DEREGALLERA_HOLDINGS_LTD - Accounts

The directors present their annual report and financial statements for the year ended 31 March 2022.

The principal activity of the company continued to be that of research and development into energy storage and motor design.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).

The company's current policy concerning the payment of trade creditors is to:

• settle the terms of payment with suppliers when agreeing the terms of each transaction;

• ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and

• pay in accordance with the company's contractual and other legal obligations.

TC Group were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:

•     properly select and apply accounting policies;

•     present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•     provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

•     make an assessment of the company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

This report has been prepared in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies

We have audited the financial statements of Deregallera Holdings Ltd (the 'company') for the year ended 31 March 2022 which comprise the income statement, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 March 2022 and of its loss for the year then ended;

•     have been properly prepared in accordance with IFRSs as adopted by the European Union; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We draw you attention to note 1.2 to the financial statements, which indicates that the Company 's cash flow projections are reliant in part on cash injections from DG Innovate Plc the parent company, which itself will need to raise debt or equity funding in order to continue in business and meet it's liabilities as they fall due for at least 12 months from the date of the approval of the financial statements.

These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our report is not modified in this matter.

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the director's assessment of the Company's ability to continue to adopt the going concern basis of accounting included a review of their projections and we examined the disclosures relating to the going concern basis of preparation and found that these provided an explanation of the director's assessment that was consistent with the evidence we obtained.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the directors' report has been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of 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 prepare the financial statements in accordance with the small companies regime and take advantage of the small companies exemption from the requirement to prepare a strategic report.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Extent to which the audit was considered capable of detecting irregularities, including fraud

The objectives of our audit, in respect to 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 its management.

Our approach was as follows:

• We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations;

• We considered the legal and regulatory frameworks directly applicable to the financial statements reporting framework (IFRS and the Companies Act 2006) and the relevant tax compliance regulations in the UK;

• We considered the nature of the industry, the control environment and business performance, including the key drivers for management’s remuneration;

• We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit;

• We considered the procedures and controls that the company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls.

Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from fraud or error.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.

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 an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

The income statement has been prepared on the basis that all operations are continuing operations.

On the 5th April 2022 the company changed its name from DG Innovate Ltd to Deregallera Holdings Ltd.

Deregallera Holdings Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 15 Victoria Mews, Mill Field Road, Cottingley, Bingley, BD16 1PY. The company's principal activities and nature of its operations are disclosed in the directors' report.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared prepared under the historical cost convention. The principal accounting policies adopted are set out below.

These financial statements have been prepared on a going concern basis which assumes that Deregallera Holdings Group will continue in operational existence for the foreseeable future. In making this assessment the directors have reviewed the balance sheet, the likely future funding available and considered the facilities and cash that are in place. true

As a result of Covid-19 restrictions, significant reductions in business activities have occurred. The board has taken steps to reduce costs in the group (predominantly staff costs) and have utilised the Government’s Job Retention Scheme to help facilitate staff salary payments. Furthermore, the board has also taken steps to secure additional debt financing through Government backed loans (Coronavirus Business Interruption Loan Scheme loan) which have been put in place.

Deregallera Holdings Ltd completed the reverse merger transaction with DG Innovate Plc (previously known as Path Investments Plc), a listed company on the main market of London Stock Exchange (LSE) on 8 April 2022. Following the merger, DG Innovate Plc became the parent company and owns 100% shareholding of Deregallera Holdings Ltd.

DG Innovate Plc has provided loans of a total of £2.68m to Deregallera Holdings by the end of November 2022 (£0.9m prior to merger and £1.78m post-merger). The loan is secured by placing a fixed charge and a floating charge over Deregallera Holdings’ assets which have been registered with Companies House. For the next 12 months DG Innovate Plc will continue financing Deregallera Holdings and its subsidiaries’ business activities via inter-company loans.

The board of Deregallera Holdings and subsidiaries will also make all efforts to seek other means to meet the working capital requirements for the 12 months through securing grant support and generating sales.

Deregallera’s board of directors believe that the business has strong growth prospects and remains a going concern, based on the current cash position, grant income expected as well as cash injections from DG Innovate Plc throughout 2023 and beyond. Therefore, the board has concluded that it is appropriate to prepare these financial statements on a going concern basis.

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

The company recognises revenue from the following major sources:

Licence fees

Licence fees are recognised on an accrual basis in accordance with the substance of the relevant agreement (provided that it is probable that the economic benefit will flow to the company and the amount of revenue can be measured reliably). Licence fees determined on a time basis are recognised on a straight-line basis over the period of the agreement. Licence fees that are based on production, sales and other measures are recognised by reference to the underlying arrangement.

Management fee

Revenue from management charges within the group is recognised at the rate agreed by both parties.

Interest income

Interest income from inter-company loans is recognised when it is probable that the economic benefit will flow to the company and the amount of the income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at a rate of 1.0% above the average LIBOR rate per annum. Interest income from saving accounts is recognised when the interest payment is received.

Government grants

Government grants are not recognised at their fair value until there is reasonable assurance that the company will comply with the conditions attaching to them and that the grants will be received.

(i) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at the cost less accumulated impairment losses.

(ii) Internally-generated intangible assets (Patents and licences and development expenditure)

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale;

• the intention to complete the intangible asset and use or sell it;

• the ability to use or sell the intangible asset;

• how the intangible asset will generate probable future economic benefit;

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible assets; and

• the ability to measure reliably the expenditure attributed to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in the statement of profit and loss in the period in which it incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is provided at the following annual rates:

Intellectual property - Straight line over 10 years

Patent applications are capitalised once they have been successful and are amortised over its useful economic life.

Subsequent development expenditure which meets the criteria for capitalisation as an intangible asset is capitalised in the specific asset to which it relates. All other expenditure is recognised in profit or loss.

(iii) Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no further economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

(iv) Impairment of intangible assets

At the end of each reporting period the group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the

impairment loss (if any).

Intangible assets with indefinite useful economic lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

The recoverable amount is considered to be the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Trade Receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

The company has made an irrevocable election to recognize changes in fair value of investments in equity

instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value

changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or

loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.

Financial assets, other than those measured at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:

•     it has been incurred principally for the purpose of repurchasing it in the near term, or

•     on initial recognition it is part of a portfolio of identified financial instruments that the manages together and has a recent actual pattern of short-term profit taking, or

•     it is a derivative that is not designated and effective hedging instrument.

Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.

Key estimates and assumptions are mostly founded on historical experiences and future expectations. In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

(i) Revenue Recognition:

In making their judgement, the directors considered the detailed criteria for the recognition of revenue from the sale of goods and services set out in IFRS 15 and, in particular, whether the company had transferred to the buyer the significant risks and rewards of ownership of the goods and services. Following the detailed quantification of the company's liability in respect of rectification work, and the agreed limitation on the customer's ability to require further work or to require replacement of the goods, the directors are satisfied that the significant risks and rewards have been transferred and that recognition of the revenue in the current year is appropriate, in conjunction with the recognition of an appropriate provision for the rectification costs.

ii) Control over subsidiaries

The directors of the company assessed whether or not the company has control over its subsidiaries based on whether the company has the practical ability to direct the relevant activities of its subsidiaries unilaterally. In making their judgement, the directors considered the company's absolute size of holding in its subsidiaries and the relative size of and dispersion of the shareholdings owned by the other shareholders. After assessment, the directors concluded that the company has a sufficiently dominant voting interest to direct the relevant activities of its subsidiaries and therefore the company has control over its subsidiaries.

(iii) Useful lives of patents, licences and development costs

The company reviews the estimated useful lives of its other intangible assets at the end of each reporting period. This is due to the fast evolving industry in which the company operates. During the current year, the directors determined that the useful lives of certain patents and development costs should be shortened, due to developments in technology.

iv) Useful lives of property plant and equipment

The company reviews the estimated useful lives of its property plant and equipment at the end of each reporting period. During the current year, the directors determined that the useful lives of the items of property plant and equipment were appropriate.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest pound unless otherwise stated.

Cash and cash equivalents

For the purposes of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Statement of Financial Position.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less provision for impairment.

Trade and other payables

These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year which were unpaid. The amounts are unsecured and are usually paid within the suppliers credit terms. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

In the application of the company's accounting policies, the directors of the company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of there vision and future periods if the revision affects both current and future periods.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

Total interest income for financial assets that are not held at fair value through profit or loss is £226 (2021 - £-).

On the 19 June 2020 a resolution was passed to transfer the 51% share-holding in Siddons Furniture Ltd to Siddons Furniture Ltd for a consideration based on an agreed future profit share on the satisfaction of certain agreed criteria. In addition, the intercompany loan as at this date of £48,960 was written off.

The charge for the year can be reconciled to the loss per the income statement as follows:

Intangible assets with a carrying amount of £4,135,500 (2021: £3,610,475) have been pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity Intellectual property relates to license, patent costs and 'know how'.

Details of the company's subsidiaries at 31 March 2022 are as follows:

The Investments in subsidiaries are all stated at cost.

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

The shareholder lenders as at the 31 March 2022 have given consent to Deregallera Holdings Ltd to defer the repayment of the loan and accrued interest payable while Deregallera Holdings Ltd is progressing with the reverse takeover.

The conditional sale and purchase agreement exchanged with Path Investment Plc. on 12 August 2021 stated that the shareholders’ loans and accrued interest will be repaid after the merger, which has taken place on 8 April 2022. Therefore the shareholder loans as at the 31 March 2022 are classified as current liabilities. The shareholder loans outstanding as at 31 March 2022 are £656,062 current (2021: £593,875 non-current). Following the completion of merger with DG Innovate Plc (previously Path Investments Plc), Deregallera Holdings repaid the shareholders’ loans on 25 April 2022 and the associated charge over the company’s assets have been subsequently removed.

During the year DG Innovate Plc issued loans of a total of £900,000 to Deregallera Holdings Ltd which is fully classed as non-current loan in these financial statements. The loan repayment has been deferred and the amount outstanding as at 31 March 2022 was £922,932. The company has provided a legal mortgage by way of a fixed and floating charge over all its property and assets to the loans.

The company is exposed to credit and liquidity risk which arises in the normal course of the company's business. The company is governed by the capital and risk management policies of Deregallera Holdings Ltd "Group" which are set out below.

Capital Management

The Group's policy is to maintain a strong capital base so as to secure investor's funds and to sustain further development of the business. Management also seeks additional funding from contracted sales and government grants. Expenditure on capital equipment and various research and development projects are under regular review and detailed cost control. Surplus funds are kept in business savings accounts offering best rates.

The Group is currently seeking third round investment to accelerate the ongoing research and development

projects and fund new projects in the pipeline.

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 adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers.

The Group's principal financial assets are bank balances, amounts due to/from other companies within the DG Innovate Group and other receivables. These represent the Group's maximum exposure to credit risk in relation to financial assets.

Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Group's short, medium and longterm funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Recognised assets and liabilities

Cash and cash equivalents comprise cash held by the Group. Other receivables represent amounts

receivable from other companies within the DG Innovate Group for sale of goods, services,

management charges and licence fees. Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The directors consider that the carrying amount of the assets and liabilities approximate to their fair value.

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

The total costs charged to income in respect of defined contribution plans is £40,630 (2021 - £25,498).

Deregellera Holdings Ltd has established an Enterprise Management Incentives (EMI) scheme as part of a plan to incentivise employees where the options are granted to recruit and retain employees. Deregellera Holdings Ltd EMI Share Option Agreement and Share Option Plan rules are produced to set up this scheme. HMRC has agreed to allow the purchase price for employees (the exercise price) to be 0.01p per share.

This is a tax-advantaged share option scheme to grant options to selected employees to allow them to acquire shares over a prescribed period, provided that the following conditions are met

• There is no tax charge on the exercise of an EMI option providing it was granted

at market value;

• If the company's share price has increased in value between the time of grant

and exercise the uplift is not charged to Income Tax;

• There will be a Capital Gains Tax (CGT) charge when the employee

disposes of his/her shares and proceeds exceed market value at the option grant date.

An option may be exercised only in the event of a sale, takeover or admission. The directors may exercise their discretion and permit the exercise of an option in whole or in part on such terms as they may determine at any time before the tenth anniversary of the date of grant. In the event of a takeover or sale, the option may only be exercised if the option holder has agreed in writing, in a manner acceptable to the directors, to exercise and to sell their shares in the Group. In any event, an option shall not be exercisable if or insofar as such option has lapsed and ceased to be exercisable in accordance with the Share Option Plan Rules.

The exercise of an option is normally subject to continued employment. Eligible employees are contracted to work a minimum of 25 hours a week, if less, 75% of their working time and must have no material interest in any of the companies within the Deregellera Holdings Group. Staff are eligible for the bonus option shares depending on the number of additional hours worked. The number of bonus share options issued will be limited to 50% of the granted core share options.

There are no further performance conditions associated with above share options.

All share-based employee remuneration will be settled in equity.

As part of the reverse takeover completed on 8 April 2022, the employees exercised their EMI share options and exchanged Deregallera Holdings Ltd shares for shares in DG Innovate Plc (previously Path Investments Plc)

The ordinary share capital holds rights in respect of voting, and shall entitle the holder to full participation in respect of equity and in the event of winding up or sale. Attached to the shares are the rights to receive dividends. Refer to the share based payment note for further information relating to the Enterprise Management Incentives Scheme operated by the company which extends to the employees of the Deregallera Holdings Group (“The Group”).

The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

During the year there were £nil (2021: £nil) shares of £0.01 (2021: £0.01) granted as options to key management personnel under the Deregallera Holdings Ltd Enterprise Management Incentives Scheme.

Of the above, £152,891 (2021: £10,000) has been included within debtors falling due within one year. The remaining £Nil (2021: £25,043) has been included within debtors falling due after one year. There are set terms or fixed repayment dates. The company holds a fixed mortgage charge over the assets of subsidiary Deregallera Ltd in relation to amounts owed to them at the 31 March 2022.

Until the 8 April 2022 Deregallera Trust owned the controlling shareholding (just over 50%) of the company. On the 8 April 2022 as a result of a reverse takeover DG Innovate Plc became the ultimate parent undertaking, this company is incorporated in England and Wales and whose registered office is 15 Victoria Mews, Cottingley Business Park, Mill Field Road, Bingley, England BD16 1PY.

Copies of the Consolidated Financial Statements of Deregallera Holding Ltd can be obtained from their registered office:

15 Victoria Mews

Mill Field Road

Cottingley

Bingley

England

BD16 1PY