -19
During the financial year, Covid-19 has had minimal impact on
the operations and revenue growth of the business. Corridor
Holdings Pty Ltd has received benefits from the Australian
Commonwealth Government, with respect to Job Keeper and the
Economic Boost, and New South Wales Government in relation to
payroll tax. Staff have been able to effectively work from home
during the Phase 1 of the pandemic with minimal impact on
productivity and product delivery. Procedures have been put in
place to ensure the safety of staff upon return to the office.
Despite travel restrictions to local and overseas conferences,
teleconferencing has been an effective tool in continuing to market
the product range. No supply chain problems have been encountered,
however alternative suppliers, where possible, are being
evaluated.
5. PEOPLE
Equal opportunity
The Group is committed to an active equal opportunities policy.
It is the Group's policy to promote an environment free from
discrimination, harassment and victimisation, where everyone
receives equal treatment regardless of gender, colour, ethnic or
national origin, disability, age, marital status, sexual
orientation or religion. Employment practices are applied which are
fair, equitable and consistent with the skills and abilities of the
employees and the needs of the Group.
Disabled employees
Applications for employment by disabled persons are always fully
considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled,
every effort is made to ensure that their employment with the Group
continues and that appropriate re-training is arranged. It is the
policy of the Group that the training, career development and
promotion of disabled persons should, as far as possible, be
identical with that of other employees.
This report is made in accordance with a resolution of
directors.
On behalf of the directors
Ian Buddery
Chairman
23 October 2020
CORPORATE GOVERNANCE
The directors acknowledge the importance of high standards of
corporate governance and intend, given the Group's size and the
constitution of the Board, to comply with the principles set out in
the QCA Corporate Governance Code published by the Quoted Companies
Alliance in April 2019 (the 'QCA Code') and, where it does not
comply with any of its recommendations, to explain the reasons
therefor.
In the Board's opinion, the Group currently complies with the
ten principles of the QCA Code which, together, are designed to
deliver growth, maintain a dynamic management framework and build
trust. As the Group expands, the Board will review its corporate
governance framework and will consider adoption of additional
principles and practices including from the UK Corporate Governance
Code 2018 published by the Financial Reporting Council (the 'UK
Corporate Governance Code').
Read more in our Corporate Governance Statement of Compliance
with the QCA Corporate Governance Code at the following website
link:
https://maestrano.com/wp-content/uploads/2020/09/Maestrano-Statement-of-QCA-compliance-2020.pdf
On behalf of the directors
Ian Buddery
Chairman
23 October 2020
DIRECTORS' REPORT
The directors present their report, together with the financial
statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Maestrano Group plc (referred to
hereafter as the 'Company' or 'parent entity') and the entities it
controlled at the end of, or during, the year ended 30 June
2020.
Directors
The following persons were directors of Maestrano Group plc
since incorporation on 6 December 2017 and up to the date of this
report, unless otherwise stated:
Ian Buddery Non-Executive Chairman
Andrew Pearson Executive Director and Chief Executive
Officer
John Davis Independent Non-Executive Director
Jonathan Macleod Independent Non-Executive Director
Nicholas McInnes Independent Non-Executive Director
(appointed 13 March 2020)
Nicholas Smith Executive Director and Vice President Sales
(appointed 6 November 2019)
Craig Holden Executive Director and Chief Financial Officer
(resigned 23 August 2019)
Stephane Ibos Non-Executive Director
(resigned 30 December 2019)
Robert Lojszczyk Executive Director and Chief Financial
Officer
(appointed 13 March 2020)
Ian Buddery, aged 63 - Non-Executive Chairman
Ian has extensive public company experience and a long
background in the telecommunications and financial services
industries in both international and local markets. Ian has founded
multiple companies; obtained venture capital and angel funding,
performed two IPOs, six acquisitions and two significant trade
sales. Ian was the founder, CEO and Executive Chair of eServGlobal,
founded in 1991 and listed on the Australian Securities Exchange
('ASX') in 2000 and the AIM in 2004. (LSE: ESG).
Ian was appointed a Director of Maestrano Pty Ltd in October
2013.
Andrew Pearson, aged 58 - Executive Director and Chief Executive
Officer
Andrew is a seasoned CEO who successfully scaled a global cloud
software company in the US, EMEA and APAC markets, achieving a
ten-fold increase in recurring subscriber US$ revenue. Prior to
this he achieved similar results at Intralinks, a SaaS vendor of
information exchange solutions and prior to Maestrano was CEO of
AIM listed Lightwave (LSE AIM: LWRF).
Andrew was appointed as Managing Director of Maestrano Group plc
on 3 December 2018.
John Davis, aged 50 - Independent Non-Executive Director
John has been working with banks and SMBs for more than 20
years. Based in London, John was the Marketing and Product Director
for Barclays Business from 2005-2010 before setting out on an
entrepreneurial career as the co-owner and Managing Director of
Business Centric Services Group Limited, an award winning, high
growth business, helping banks and telecommunication companies to
enhance their digital engagement with and propositions for small
and medium sized businesses. He also acted as Chair and co-owner of
two other London based FinTech start-ups. John completed the sales
of all three of these companies during 2016 and 2018.
Jonathan Macleod, aged 63 - Independent Non-Executive
Director
Jonathan is a practising Chartered Accountant and Financial
Adviser with over 30 years of experience in the Financial Services
and Software industries in both NZ and Australia. He has held
senior executive positions within the National Bank of NZ and
Rabobank Australia/NZ. Jonathan was the Chief Financial Officer of
ASX listed company eServGlobal from 2008 to 2010.
Nicholas Smith , aged 3 5 - Executive Director and Vice
President Sales
Results focused with an outstanding record of founding, growing
and scaling technical businesses, Nick has a demonstrated ability
to lead and manage geographically dispersed teams while maintaining
the culture of the organisation. He has strong strategic business
development attributes with the ability to build a loyal following
though the practice of strong technical awareness and open
communication.
Nicholas was appointed as Vice President Sales and Executive
Director of Maestrano Group plc on 6 November 2019.
Nicholas McInnes, aged 66 - Independent Non-Executive
Director
Nick McInnes has been a United Kingdom diplomat through much of
his career, focusing on international trade and investment in such
key positions as the British Consul General, Sydney and Director
General Trade & Investment for Australia and New Zealand; and
Director Trade & Investment USA and Deputy Consul General New
York.
Nicholas was appointed to the Board of Maestrano Group plc on 13
March 2020.
Robert Lojszczyk , aged 63 - Executive Director, Chief Financial
Officer and Company Secretary
Robert is a widely experienced senior finance executive with a
blue chip organisational and commercial background. He has operated
in finance roles of increasing seniority, scope and complexity. In
many cases operating with small to medium sized profit centres
making up the business across multinational boundaries.
Robert is a Fellow Certified Practicing Accountant and joined
Maestrano Group plc as Chief Financial Officer and Executive
Director on 13 March 20 20 .
Principal activities
Information on the Group's principal activities are disclosed in
the strategic report.
Results and dividends
The loss for the Group after providing for income tax and
non-controlling interest amounted to GBP854,298 (30 June 2019:
GBP2,339,896).
No dividend has been paid during the financial year and the
directors do not recommend a final dividend in respect of the year
ended 30 June 2020 (30 June 2019: GBPnil).
Further commentary on the financial results are disclosed in the
financial review by the chief financial officer within the
strategic report.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and financial
position are given in the strategic review and this directors'
report. In addition, the notes to the financial statements include
details on the Group's borrowing facilities and its objectives,
policies and processes for managing its capital; its financial risk
management objectives; and its exposures to credit risk and
liquidity risk.
The Group has considerable financial resources together with a
member base split across different geographic areas. The Group's
forecasts and projections, taking into account reasonably possible
changes in trading performance and the newly acquired business,
show that the Group should be able to operate for the foreseeable
future with the current working capital. As a consequence, the
directors believe that the Group is well placed to manage its
business risks successfully.
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the financial
statements.
Likely future developments
Information on likely future developments of the Group are
disclosed in the strategic report.
Financial instruments
Information on the Group's financial instruments are disclosed
in the strategic report and note 26 to the financial
statements.
Charitable and political donations
No charitable or political donations were made during the
financial year.
Disabled employees
Due to the size of the Group, no formal policy for the
employment of disabled persons has been established. However, the
Group gives full consideration to employment applications from
disabled persons where the candidate's particular aptitudes and
abilities are consistent with adequately meeting the requirements
of the job.
Indemnity of directors
The Company has indemnified the directors of the Company for
costs incurred, in their capacity as a director, for which they may
be held personally liable, except where there is a lack of good
faith.
Substantial shareholdings
The substantial shareholders in the Company as at 30 June 2020
were as follows:
Nicholas Smith 15.77%
Aaron Hoye 15.77%
Disclosure of information to the auditors
So far as each person who was a director at the date of
approving this report is aware, there is no relevant audit
information, being information needed by the auditor in connection
with preparing its report, of which the auditor is unaware. Having
made enquiries of fellow directors and the Group's auditor, each
director has taken all the steps that they are obliged to take as a
director in order to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that
information.
Auditor
Oury Clark was appointed auditor during the financial year and
pursuant to section 487 of the Companies Act 2006 will be deemed to
be re-appointed and therefore continue in office.
This report is made in accordance with a resolution of
directors.
On behalf of the directors
Ian Buddery
Chairman
23 October 2020
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the strategic
report, directors' report and the financial statements in
accordance with applicable law and regulation.
UK Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the Group financial statements in
accordance with International Financial Reporting Standards
('IFRS') as adopted by the European Union and financial statements
of the Company in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law) including FRS 101 'Reduced Disclosure Framework'.
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 Group and Company and the
profit or loss of the Group for that year.
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;
-- state whether applicable IFRS as adopted by the European
Union and applicable United Kingdom Accounting Standards have been
followed for the Group and the Company respectively, subject to any
material departures disclosed and explained in the financial
statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The directors confirm they have complied with all the above
requirements in preparing the financial statements.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements comply with the
Companies Act 2006 and, as regards the Group financial statements,
Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and Company and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Ian Buddery
Chairman
23 October 2020
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF MAESTRANO GROUP
PLC
Opinion
We have audited the group financial statements of Maestrano
Group PLC (the 'parent company') and its subsidiaries (the 'group')
for the year ended 30 June 2020 which comprise the Consolidated
Statement of Profit or Loss and Other Comprehensive Income, the
Consolidated Statement of Financial Position, the Company Statement
of Financial Position, the Consolidated Statement of Changes in
Equity, the Company Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and Notes to the Statement of
Cash Flows, Notes to the Consolidated Financial Statements and
Notes to the Company Financial Statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union, including FRS101 "Reduced Disclosure Framework"
(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's affairs as at 30
June 2020 and of the group's loss for the year then ended;
- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
- the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
- the financial statements 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
and parent 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 as applied to listed public
entities, 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
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
- the directors' use of the going concern basis of accounting in
the preparation of the financial statements is not appropriate;
or
- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Emphasis of matter
The group is in a growth phase and believes it has identified a
niche market area to exploit.
During the year they acquired the Airsight group, and made
further investment in the pre-existing technology and intellectual
property owned by Airsight. This has enabled the Group to begin
product commercialisation.
As a result of its business model, a proportion of forecast
revenues are non-contractual. As a result, we are unable to gain
sufficient audit evidence that these revenues will materialise to a
level sufficient to confirm that the company will be able to meet
all liabilities as they fall due. A substantial amount of work has
been undertaken in preparing the forecasts, there appears to be a
robust forecasting process, and the forecasts appear to be
conservative. There is a proportion of contractual revenue which
has a non-contractual usage element. This usage element, while not
being contractual in itself, is effectively certain.
However, the group's ability to continue as a going concern is
dependent on them securing sufficient business and managing their
cost base accordingly.
Overview of our audit approach
Key audit matters
1. Going concern
2. Contingent consideration for the purchase of the Airsight Group
3. GBP200,000 'capital' reorganisation reserve'
Audit scope
1. We performed an audit of the parent company, the 100% UK
subsidiary company and the consolidated entity
2. We did not audit the components located in other countries,
though our consolidated audit included a review of the procedures
and work undertaken on these by other local authorised auditors
together with an assessment of those auditors
Materiality
1. Overall group materiality of GBP97,000, which represents 10%
of the consolidated loss for the year
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements, as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these
matters.
Going concern
Risk
1. The group recorded a loss of GBP969,949 in the year
2. The Covid-19 pandemic has caused significant issues for many
businesses, it is not considered to be significantly impacting the
group currently
3. There is a risk that given the significant losses and the
uncertainty around new contracts being won that the company does
not have sufficient funds to meet its debts as they fall due for
the foreseeable future
Our response to the risk
1. We inspected management's going concern assessment and
challenged the forecast assumptions provided, particularly in
respect of future sales both directly and through distributors
2. We inspected a sample of contracts with distributors and a
sample of contracts in place directly with end customers, both in
place now and the progress of discussions for prospective
projects
3. We reviewed minutes from board meetings after the year end to
evidence continued performance and progress on discussions
4. We discussed and enquired further with management over the
assumptions used to produce the forecasts
5. We assessed the appropriateness of the going concern
disclosure in the financial statements in light of the above and
concluded an emphasis of matter paragraph should be included
6. We discussed this basis with the firm's internal Ethical and
Technical Committee who were in agreement
Key observations communicated to the audit committee
1. Based on our audit procedures we agreed with management that
it is appropriate to adopt the going concern basis for the
financial statements for the year to 30 June 2020
2. An emphasis of matter paragraph is included given the uncertainty of future possible revenue
Contingent consideration for the purchase of the Airsight
Group
Risk
1. As part of the acquisition of the Airsight Group on 1st
November 2019, the company agreed to pay additional consideration
subject to certain targets being met
2. There is a risk that the contingent consideration would be
both recognised incorrectly initially and recognised incorrectly at
the year end
Our response to the risk
1. We obtained a copy of the Share Purchase Agreement (the
'SPA') for the acquisition of the Airsight Group and reviewed the
terms included
2. We obtained the valuation report for the fair value of the
contingent consideration at the date of purchase and confirmed the
amount included in Goodwill calculation agreed to this
3. We assessed the competencies of the valuers in being able to
conduct this valuation and noted no issues
4. We reviewed analysis against targets and board minutes after
the year end to confirm the targets were met
5. Given the contingent consideration is in the form of shares
at a future date, we reviewed the situation in the context of the
applicable accounting standards
Key observations communicated to the audit committee
1. Based on our audit procedures we concluded that no provision
should be recognised due to the future value of the transaction
being unknown
2. We therefore concluded it is appropriate to include a contingent liability disclosure
GBP200,000 'capital' reorganisation reserve' Risk
1. Within Maestrano Group PLC, there existed a GBP200,000 debit
balance within a 'capital reorganisation reserve', relating to the
issuance of shares in Maestrano Group PLC in April 2018 for the
acquisition of Maestrano Pty Limited.
2. This accounting did not reflect our understanding of the
appropriate accounting treatment and so there is a risk that
inappropriate accounting treatment is being used.
Our response to the risk
1. We discussed the treatment with management (current and
former) and the prior year auditors to understand the rationale for
the accounting treatment
2. We considered the treatment in the context of the applicable accounting standards
3. We discussed the treatment with: external technical experts;
the firm's internal Ethical and Technical committee
Key observations communicated to the audit committee
1. The investment of GBP200,000 should have initially been
recognised as an investment rather than a debit directly to
'capital reorganisation reserve'
2. A prior year adjustment is therefore included to account for
this, with the corresponding disclosure notes updated
accordingly
3. As the entire investment was impaired in the prior year and
the Maestrano Pty software is currently not being utilised,
together with its subsidiary being in a net liability position, it
was decided that the GBP200,000 should also have been fully
impaired in the prior year
An overview of the scope of our audit
Our assessment of audit risk, our evaluation of materiality and
our allocation of performance materiality determine our audit scope
for each entity within the group. Taken together, this enables us
to form an opinion on the consolidated financial statements. We
take into account size, risk profile, the organisation of the group
and effectiveness of group-wide controls, changes in the business
environment and other factors such as recent internal audit results
when assessing the level of work to be performed at each
entity.
In assessing the risk of material misstatement to the group
financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, we
selected all components covering entities within Australia, United
States of America and the United Kingdom, which represent the
principal business units within the Group.
Of all the components selected, we performed an audit of the
complete financial information of the two UK entities. We reviewed
the work undertaken by component auditors of the Australian
entities. We also performed audit testing on the material elements
of the United States of America entity.
The reporting components where we performed audit procedures or
reviewed component auditor procedures undertaken accounted for 100%
of the Group's loss before tax, 100% of the Group's revenue and
100% of the Group's total assets.
Our application of materiality
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually
or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and extent
of our audit procedures.
We determined materiality for the Group to be GBP97,000 (2019:
GBP78,000) which is 10% of the operating loss for the year (2019:
2% of operating expenses). We believe that losses is the most
appropriate basis for materiality as the group is still in the
early stages of development and is still incurring significant
losses. During the course of the audit, we reassessed initial
materiality and materiality was therefore updated to reflect the
latest loss figure for the year.
Performance materiality
The application of materiality at the individual account or
balance level. It is set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the Group's overall control environment, our
judgement was that performance materiality was 90% (2019: 50%) of
our planning materiality, being GBP87,300 (2019: GBP39,000). We
have set performance materiality at this level as we consider the
overall control environment to be good and the risk of the audit to
be low.
Reporting threshold
The amount below which identified misstatements are considered
as being clearly trivial
It was decided that we would report all audit differences in
excess of GBP5,000 (2019: GBP3,900), which is set as 5% of
materiality, as well as differences below that threshold that, in
our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our
opinion.
Other information
The directors are responsible for the other information. The
other information comprises the information set out in pages 4 to
17, 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 there is a
material misstatement in the financial statements or a material
misstatement of the other information. 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, the part of the directors' remuneration report
to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
- the information given in the Report of the Directors for the
financial year for which the financial statements are
prepared is consistent with the financial statements; and
- the Report of the Directors has been prepared in accordance
with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the 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 and the Report of the Directors.
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
- the financial statements are not in agreement with the
accounting records and returns; or
- certain disclosures of directors' remuneration specified by
law are not made; or
- we have not received all the information and explanations we
require for our audit; or
- the directors were not entitled to take advantage of the small
companies' exemption from the requirement to prepare a Strategic
Report or in preparing the Report of the Directors.
Responsibilities of directors
As explained more fully in the Statement of Directors'
Responsibilities set out on page two, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
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 objectives of our audit, in respect of fraud, are; to
identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate
audit evidence regarding the assessed risks of material
misstatement due to fraud, through designing and implementing
appropriate responses; and to respond appropriately to fraud or
suspected fraud identified during the audit. However, the primary
responsibility for the prevention and detection of fraud rests with
both those charged with governance of the entity and
management.
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.
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.
Rachel Lockwood (Senior Statutory Auditor)
for and on behalf of Oury Clark Chartered Accountants
Statutory Auditors
Herschel House
58 Herschel Street
Slough
Berkshire
SL1 1PG
Date: 23 October 2020
Notes:
1. The maintenance and integrity of the Maestrano Group PLC
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 30 JUNE 2020
Note 2020 2019
(as restated)
GBP GBP
Revenue from contracts with customer 5 872,270 905,400
Other income 6 441,617 776,843
Interest revenue calculated using the effective
interest method 1,725 29,286
Expenses
Hosting fees and other direct costs -254,430 -376,637
Employee benefits expense 9 -1,169,112 -2,510,810
Occupancy expense 8 -106,174 -235,721
Depreciation and amortisation expense 8 -36,104 -35,056
Initial public offering ('IPO') and
other non-operating costs 8 -84,990 -73,063
Other expenses 8 -625,289 -808,470
Finance costs 8 -9,462 -
---------------- ---------------
Loss before income tax expense -969,949 -2,328,228
Income tax expense 12 - -
---------------- ---------------
Loss after income tax expense for
the year -969,949 -2,328,228
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Foreign currency translation 115,651 -11,668
---------------- ---------------
Other comprehensive income for the
year, net of tax 115,651 -11,668
---------------- ---------------
Total comprehensive income for the
year - 854,298 - 2,339,896
================ ===============
Loss for the year is attributable
to:
Non-controlling interest - -
Owners of Maestrano Group plc -969,949 -2,328,228
---------------- ---------------
-969,949 -2,328,228
================ ===============
Total comprehensive income for the
year is attributable to:
Non-controlling interest - -
Owners of Maestrano Group plc - 854,298 - 2,339,896
- 854,298 - 2,339,896
================ ===============
Pence Pence
Basic earnings per share 33 - 0.78 -2.91
Diluted earnings per share 33 - 0.78 -2.91
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2020
Note 2020 2019
(as restated)
GBP GBP
Non-current assets
Goodwill 14 1,223,403 -
Right to Use Asset 15 138,963 -
Property, plant and
equipment 16 80,175 12,961
Total non-current assets 1,442,541 12,961
----------- ---------------
Current assets
Inventories 17 135,172 -
Trade and other receivables 18 181,843 492,785
Income tax 259,817 351,526
Other 20 52,072 61,873
Cash and cash equivalents 1,564,267 2,247,201
Total current assets 2,193,171 3,153,385
----------- ---------------
Non-current liabilities
Lease Liabilities 30 84,788 -
Total non-current liabilities 84,788 -
----------- ---------------
Current liabilities
Trade and other payables 21 253,414 259,336
Employee benefits 149,687 65,275
Unearned Income 103,091 -
Contingent consideration 29 127,834 -
Lease Liabilities 30 70,875 -
Total current liabilities 704,901 324,611
----------- ---------------
Net current assets 1,488,270 2,828,774
----------- ---------------
Total assets less current
liabilities 2,930,811 2,841,735
----------- ---------------
Net assets 2,846,023 2,841,735
=========== ===============
Equity
Share capital 22 1,460,854 800,403
Share premium account 23 7,781,192 7,583,057
Other reserves 24 2,280,174 2,164,523
Accumulated losses -8,676,197 -7,706,248
Total equity 2,846,023 2,841,735
=========== ===============
The financial statements of Maestrano Group plc (company number
11098701 (England and Wales)) were approved by the Board of
Directors and authorised for issue on 23 October 2020.
They were signed on its behalf by:
Ian Buddery Andrew Pearson
Chairman Director
23 October 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2020
Share Share premium Other Accumulated Total equity
capital account* reserves losses
GBP GBP GBP GBP GBP
Balance at 1 July
2018 800,403 7,583,057 2,176,191 (5,378,020) 5,181,631
Loss after income
tax expense for the
year - - - (2,679,754) (2,679,754)
Other comprehensive
income for the year,
net of tax - - (11,668) - (11,668)
Total comprehensive
income for the year - - (11,668) (2,679,754) (2,691,442)
------- ------------- --------- ----------- --------------
Balance at 30 June
2019 800,403 7,583,057 2,164,523 (8,057,774) 2,490,209
Prior year adjustment 351,526 351,526
------- ------------- --------- -----------
As restated 800,403 7,583,057 2,164,523 (7,706,248) 2,841,735
======= ============= ========= =========== ==========
v The share premium account is used to recognise the difference
between the issued share capital at nominal value and the capital
received, net of transaction costs.
Share Share premium Other Accumulated Total equity
capital account reserves losses
GBP GBP GBP GBP GBP
Balance at 1 July
2019 800,403 7,583,057 2,164,523 (7,706,248) 2,841,735
Loss after income
tax expense for the
year - - - (969,949) (969,949)
Other comprehensive
income for the year,
net of tax - - 115,651 - 115,651
Total comprehensive
income for the year - - 115,651 (969,949) (858,298)
Share issue 660,451 198,135 - - 858,586
Balance at 30 June
2020 1,460,854 7,781,192 2,280,174 (8,676,197) 2,846,023
========= ============= ========= =========== ============
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2020
Note 2020 2019
(as restated)
GBP GBP
Cash flows from operating activities
Loss before income tax expense for the year -969,949 -2,328,228
Adjustments for:
Depreciation and amortisation 36,104 35,056
Foreign exchange differences -150,141 -10,958
Interest received -1,725 -29,286
Interest and other finance costs 9,462 -
-1,076,249 -2,333,416
Change in operating assets and liabilities:
Increase in inventories -122,473 -
Decrease/(increase) in trade and other receivables 391,245 -693,905
Decrease in contract assets - 68,955
Decrease/(increase) in other operating assets 101,510 47,196
(Decrease)/increase in trade and other payables -148,630 9,956
Decrease in contract liabilities - -27,804
Decrease in other liabilities -33,114 -26,794
-887,711 -2,955,812
Interest received 1,725 29,286
Interest and other finance costs paid -3,280 -
Income taxes paid - -30,612
Net cash used in operating activities -889,266 -2,957,138
------------ ---------------
Cash flows from investing activities
Aggregate cash flow on acquisition 18,310 -
of subsidiary
Payments for plant and equipment 16 -71,589 -29,337
Net cash used in investing activities -53,279 -29,337
------------ ---------------
Cash flows from financing activities
Cash payments for leases -
Interest on lease payments -6,181 -
Net cash from financing activities -6,181 -
------------ ---------------
Net (decrease)/increase in cash and cash equivalents -948,726 -2,986,475
Cash and cash equivalents at the beginning of the
financial year 2,247,201 5,236,040
Effects of exchange rate changes on cash and cash
equivalents 265,792 -2,364
Cash and cash equivalents at the end of the financial
year 1,564,267 2,247,201
============ ===============
Included in the decrease of trade and other payables during the
year were lease payments of GBP25,410 (2019: GBPNIL).
ACQUISITION OF BUSINESS
Refer to note 14 to these consolidated financial statements for
details of the acquisition of business. The consolidated statement
of cash flow has been adjusted for assets and liabilities acquired
on acquisition of business detailed in note 14.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL INFORMATION
The financial statements cover Maestrano Group plc ('Company')
and the entities it controlled at the end of, or during, the
financial year (referred to as the 'Group'). The financial
statements are presented in Pound Sterling, which is Maestrano
Group plc's functional and presentation currency. The group's
functional currency in Australia is Australian Dollars.
The Company was incorporated on 6 December 2017 as a private
company, Maestrano Group Limited. On 19 April 2018, as part of a
Group reorganisation, the Company acquired 100% of the ordinary
shares of Maestrano Pty Ltd from the existing shareholders and
became the immediate and ultimate parent of the Group. On 11 May
2018, the Company converted to a public company, Maestrano Group
plc and on 30 May 2018 was admitted onto the Alternative Investment
Market ('AIM'). On 31 October 2019, Maestrano Group plc acquired
the shares in Corridor Holdings Pty Ltd (previously Airsight
Holdings Pty Ltd).
Maestrano Group plc is a listed public company limited by
shares, incorporated and domiciled in England and Wales. Its
registered office and principal place of business are:
Registered office Principal place of business
10 John Street 2/2 Frost Drive
London WC1N 2EB Mayfield West NSW 2304
United Kingdom Australia
A description of the nature of the Group's operations and its
principal activities are included in the strategic report, which is
not part of the financial statements.
The financial statements were authorised for issue, in
accordance with a resolution of directors, on 23 October 2020. The
directors have the power to amend and reissue the financial
statements.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
New or amended Accounting Standards and Interpretations
adopted
The Group has adopted all of the new or amended Accounting
Standards and Interpretations issued by the International
Accounting Standards Board ('IASB') that are mandatory for the
current reporting period.
Any new or amended Accounting Standards or Interpretations that
are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations
did not have any significant impact on the financial performance or
position of the Group.
The following Accounting Standards and Interpretations are most
relevant to the Group:
IFRS 16 Leases
The group adopted IFRS 16 on 1 July 2019 replacing IAS 17
Leases. The standard introduced a new classification of right of
use assets whereby all leases other than those that are short term
leases or immaterial leases are classified as assets on the balance
sheet.
All existing leases at 1 July 2019 had a commitment term of less
than 12 months and the Group has used the transitional election to
continue to account for leases as operating leases. The leases
acquired as part of the business acquisition have been recognised
on the cumulative catch-up method. This effected the equity of the
business acquisition and therefore there is no impact on Group
equity from the initial adoption of IFRS 16.
Impact of adoption
The impact of adoption on opening accumulated losses as at the
transition date of 1 July 2019 was GBPnil due to the reasons
mentioned above.
The adoption has led to a recognition of a right to use asset
and a lease liability with further information detailed in note 15
and 30 respectively.
Going concern
The financial statements have been prepared assuming the Group
will continue as a going concern. Under the going concern
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future.
The directors consider that the group is in a growth phase and
believe it has identified a niche market area to exploit. During
the year the group acquired the Airsight group, and made further
investment in the pre-existing technology and intellectual property
owned by Airsight. This has enabled the Group to begin product
commercialisation.
As a result of this business model, there is a proportion of
contractual revenue which has a non-contractual usage element.
Whilst this usage element is not contractual in itself, it is
effectively certain.
However, the group's ability to continue as a going concern is
dependent on them securing sufficient business and managing their
cost base accordingly.
The directors have considered the Group's existing working
capital and are of the opinion that the Group has adequate
resources to undertake its planned programme of activities for the
12 months from the date of approval of these financial
statements.
Basis of preparation
The consolidated financial statements are prepared in accordance
with International Financial Reporting Standards ('IFRS' or
'IFRSs') as adopted for use in the European Union (the 'EU') and
IFRS Interpretations Committee interpretations (together 'EU IFRS')
and the UK Companies Act 2006.
Historical cost convention
The consolidated financial statements are prepared under the
historical cost convention.
Critical accounting estimates
The preparation of the consolidated financial statements
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's and Company's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Group reorganisation and comparative information
Maestrano Group plc (previously known as Maestrano Group
Limited) was incorporated on 6 December 2017. Shareholders of the
former parent company Maestrano Pty Ltd (the 'legal subsidiary'),
approved a formal business entity reorganisation, whereby Maestrano
Group plc ('the legal parent') became the parent of the Group,
effective 19 April 2018, by acquiring all the outstanding shares of
the Group's previous ultimate holding company Maestrano Pty Ltd in
exchange for the issue of its own shares. This share for share
transaction is not a business combination and does not result in
any economic substance from the perspective of the Group. The
substance of the Group reorganisation is a continuation of the
existing Group, as a result the financial statements reflect that
fact. This share for share transaction is hereafter referred to as
the Group reorganisation and accounted for as follows:
-- the consolidated financial statements of Maestrano Group plc
are a continuation of the existing Group;
-- the difference in share capital is reflected as an adjustment
directly to the capital reorganisation reserve in equity;
-- retained earnings and other equity balances in the financial
statements at acquisition date are those of Maestrano Pty Ltd;
-- no 'new' goodwill was recognised as a result of the combination;
Therefore, the consolidated financial statements are presented
as if Maestrano Group plc had been the parent company of the
existing Group throughout the periods presented. No
reclassifications or adjustments to previously reported figures and
no changes in the operations of the Group resulted from this
change.
-- the results for the financial year ended 30 June 2020
comprise the consolidated results for the financial year of the
Maestrano Group plc together with the results of Corridor Holdings
Pty Ltd, formerly Airsight Holdings Pty Ltd, and its subsidiaries
from 1 November 2019 to 30 June 2020.
Principles of consolidation
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of Maestrano Group plc as at the
balance sheet dates presented and the results of all subsidiaries
for the year then ended.
Subsidiaries are all those entities over which the Group has
control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on
transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
The acquisition of common control subsidiaries is accounted for
at book value. The acquisition of other subsidiaries is accounted
for using the acquisition method of accounting. A change in
ownership interest, without the loss of control, is accounted for
as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the
non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises
the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation
differences recognised in equity. The Group recognises the fair
value of the consideration received and the fair value of any
investment retained together with any gain or loss in profit or
loss.
Operating segments
Operating segments are presented using the 'management
approach', where the information presented is on the same basis as
the internal reports provided to the Chief Operating Decision
Makers ('CODM'). The CODM is responsible for the allocation of
resources to operating segments and assessing their
performance.
Foreign currency translation
The consolidated financial statements are presented in Pound
Sterling, which is Maestrano Group plc's presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Pound Sterling
using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
financial year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated
into Pound Sterling using the exchange rates at the reporting date.
The revenues and expenses of foreign operations are translated into
Pound Sterling
using the average exchange rates, which approximate the rates at
the dates of the transactions, for the period. All resulting
foreign exchange differences are recognised in other comprehensive
income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss
when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is recognised at an amount that reflects the
consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each
contract with a customer, the Group: identifies the contract with a
customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates
of variable consideration and the time value of money; allocates
the transaction price to the separate performance obligations on
the basis of the relative stand-alone selling price of each
distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner
that depicts the transfer to the customer of the goods or services
promised.
Variable consideration within the transaction price, if any,
reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the
customer and any other contingent events. Such estimates are
determined using either the 'expected value' or 'most likely
amount' method. The measurement of variable consideration is
subject to a constraining principle whereby revenue will only be
recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised
will not occur.
The measurement constraint continues until the uncertainty
associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining
principle are recognised as a refund liability. Revenue is not
recognised in line with when the revenue is received. Revenue is
received prior to the delivery of a good or service.
Grants from government
Grants from government are recognised at their fair value where
there is a reasonable assurance that the grant will be received and
the Group will comply with all attached conditions. Government
grants which represent compensation for expenses or losses already
incurred are included in other income in profit or loss statement
in the year in which expenses or losses were incurred.
Interest income
Interest income is recognised as interest accrues using the
effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other income
Other income is recognised when it is received or when the right
to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax
payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in
deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for
prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to be applied when the assets
are recovered or liabilities are settled, based on those tax rates
that are enacted or substantively enacted, except for:
-- When the deferred income tax asset or liability arises from
the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the
time of the transaction, affects neither the accounting nor taxable
profits; or
-- When the taxable temporary difference is associated with
interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that
the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary
differences and losses.
The carrying amount of recognised and unrecognised deferred tax
assets is reviewed at each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable
that future taxable profits will be available for the carrying
amount to be recovered. Previously unrecognised deferred tax assets
are recognised to the extent that it is probable that there are
future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there
is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred
tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which
intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the balance sheet based
on current and non-current classification.
An asset is classified as current when: it is either expected to
be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of
trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected
to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled
within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at
least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as
non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade
receivables are generally due for settlement within 30 days.
The Group has applied the simplified approach to measuring
expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables
have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any
allowance for expected credit losses.
Contract assets
Contract assets are recognised when the Group has transferred
goods or services to the customer but where the Group is yet to
establish an unconditional right to consideration. Contract assets
are treated as financial assets for impairment purposes.
Plant and equipment
Equipment is stated at historical cost less accumulated
depreciation and impairment. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off
the depreciable amount of each item of equipment over their
expected useful lives as follows:
Office equipment 2 years
Furniture and fixtures 2 years
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each reporting date.
Equipment under lease are depreciated over the unexpired period
of the lease or the estimated useful life of the assets, whichever
is shorter.
An item of equipment is derecognised upon disposal or when there
is no future economic benefit to the Group. Gains and losses
between the carrying amount and the disposal proceeds are taken to
profit or loss.
Inventories
Inventories are measured at the lower of cost and net realisable
value. The cost of manufactured products includes direct part
costs. Net realisable value is estimated selling price in the
ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
Intangible assets
Intangible assets acquired as part of a business combination,
are initially measured at their fair value at the date of the
acquisition. Intangible assets acquired separately are initially
recognised at cost. Finite life intangible assets are subsequently
measured at cost less amortisation and any impairment. The gains or
losses recognised in profit or loss arising from the derecognition
of intangible assets are measured as the difference between net
disposal proceeds and the carrying amount of the intangible asset.
The amortisation method and useful lives of finite life intangible
assets are reviewed annually. Changes in the expected pattern of
consumption or useful life are accounted for prospectively by
changing the amortisation method or period.
An annual impairment review is conducted annually to assess
whether the goodwill recognised in respect of acquisition
accounting is in need of impairment.
Software
Significant costs associated with purchased software are
deferred and amortised on a reducing balance basis over the period
of their expected benefit, being their finite useful life of two
years.
Research and development
Research costs are expensed in the period in which they are
incurred. Development costs are capitalised when it is probable
that the project will be a success considering its commercial and
technical feasibility; the Group is able to use or sell the asset;
the Group has sufficient resources; and intent to complete the
development and its costs can be measured reliably. Capitalised
development costs are amortised on a straight-line basis over the
period of their expected benefit. Amortisation commences when the
asset is available for use, i.e. when it is in the location and
condition necessary for it to be capable of operating in the manner
intended by management.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised at the amount
by which the asset's carrying amount exceeds its recoverable
amount.
Recoverable amount is the higher of an asset's fair value less
costs of disposal and value-in-use. The value-in-use is the present
value of the estimated future cash flows relating to the asset
using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a
cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured
at amortised cost and are not discounted. The amounts are unsecured
and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to
transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a
receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods
or services to the customer.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured
at the amounts expected to be paid when the liabilities are
settled.
Share-based payments
Equity-settled share-based compensation benefits are provided to
employees.
Equity-settled transactions are awards of shares, or options
over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions is measured at fair
value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that
takes into account the exercise price, the term of the option, the
impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option,
together with non-vesting conditions that do not determine whether
the Group receives the services that entitle the employees to
receive payment. No account is taken of any other vesting
conditions.
The cost of equity-settled transactions is recognised as an
expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based
on the grant date fair value of the award, the best estimate of the
number of awards that are likely to vest and the expired portion of
the vesting period. The amount recognised in profit or loss for the
period is the cumulative amount calculated at each reporting date
less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining
fair value. Therefore, any awards subject to market conditions are
considered to vest irrespective of whether or not that market
condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense
is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting
period, for any modification that increases the total fair value of
the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the Group
or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the
Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the
remaining vesting period, unless the award is forfeited.
If an equity-settled award is cancelled, it is treated as if it
has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is
substituted for the cancelled award, the cancelled and new award is
treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is
measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an
asset or paid to transfer a
liability in an orderly transaction between market participants
at the measurement date; and assumes that the transaction will take
place either: in the principal market; or in the absence of a
principal market, in the most advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For
non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are classified
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest
level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant.
External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an
asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs
applied in the latest valuation and a comparison, where applicable,
with external sources of data.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Dividends
Dividends are recognised when declared during the financial
year.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of Maestrano Group plc, excluding any
costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares
issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary
shares.
Value-Added Tax ('VAT')/Goods and Services Tax ('GST') and other
similar taxes
Revenues, expenses and assets are recognised net of the amount
of associated VAT/GST, unless the VAT/GST incurred is not
recoverable from the tax authority. In this case it is recognised
as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of
VAT/GST receivable or payable. The net amount of VAT/GST
recoverable from, or payable to, the tax authority is included in
other receivables or other payables in the balance sheet.
Cash flows are presented on a gross basis. The VAT/GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax
authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of
VAT/GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory
or early adopted
Accounting Standards that have recently been issued or amended
but are not yet mandatory, have not been early adopted by the Group
for the annual reporting period ended 30 June 2020. The Group's
assessment of the impact of mandatory new Accounting Standards and
Interpretations, most relevant to the Group, are set out below.
Leases
The Group assesses at contract inception whether a contract is,
or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration.
Group as a lease
The group applies a single recognition and measurement approach
for all leases, except for short-term leases and leases of
low-value assets. The group recognises lease liabilities to make
lease payments and right-of-use assets representing the right to
use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the commitment date
of the lease (ie. The date the underlying asset is available for
use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any measurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the shorter of
the lease term and estimated useful life of the assets, as
follows:
Property 10 years
If ownership of the leased asset transfers to the Group at the
end of the lease term or the cost reflects the exercise of a
purchased option, depreciation is calculated using the estimated
useful life of the asset.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating the lease, if
the lease terms reflects the Group exercising the option to
terminate. Variable lease payments that do not depend on an index
or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition
that triggers the payment occurs.
In calculating the present value of lease payments, the Group
uses the interest rate implicit in the lease. After the
commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in
the lease term, a change in the lease payments (e.g., changes to
future payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset.
The Group's lease liabilities are presented separately in the
statement of financial position.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to
leases of office equipment that are considered to be of low value.
Lease payments on short-term leases and leases of low-value assets
are recognised as an expense on a straight-line basis over the
lease term.
Straight-line operating lease expense recognition will be
replaced with a depreciation charge for the leased asset (included
in operating costs) and an interest expense on the recognised lease
liability (included in finance costs). In the earlier periods of
the lease, the expenses associated with the lease under IFRS 16
will be higher when compared to lease expenses under IAS 17.
However, EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results will be improved as the operating expense is
replaced by interest expense and depreciation in profit or loss
under IFRS 16. For classification within the statement of cash
flows, the lease payments will be separated into both a principal
(financing activities) and interest (either operating or financing
activities) component. Had the standard been adopted from 1 July
2019, and using the transitional rules available, the Group would
have recognised a lease liability of the remaining lease payments
as disclosed in note 30, discounted using the lessee's incremental
borrowing rate of 6%, with a corresponding increase in plant and
equipment.
IASB new Conceptual Framework for Financial Reporting
The new framework is applicable for annual reporting periods
beginning on or after 1 January 2020 and the application of the new
definition and recognition criteria may result in future amendments
to several accounting standards. Furthermore, entities who rely on
the conceptual framework in determining their accounting policies
for transactions, events or conditions that are not otherwise dealt
with under IFRS may need to revisit such policies. The Group will
apply the revised conceptual framework from 1 July 2020 and is yet
to assess its impact.
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including
expectations of future events, management believes to be reasonable
under the circumstances. The resulting accounting judgements and
estimates will seldom equal the related actual results.
The accounting judgements, estimates and assumptions that have a
significant risk of causing an adjustment to the carrying amounts
of assets and liabilities (refer to the respective notes) within
the next financial year are discussed below.
NOTE 3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
Estimates:
Revenue recognition where contracts are in progress
In accordance with the revenue recognition policy detailed in
note 2, in measuring revenue relating to fixed agreements the Group
measures the stage of completion with reference to costs incurred
and the total costs estimated for each contract. The total
estimated costs for each contract are reviewed monthly to ascertain
the current stage of completion and requires reasonable judgments
to be made. Judgement
includes allocating transaction prices to each of the
performance obligations. Refer to note 19 for the accrued revenue
asset and the balance sheet for the deferred revenue liability.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined
by using the Black-Scholes model taking into account the terms and
conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based
payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact
profit or loss and equity. Refer to note 34 for valuation model
inputs.
NOTE 4. OPERATING SEGMENTS
Identification of reportable operating segments
The Group operates in one segment being provision of data
integration and analytic services. This operating segment is based
on the internal reports that are reviewed and used by the Board of
Directors (who are identified as the Chief Operating Decision
Makers ('CODM')) in assessing performance and in determining the
allocation of resources.
The operating segment information is the same information as
provided throughout the consolidated financial statements and are
therefore not duplicated. Given the research and development
expenditure for all types of product, the board have determined
that reportable operating segments would be too difficult to
determine.
Major customers
There are 3 customers contributing external revenue of more than
10% amounting to GBP193,216, GBP179,572 and GBP93,614 respectively
(2019: Different 3 customers amounting to GBP465,817, GBP236,467
and GBP112,891 respectively).
Revenue by geographical area
Revenue from the principal activities of the Group is
attributable to the following geographical areas:
2019 (as
2020 restated)
GBP GBP
United Kingdom 8,150 -
Australia 729,338 325,174
United States of America 20,221 578,707
Middle East and Africa - 1,519
Japan 80,243 -
New Zealand 34,318 -
Total revenue 872,270 905,400
======= ==========
It was not possible to determine profit or loss by geographical
region during the period.
NOTE 5. REVENUE FROM CONTRACTS WITH CUSTOMER
2019 (as
2020 restated)
GBP GBP
Enterprise implementation 179,572 851,699
Enterprise subscriber 4,338 53,701
Airsight/Corridor 688,360 -
Revenue from contracts with customer 872,270 905,400
======= ==========
NOTE 6. OTHER INCOME 2019 (as
2020 restated)
GBP GBP
Government grants and rebates 441,617 776,843
Other income - -
------- ----------
Other income 441,617 776,843
======= ==========
Government grants and rebates predominately relates to research
and development rebates.
A prior year adjustment has been included in other income by
GBP351,526. This related to a government research and development
rebate which was received in FY2020 but related to the FY2019
period but was not recognised at the time.
NOTE 7. EBITDA RECONCILIATION (EARNINGS BEFORE INTEREST EXPENSE,
TAXATION, DEPRECIATION AND AMORTISATION) 2019 (as
2020 restated)
GBP GBP
EBITDA reconciliation
Loss before income tax (969,949) (2,328,228)
Add: Interest expense 9,462 -
Add: Depreciation and amortisation 36,104 35,056
EBITDA (924,383) (2,293,172)
========= ===========
Underlying EBITDA represents EBITDA adjusted for significant,
unusual and other one-off items.
2019 (as
2020 restated)
GBP GBP
Underlying EBITDA reconciliation
EBITDA (924,383) (2,293,172)
Initial public offering ('IPO') and other non-operating
costs - 73,063
Underlying EBITDA (924,383) (2,220,109)
========= ===========
The financial statements include both the statutory financial
statements and additional performance measures of EBITDA and
Underlying EBITDA. The directors believe these additional measures
provide useful information on the underlying trend in operational
performance going forward without these unusual and other one-off
items.
NOTE 8. EXPENSES
2019 (as
2020 restated)
GBP GBP
Loss before income tax includes the following
specific expenses:
Depreciation
Leasehold improvements 869 4,870
Office equipment 8,540 14,919
Furniture and fixtures - 2,633
Motor Vehicles 3,034 -
Flight Equipment 2,245 -
--------- ----------
Total depreciation 14,688 22,422
Amortisation
Software - 12,634
Right to Use Asset 21,415 -
Total depreciation and amortisation 36,103 35,056
IPO and other non-operating costs
Restructuring costs and Enterprise Investment
Scheme set-up costs, acquisition costs 84,990 -
Provision for unrecoverable staff loans - 73,063
--------- ----------
Total IPO and other non-operating costs 84,990 73,063
Occupancy expense
Minimum lease payments 93,938 214,300
Other occupancy expense 12,236 21,421
--------- ----------
Total occupancy expense 106,174 235,721
Finance costs
Interest and finance charges paid/payable 9,462 -
Total finance costs expensed 9,462 -
Other expenses
Travel and entertainment 30,649 42,764
Marketing services 75,165 59,323
IT infrastructure 17,976 127,039
Professional fees 485,611 534,768
Net foreign exchange (gain)/loss (150,141) (350)
Other 166,029 44,926
Total other expenses 625,289 808,470
--------- ----------
Research and development costs recorded in the consolidated
statement of profit and loss and other comprehensive income were
GBP734,945 in 2020 and GBP1,195,616 in 2019.
NOTE 9. STAFF COSTS
The average number of employees during the year was as follows:
2019 (as
2020 restated)
Sales and marketing 3 3
Technical 12 19
Finance and administration 2 3
---- ----------
Average number of employees 17 25
==== ==========
The employee benefits expense during the year was as follows:
2020 2019 (as
restated)
GBP GBP
Wages and salaries 1,053,640 2,288,183
Social security costs 54,519 130,662
Other pension costs 60,952 91,965
Share-based payments - -
Total employee benefits expense 1,169,111 2,510,810
============ ============
Included in other creditors at the period end there was unpaid
pension costs of GBP12,106 (2019: GBP1,791)
NOTE 10. DIRECTORS' REMUNERATION
Details of directors' remuneration is set out below: 2019 (as
2020 restated)
Number of directors accruing benefits under money
purchase schemes in respect of qualifying services 5 4
The total remuneration in respect of the year ended June 2020 and
paid to each director who held office during the year as follows:
Salary
and Benefit Post-employment
fees in kind Bonus benefits Total
2020 GBP GBP GBP GBP GBP
Non-Executive Directors:
Ian Buddery 59,828 - - - 59,828
John Davis 33,730 - - 1,012 34,742
Jonathan Macleod 31,839 - - - 31,839
Nicholas McInnes (appointed
13 March 2020)* 12,534 - - - 12,534
Executive Directors:
Stephane Ibos (resigned
30 December 2019) 21,500 - - - 21,500
Andrew Pearson 165,597 - 29,745 815 196,157
.
Craig Holden (resigned 31
August 2019) 18,718 - - - 18,718
Nicholas Smith (appointed
6 November 2019)* 55,132 - - 5,238 60,370
Robert Lojszczyk (appointed
13 March 2020)* 43,709 - - 4,024 47,733
Total directors' remuneration 442,587 - 29,745 11,089 483,421
======= ======= ====== =============== =======
*Remuneration from date of appointment as director of the
Company.
Salary Benefit Post-employment
and fees in kind Bonus benefits Total
2019 GBP GBP GBP GBP GBP
Non-Executive Directors:
Ian Buddery 83,279 - - - 83,279
John Davis 45,600 - - 1,026 46,626
Jonathan Macleod 40,584 - - 3,855 44,439
Executive Directors:
Stephane Ibos 78,879 - - 3,641 82,520
Andrew Pearson (appointed
3 December 2018) * 145,315 - 8,567 3,028 156,910
Craig Holden (resigned 31
August 2019) 97,307 - - - 97,307
Total directors' remuneration 490,964 - 8,567 11,550 511,081
========= ======== ===== =============== =======
*Remuneration from date of appointment as director of the
Company.
Number of directors accruing benefits under money purchase
schemes in respect of qualifying services were four.
The number of directors who exercised share options was
none.
NOTE 11. KEY MANAGEMENT PERSONNEL DISCLOSURES
Compensation
The aggregate compensation made to directors and other members
of key management personnel of the Group is set out below:
2019 (as
2020 restated)
GBP GBP
Short-term employee benefits 459,971 742,729
Post-employment benefits 13,851 32,267
Share-based payment - -
473,822 774,996
======= ==========
NOTE 12. INCOME TAX
2019 (as
2020 restated)
GBP GBP
Income tax expense
Adjustment recognised for prior periods - -
Aggregate income tax expense - -
Numerical reconciliation of income tax expense
and tax at the statutory rate
Loss before income tax expense (969,949) (2,328,228)
Tax at the statutory tax rate of 23% (2019: 23%) (223,088) (518,031)
Tax effect amounts which are not deductible/(taxable)
in calculating taxable income:
Unwind of interest on convertible notes - -
Research and development expenditure, net of
tax credits 15,925 128,308
Prepayments and accruals (8,923) 5,289
Amortisation of cost of raising convertible
note - -
Other non-deductible items 47,346 19,572
Prior year tax adjustment 30,862
Current year tax losses not recognised 168,740 334,000
Temporary differences not recognised - -
Income tax expense - -
========= ===========
Tax at the statutory tax rate represents the effective rate of
income tax across the jurisdictions in which each of the Group
entities are domiciled.
The tax rates of the main jurisdictions are Australia 27.5%
(2019: 27.5%), United Kingdom 19.0% (2019: 19.0%), United States of
America 21.0% (2019: 21.0%) and the United Arab Emirates 0% (2019:
0%).
2019 (as
2020 restated)
GBP GBP
Tax losses not recognised
Unused tax losses for which no deferred tax asset
has been recognised 4,533,886 4,871,535
--------- ----------
Potential deferred tax asset at domestic tax rates
applicable in the countries concerned 1,007,238 1,051,037
--------- ----------
The above potential tax benefit for tax losses has not been
recognised in the balance sheet due to a lack of certainty as to
when the losses will reverse.
2019 (as
2020 restated)
GBP GBP
Deferred tax assets/(liabilities) not recognised
Deferred tax assets/(liabilities) not recognised
comprises temporary differences attributable to:
Employee benefits 21,586 21,586
Accrued expenses 6,283 29,769
Prepayments and work in progress (13,382) (1,633)
14,487 49,722
======== ==========
The above potential tax benefit for deductible temporary
differences have not been recognised in the balance sheet as the
recovery of the benefit is uncertain.
NOTE 13. PRIOR YEAR ADJUSTMENT
The prior period has been restated to include AUD$636,773
R&D tax rebate receivable in Maestrano Pty Ltd. This has
increased the prior year tax debtor and other income by GBP351,526.
The tax receivable had erroneously been recognised in the year
ended 30 June 2020. This has also affected the earnings per share
and diluted earnings per share, which have both been restated.
NOTE 14. GOODWILL
2020 2019 (as
restated)
GBP GBP
Goodwill 1,223,403 -
1,223,403 -
=============== ===========
Acquisition
Goodwill relates to the purchase of the Corridor Holdings Pty
Ltd group, formerly Airsight Holdings Pty Ltd group, on November 1,
2019. The acquisition was funded by a share issue of 66,045,038
shares as described in note 22. Further consideration is payable
dependent upon the sales performance of the group acquired. Further
details of this contingent consideration can be found in note 29.
The purchase was accounted for under the acquisition method of
accounting, whereby the identifiable assets acquired are recorded
at fair value. The Group recognises goodwill for the excess of the
purchase price over the fair value of the assets acquired and
liabilities assumed. As a result of the acquisition, goodwill of
GBP1,223,403 was generated.
The goodwill has been recognised in the year ended 30 June 2020
and no impairments have been recognised to date.
Consideration paid:
GBP
Share issue 858,585
Fair value of contingent
consideration 127,834
986,419
=============
Assets and liabilities acquired are as follows:
GBP
Cash and cash equivalents 18,310
Trade and other receivables 80,303
Inventory 12,699
Trade payables (142,708)
Other liabilities (237,316)
Property, Plant and Equipment 31,728
Goodwill 1,223,403
986,419
===============
Since the acquisition of Airsight Holdings Pty Ltd, the entity
has generated revenue of GBP662,385 and a loss of GBP76,945. If the
entity was consolidated in the results of the Group for the whole
year, the loss for the year would have been GBP231,547.
NOTE 15. NON-CURRENT ASSETS - RIGHT TO USE ASSET
2020 2019 (as
restated)
GBP GBP
Right to Use Asset 160,378 -
Less: Accumulated depreciation (21,415) -
138,963 -
============= ===========
The following non-cancellable lease commitments existed at the
period end:
2020 2019 (as
restated)
GBP GBP
0-1 Year 38,115 -
1-5 Years 114,343 -
152,458 -
============= ===========
The GBP160,378 right to use asset represents the full addition
in the year and the GBP21,415 depreciation represents all
depreciation charged in the year. There were no further additions
or disposals.
NOTE 16. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
2019 (as
2020 restated)
GBP GBP
Leasehold improvements - at cost 20,462 4,870
Less: Accumulated depreciation (5,738) (4,870)
14,723 -
Office equipment - at cost 73,770 30,392
Less: Accumulated depreciation (41,475) (17,431)
32,296 12,961
Furniture and fixtures - at cost 3,504 3,504
Less: Accumulated depreciation (3,504) (3,504)
- -
Motor vehicles - at cost 32,155 -
Less: Accumulated depreciation (18,464) -
13,691 -
Flight equipment - at cost 133,041 -
Less: Accumulated depreciation (113,576) -
--------- ----------
19,465 -
--------- ----------
80,175 12,961
========= ==========
Reconciliations
Reconciliations of the written down values at the beginning and
end of the current and previous financial years are set out
below:
Leasehold Office Furniture Motor Flight
and
improvements equipment fixtures Vehicles equipment Total
GBP GBP GBP GBP GBP GBP
Balance at 1
July 2018 - 4,301 1,246 - - 5,547
Additions 4,870 23,080 1,387 - - 29,337
Exchange
differences - 499 - - - 499
Depreciation
expense -4,870 -14,919 -2,633 - - -22,422
------------- ------------
Balance at 30
June 2019 - 12,961 - - - 12,961
--------------- ---------- --------------- ------------- ------------ ------------
Additions 11,992 25,092 - 8,265 23,421 68,770
Acquisition on
business
combination 3,600 20,135 - 23,890 109,620 157,245
Disposals - -1,848 - - - -1,848
Depreciation
disposed - 823 - - - 823
Depreciation
acquired on
business
combination - -16,327 - -15,430 -111,331 -143,088
Depreciation
expense -869 -8,540 - - 3,034 - 2,245 -14,688
Balance at 30
June 2020 14,723 32,296 - 13,691 19,465 80,175
=============== ========== =============== ============= ============ ============
Non-current assets by geographical location
All property plant and equipment is located in Australia other
than office equipment with a net book value of GBP4,881 which is
located in the United Kingdom.
NOTE 17. CURRENT ASSETS - Inventories
2019 (as
2020 restated)
GBP GBP
Inventories 135,172 -
135,172 -
======= ==========
The amount of inventories expensed during the period was
GBP127,566 (2019: GBPNIL).
NOTE 18. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
2019 (as
2020 restated)
GBP GBP
Trade receivables 132,946 479,355
Other receivables 48,897 13,430
181,843 492,785
======= ==========
Allowance for expected credit losses
The Group has recognised a loss of GBPnil (2019: GBPnil) in
profit or loss in respect of the expected credit losses for the
year ended 30 June 2020. The ageing of the receivables and
allowance for expected credit losses provided for above are as
follows:
Expected credit Allowance for expected
loss rate Carrying amount credit losses
2020 2019 2020 2019 2020 2019
% % GBP GBP GBP GBP
Not overdue - - 112,969 293,997 - -
0 to 3 months overdue - - 19,977 142,599 - -
3 to 6 months overdue - - - 16,669 - -
Over 6 months overdue - - - 26,090 - -
132,946 479,355 - -
======== ======= =========== ===========
The Company has virtually no experience of bad debts and credit
losses and the directors do not expect any future credit losses to
arise as contracts come to termination and as a result no expected
credit loss provision was recorded as it was deemed immaterial.
NOTE 19. CURRENT ASSETS - CONTRACT ASSETS
2019 (as
2020 restated)
GBP GBP
Contract assets - -
Reconciliation
Reconciliation of the written down values at the
beginning and end of the current and previous financial
year are set out below:
Opening balance - 68,955
Transfer to trade receivables - (68,955)
Closing balance - -
==== ==========
NOTE 20. CURRENT ASSETS - OTHER
2019 (as
2020 restated)
GBP GBP
Prepayments 52,072 61,873
------ ----------
52,072 61,873
====== ==========
NOTE 21. CURRENT LIABILITIES -TRADE AND OTHER PAYABLES
2019 (as
2020 restated)
GBP GBP
Trade payables 85,692 65,352
Accrued expenses 121,132 190,656
Other payables 46,590 3,328
253,414 259,336
======= ==========
Refer to note 26 for further information on financial
instruments.
There were no contract liabilities as at 30 June 2020 or 30 June
2019.
NOTE 22. EQUITY - SHARE CAPITAL
Capital reconstruction - Group reorganisation
Maestrano Group plc was incorporated on 6 December 2017 and was
admitted to the Alternative Investment Market ('AIM') on 30 May
2018. Prior to AIM admission, the Group undertook a reorganisation
such that Maestrano Group plc was established as Maestrano Pty
Ltd's parent/holding entity. Maestrano Group plc determined that
the acquisition of Maestrano Pty Ltd did not represent a business
combination as defined by IFRS 3 'Business Combinations'. The
appropriate accounting treatment for recognising the new Group
structure has been determined to be a continuation of the financial
statements of Maestrano Pty Ltd Group. Refer to basis of
preparation in note 2 for further details. The number of shares in
issue shown below therefore reflects those of Maestrano Group
plc.
2019 (as 2019 (as
2020 restated) 2020 restated)
Shares Shares GBP GBP
Ordinary shares of GBP0.01 each
- issued and fully paid 146,085,369 80,040,331 1,460,854 800,403
=========== ========== ========= ==========
Movements in ordinary share capital
Details Date Shares GBP
Balance 1 July 2018 80,040,331 800,403
Balance 30 June 2019 80,040,331 800,403
Issue of shares of GBP0.01 each in
Maestrano Group plc on acquisition
of Corridor Holdings Pty Ltd, formerly
Airsight Holdings Pty Ltd 01 Nov 2019 66,045,038 660,451
Balance 30 June 2020 146,085,369 1,460,854
=========== =========
Ordinary shares
Ordinary shares entitle the holder to participate in dividends
and the proceeds on the winding up of the Company in proportion to
the number of and amounts paid on the shares held. The Company does
not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person
or by proxy shall have one vote and upon a poll each share shall
have one vote.
Capital risk management
The Group's objectives when managing capital is to safeguard its
ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimum capital structure to reduce the cost of
capital.
Capital is regarded as total equity, as recognised in the
balance sheet, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents. If net debt is negative,
then the net debt adjustment is limited to zero.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
The Group would look to raise capital when an opportunity to
invest in a business or company is seen as value adding relative to
the current Company's share price at the time of the investment.
The Group is not actively pursuing additional investments in the
short term as it continues to integrate and grow its existing
businesses in order to maximise synergies.
The Group is not subject to any financing arrangement covenants
and there have been no events of default on the financing
arrangements during the financial year.
The capital risk management policy remains unchanged throughout
the periods presented.
NOTE 23. EQUITY - SHARE PREMIUM ACCOUNT
2019 (as
2020 restated)
GBP GBP
Share premium account 7,781,191 7,583,057
========= ==========
Movements in share premium account
Detail Date GBP
Balance 01 July 2019 7,583,057
Capital received on acquisition
of Corridor Holdings PTY, formerly
Airsight Holdings Pty Ltd 1 November 2019 198,135
---------
7,781,192
=========
The share premium account is used to recognise the difference
between the issued share capital at nominal value and the capital
received, net of transaction costs.
NOTE 24. EQUITY - OTHER RESERVES
2019 (as
2020 restated)
GBP GBP
Foreign currency reserve 390,334 274,683
Capital reorganisation reserve 1,889,840 1,889,840
2,280,174 2,164,523
========= ==========
Foreign currency reserve
The reserve is used to recognise exchange differences arising
from the translation of the financial statements of foreign
operations to Pound sterling.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits
provided to employees and directors as part of their remuneration,
and other parties as part of their compensation for services.
Capital reorganisation reserve
As explained in note 2, the Group is a continuation of the
existing Maestrano Pty Limited group. Maestrano Group plc has
therefore recorded the net assets of Maestrano Pty Limited group at
their historic carrying value at the date of acquisition as a
capital reorganisation. The reserve is used to recognise the
difference between the shares issued to effect the transaction
(GBP200,000) and the share capital acquired (GBP2,089,840).
Movements in reserves
Movements in each class of reserve during the current and
previous financial years are set out below:
Foreign Share based Capital
currency payments reorganisation Total
GBP GBP GBP GBP
Balance at 1 July 2018 286,351 - 1,889,840 2,176,191
Foreign currency translation (11,668) - - (11,668)
Balance at 30 June 2019 274,683 - 1,889,840 2,164,523
Foreign currency translation 115,651 - - 115,651
Balance at 30 June 2020 390,334 - 1,889,840 2,280,174
======== =========== ============== =========
NOTE 25. EQUITY - DIVIDS
There were no dividends paid, recommended or declared during the
current or previous two financial years.
NOTE 26. FINANCIAL INSTRUMENTS
Financial risk management objectives
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's
overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects
on the financial performance of the Group. The Group uses different
methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest
rate and foreign exchange risks and ageing analysis for credit
risk.
Risk management is carried out by senior finance executives
('finance') under policies approved by the Board of Directors ('the
Board'). These policies include identification and analysis of the
risk exposure of the Group and appropriate procedures, controls and
risk limits. Finance identifies and evaluates financial risks
within the Group's operating units. Finance reports to the Board on
a regular basis.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currency and is exposed to foreign currency risk through foreign
exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions
and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional
currency. The risk is measured using sensitivity analysis and cash
flow forecasting.
The Group had net assets denominated in foreign currencies of
GBP288,853 as at 30 June 2020 (2019: GBP115,384). Based on this
exposure, had the Pound sterling weakened by 10%/strengthened by
10% against these foreign currencies with all other variables held
constant, the Group's profit before tax for the year would have
been GBP28,885 lower / GBP28,885 higher (2019: GBP11,538 lower /
GBP11,538 higher). The actual foreign exchange gain for the year
ended 30 June 2020 was GBP350 (2019: gain of GBP9,821).
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group is not exposed to any significant interest rate risk.
Most of the cash and cash equivalents are held in banks in the UK
where the current interest rate is negotiable and unlikely to
fluctuate in the foreseeable future.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit and setting
appropriate credit limits. The maximum exposure to credit risk at
the reporting date to recognised financial assets is the gross
carrying amount, as disclosed in the balance sheet and notes to the
financial statements. The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in
estimating expected credit losses to trade receivables through the
use of a provisions matrix using fixed rates of credit loss
provisioning. These provisions are considered representative across
all customers of the Group based on recent sales experience,
historical collection rates and forward-looking information that is
available.
Generally, trade receivables are written off when there is no
reasonable expectation of recovery. Indicators of this include the
failure of a debtor to engage in a repayment plan, no active
enforcement activity and a failure to make contractual payments for
a period greater than 1 year.
Except for cash and cash equivalents, the Group has no other
concentration of credit risk exposure as at 30 June 2020 and 2019.
No expected credit loss is recorded for cash and cash equivalents
as the Group and Company only deal with at least "A" rated
financial institutions.
Liquidity risk
Vigilant liquidity risk management requires the company to
maintain sufficient liquid assets (mainly cash and cash
equivalents) to be able to pay debts as and when they become due
and payable.
The Group manages liquidity risk by maintaining adequate cash
reserves by continuously monitoring actual and forecast cash flows
and matching the maturity profiles of financial assets and
liabilities.
Remaining contractual maturities
The following tables detail the Group's remaining contractual
maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both
interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from
their carrying amount in the balance sheet.
Between Between Remaining
1 year 1 and 2 2 and 5 Over 5 contractual
or less years years years maturities
2020 GBP GBP GBP GBP GBP
Non-derivatives
Non-interest bearing
Trade payables 85,692 - - - 85,692
Other payables 46,591 - - - 46,591
Total non-derivatives 132,283 - - - 132,283
-------- -------- -------- ------ ------------
Between Between Remaining
1 year 1 and 2 2 and 5 Over 5 contractual
or less years years years maturities
2019 GBP GBP GBP GBP GBP
Non-derivatives
Non-interest bearing
Trade payables 65,352 - - - 65,352
Other payables 3,328 - - - 3,328
Total non-derivatives 68,680 - - - 68,680
-------- -------- -------- ------ ------------
The cash flows in the maturity analysis above are not expected
to occur significantly earlier than contractually disclosed above.
The Group has more than adequate cash reserves to meet the
remaining contractual maturities.
NOTE 27. FAIR VALUE MEASUREMENT
The carrying amounts of trade and other receivables and trade
and other payables approximate their fair values due to their
short-term nature.
The fair value of financial liabilities is estimated by
discounting the remaining contractual maturities at the current
market interest rate that is available for similar financial
liabilities.
NOTE 28. AUDITOR REMUNERATION
During the financial year ended June 2020, the following fees
were paid or payable for services provided by Oury Clark Chartered
Accountants, the auditor of the Company, and its associates. Ernst
& Young LLP audited the prior year results.
2019 (as
2020 restated)
GBP GBP
Audit services
Audit or review of the financial statements 46,000 63,000
Other services
Accounting assistance 43,813 -
Other - -
- -
89,813 63,000
====== ==========
NOTE 29. CONTINGENT LIABILITIES
2019 (as
2020 restated)
GBP GBP
Contingent consideration 127,834 -
------- ----------
The contingent consideration related to the purchase of Airsight
Holdings Pty Ltd now Corridor Holdings Pty Ltd. The consideration
is in the form of a share issue by Maestrano Group PLC and is
dependent on the total revenue achieved by the Airsight Holdings
Pty Ltd group for the financial year ending 30 June 2020. The
consideration is calculated dividing the total revenue achieved by
the Airsight Holdings Pty Ltd group in the year ended 30 June 2020
by AU$1,500,000, multiplied by 7,338,337. To determine how many
shares are to be issued by Maestrano Group PLC. The shares would be
issuable on 30 September 2020.
The contingent consideration recognised in the accounts was
calculated using the fair value on the date of acquisition.
NOTE 30. LEASES
Right-of-use assets
Right-of-use assets related to leased properties that do not
meet the definition of investment property are presents as
property, plant and equipment.
The Group leases premises with a lease term of 5 years ending 29
May 2024. There is no option to purchase and there are no variable
payments.
Carrying
Additions Depreciation Impairment amount
Buildings 160,378.00 - 21,415.00 - 138,963.00
160,378.00 - 21,415.00 - 138,963.00
====================== ============= ======================= ======================
Lease liabilities
Included within current liabilities is a lease liability of
GBP18,793. Included within non-current liabilities is a lease
liability of GBP84,788.
As at 30 June 2020 the Group had not committed to any further
lease liabilities that had not yet commenced.
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for
short-term leases (leases of expected term of 12 months or less) or
for leases of low value assets. Payments made under such leases are
expenses on a straight-line basis.
There was GBP97,251 of rent recognised on the short-term lease
basis.
The total cash outflow in respect of leases in the year was
GBP122,661 and the interest expense for leasing arrangements was
GBP6,181.
NOTE 31. RELATED PARTY TRANSACTIONS
Parent entity and ultimate controlling party
The parent entity and ultimate parent entity is Maestrano Group
plc. There is no ultimate controlling party.
Key management personnel
Disclosures relating to key management personnel are set out in
note 11.
Transactions with related parties
There were no transactions with related parties during the
current and previous financial years other than those noted above
with key management personnel.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to
related parties at the current and previous reporting dates.
Loans to/from related parties
There were no loans to or from related parties at the current
and previous reporting dates.
NOTE 32. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiaries held by the
Company in accordance with the accounting policy described in note
2:
Holding
Address and country
Name of incorporation %
2/2 Frost Drive, Mayfield
Maestrano Pty Ltd West NSW 2304, Australia 100%
Corridor Technology 10 John Street, London
Limited WC 1N 2EB United Kingdom 100%
Suite 6.018, 404 5(th)
Avenue, New York NY
Corridor Technology 10018, United States
Inc. of America 100%
Corridor Holdings Pty 2/2 Frost Drive, Mayfield
Ltd West NSW 2304, Australia 100%
2/2 Frost Drive, Mayfield
Corridor Pty Ltd West NSW 2304, Australia 100%
Airsight Australia Pty 2/2 Frost Drive, Mayfield
Ltd West NSW 2304, Australia 100%
2/2 Frost Drive, Mayfield
Airsight IP Pty Ltd West NSW 2304, Australia 100%
The Corridor Holdings Pty Ltd group which includes, Corridor
Holdings Pty Ltd, Corridor Pty Ltd, Airsight IP Pty Ltd and
Airsight Australia Pty Ltd have been included in the consolidation
from the date of acquisition being 1 November 2019 .
Maestrano EMEA DMCC was a 100% owned subsidiary but was
liquidated during the period. There was no activity during the
period and therefore its results are not shown as a separate line
item under 'discontinued operations' in the Statement of profit or
loss for the period.
NOTE 33. EARNINGS PER SHARE
2019 (as
2020 restated)
GBP GBP
Loss after income tax (969,949) (2,328,228)
Non-controlling interest - -
Loss after income tax attributable to the owners
of Maestrano Group plc (969,949) (2,328,228)
========= ===========
Number Number
Weighted average number of ordinary shares used in
calculating basic earnings per share 124,070,377 80,040,331
Weighted average number of ordinary shares used in
calculating diluted earnings per share 124,070,377 80,040,331
=========== ==========
Pence Pence
Basic earnings per share (0.78) (2.91)
Diluted earnings per share (0.78) (2.91)
Options and convertible notes have not been included in the
diluted earnings per share in the prior year as they were
anti-dilutive.
NOTE 34. SHARE-BASED PAYMENTS
A share option plan has been established by the Group and
approved by shareholders at a general meeting, whereby the Group
may, at the discretion of the Board of Directors, grant options
over equity settled ordinary shares in the Company to certain key
management personnel of the Group. The options are issued for nil
consideration and are granted in accordance with performance
guidelines established by the Board of Directors.
All options vest over a period no longer than three years and
may have other vesting conditions. Options expire when an employee
ceases to be employed or contracted by a Group unless the Board in
its discretion allows the employee to retain all or some of their
options. Options do not have a fixed expiry date.
All options granted during prior periods were forfeited or
cancelled by the prior year end and the fair value of share-based
payment charge was totally immaterial and thus the share-based
payment expense during the prior financial year was recorded as
GBPnil.
During the current financial year, there were 9,964,722 equity
settled share options granted. The share-based payment expense
during the financial year was recorded as GBP6,896 that is
recognised as an accrual at the year end.
The fair value of the options granted was calculated using the
Black Scholes Model. The inputs used for the shares granted on
01/07/2019 were as follows. Weighted average share price GBP0.01,
exercise price GBP0.013, expected volatility of 100, a risk-free
interest rate of 2.9% and an option life of 550 days. The
volatility was calculated using the entity's share price over the
previous 12 months.
2020
Balance Balance
at Expired/ at
the start the end
Exercise of forfeited/ of
Grant date price the year Granted Exercised other the year
01/07/2015 GBP0.012 6,221,250 - (6,041,250) (180,000) -
01/10/2015 GBP0.012 50,268 - (50,258) (10) -
26/11/2015 GBP0.012 300,000 - (300,000) - -
31/12/2015 GBP0.012 1,000,000 - (1,000,000) - -
01/01/2016 GBP0.012 100,000 - (60,000) (40,000) -
03/02/2016 GBP0.012 350,000 - (250,000) (100,000) -
02/06/2016 GBP0.012 10,000 - - (10,000) -
01/07/2016 GBP0.012 430,000 - (360,000) (70,000) -
19/09/2016 GBP0.012 30,000 - (30,000) - -
31/10/2016 GBP0.012 30,000 - (30,000) - -
14/11/2016 GBP0.012 3,050,000 - (2,000,000) (1,050,000) -
07/12/2016 GBP0.012 20,000 - (20,000) - -
01/01/2017 GBP0.012 100,000 - - (100,000) -
06/02/2017 GBP0.012 1,500,000 - (500,000) (1,000,000) -
21/04/2017 GBP0.012 150,000 - - (150,000) -
15/05/2017 GBP0.012 370,000 - (220,000) (150,000) -
19/06/2017 GBP0.012 20,000 - (20,000) - -
08/12/2017 GBP0.012 1,100,000 - (900,000) (200,000) -
27/02/2018 GBP0.012 278,492 - (278,492) - -
03/12/2018 GBP0.087 - - - - -
03/12/2018 GBP0.087 3,660,000 - - (3,660,000) -
26/02/2019 GBP0.049 880,000 - - (880,000) -
01/07/2019 GBP0.013 - 5,082,222 - - 5,082,222
13/03/2020 GBP0.02 - 800,000 - - 800,000
17/04/2020 GBP0.018 - 2,082,500 - - 2,082,500
04/05/2020 GBP0.019 - 2,000,000 - - 2,000,000
19,650,010 9,964,722 (12,060,000) (7,590,010) 9,964,722
---------- --------- ------------ ----------- ---------
Weighted average
exercise price GBP0.028 GBP0.016 GBP0.012 GBP0.012 GBP0.016
The weighted average share price during the financial year was
GBP0.018 (2019: GBP0.06).
The weighted average remaining contractual life of options outstanding
at the end of the financial year was 1.44 (2019: Nil years).
At the period end, there were 2,826,076 (2019: 0) exercisable shares.
There is no agreement in place between the Company and its employees
for the Company to pay taxes on behalf of its employees.
NOTE 35. EVENTS AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 30 June 2020 that has
significantly affected, or may significantly affect the Group's
operations, the results of those operations, or the Group's state
of affairs in future financial years.
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END
FR UOUARRWURURA
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October 26, 2020 03:00 ET (07:00 GMT)
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