Company Registration No. 07840778 (England and Wales)
DESWIK EUROPE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
DESWIK EUROPE LIMITED
COMPANY INFORMATION
Directors
M R Chilcott
C Lalousis
Company number
07840778
Registered office
Suites B & D
Burnham Yard
Beaconsfield
Bucks
HP9 2JH
Auditor
Azets Audit Services
Suites B & D
Burnham Yard
Beaconsfield
Bucks
HP9 2JH
DESWIK EUROPE LIMITED
CONTENTS
Page
Directors' report
1 - 2
Independent auditor's report
3 - 5
Income statement
6
Statement of financial position
7
Statement of changes in equity
8
Notes to the financial statements
9 - 22
DESWIK EUROPE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2022
- 1 -

The directors present their annual report and financial statements for the year ended 30 June 2022.

Principal activities

The principal activity of the company continued to be that of delivering engineering efficiency to the mining industry through customised software, consulting and training solutions.

Results and dividends

The results for the year are set out on page 6.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

No preference dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

M R Chilcott
C Lalousis
I A Lawler
(Resigned 4 August 2022)
Auditor

The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of directors' responsibilities

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

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

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

Statement of disclosure to auditor

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

DESWIK EUROPE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 2 -
On behalf of the board
C Lalousis
Director
18 August 2022
DESWIK EUROPE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF DESWIK EUROPE LIMITED
- 3 -
Opinion

We have audited the financial statements of Deswik Europe Limited (the 'company') for the year ended 30 June 2022 which comprise the income statement, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

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

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:

DESWIK EUROPE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF DESWIK EUROPE LIMITED
- 4 -
Matters on which we are required to report by exception

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

 

Responsibilities of directors

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

Auditor's responsibilities for the audit of the financial statements

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

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

DESWIK EUROPE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF DESWIK EUROPE LIMITED
- 5 -

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

 

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

 

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

 

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the company’s member 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 member 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 member for our audit work, for this report, or for the opinions we have formed.

David Green MA (Cantab) ACA (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
18 August 2022
Chartered Accountants
Statutory Auditor
Suites B & D
Burnham Yard
Beaconsfield
Bucks
HP9 2JH
DESWIK EUROPE LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2022
- 6 -
2022
2021
Notes
£
£
Revenue
2
2,158,509
2,059,629
Cost of sales
(1,364,459)
(927,949)
Gross profit
794,050
1,131,680
Administrative expenses
(1,335,296)
(1,025,166)
Other operating income
101,251
194,363
Operating (loss)/profit
3
(439,995)
300,877
Investment income
5
440,022
73
Finance costs
7
(3,283)
(8,095)
(Loss)/profit before taxation
(3,256)
292,855
Tax on (loss)/profit
8
33,715
(56,714)
Profit and total comprehensive income for the financial year
30,459
236,141

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

DESWIK EUROPE LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
30 JUNE 2022
30 June 2022
- 7 -
2022
2021
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
10
220,580
295,952
Investments
12
113
113
220,693
296,065
Current assets
Inventories
13
48,502
39,350
Trade and other receivables
14
1,691,550
915,802
Cash and cash equivalents
1,129,194
1,177,560
2,869,246
2,132,712
Current liabilities
15
(2,148,885)
(1,301,455)
Net current assets
720,361
831,257
Total assets less current liabilities
941,054
1,127,322
Non-current liabilities
15
(73,384)
(292,200)
Provisions for liabilities
Deferred tax liabilities
17
(15,118)
(13,029)
Net assets
852,552
822,093
Equity
Called up share capital
20
100
100
Retained earnings
852,452
821,993
Total equity
852,552
822,093
The financial statements were approved by the board of directors and authorised for issue on 18 August 2022 and are signed on its behalf by:
C Lalousis
Director
Company Registration No. 07840778
DESWIK EUROPE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
- 8 -
Share capital
Retained earnings
Total
Notes
£
£
£
Balance at 1 July 2020
100
1,285,852
1,285,952
Year ended 30 June 2021:
Profit and total comprehensive income for the year
-
236,141
236,141
Dividends
9
-
(700,000)
(700,000)
Balance at 30 June 2021
100
821,993
822,093
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
30,459
30,459
Balance at 30 June 2022
100
852,452
852,552
DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
- 9 -
1
Accounting policies
Company information

Deswik Europe Limited is a private company limited by shares incorporated in England and Wales. The registered office is Suites B & D, Burnham Yard, Beaconsfield Bucks, HP9 2JH. The company's principal activities and nature of its operations are disclosed in the directors' report.

1.1
Accounting convention

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

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 under the historical cost convention. The principal accounting policies adopted are set out below.

As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:

Where required, equivalent disclosures are given in the group accounts of Deswik Group Pty Ltd (incorporated in Australia). The group accounts of Deswik Group Pty Ltd are available to the public and can be obtained from Level 9, 348 Edward St, Brisbane, Queensland 4000, Australia.

1.2
Going concern

The directors have at the time of approving the financial statements, a reasonable expectation that the truecompany has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 10 -
1.3
Revenue

Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The main sources of revenue are:

 

Consultancy services

Revenue from the rendering of services is recognised by reference to the stage of completion of the contract. The provision of services has been adjusted for accrued revenues calculated by reference to their fair value of services performed up to the balance sheet date.

 

Perpetual license and maintenance and support revenue

Prior to 1 April 2022:

Revenue from the sale of a perpetual license is recognised at a point in time, being the date that the license is issued. Maintenance and support of perpetual licenses comprise multiple performance obligations, Maintenance comprises two components: enhancements and defects. The component attributed to enhancements is recognised at a point in time, being the date access to the enhancements is provided. The components attributed to defects and technical support are recognised over the contract period.

From 1 April 2022 the revenue recognition policy was amended to align to the financial reporting policy of the ultimate parent company, Sandvik AB: Revenue from the sale of a perpetual license is recognised at a point in time, being the date that the license is issued. Maintenance and support of perpetual licenses comprise multiple performance obligations. All components of which are recognised over the contract period.

Subscription and rental revenue

Prior to 1 April 2022:

Software subscription and software rental contracts contain multiple performance obligations. The license and maintenance enhancement components within both subscriptions and rental revenue are recognised at a point in time, and the maintenance defects and technical support components within both subscription and rental revenue are recognised over the contract period.

 

From 1 April 2022 the revenue recognition policy was amended to align to the financial reporting policy of the ultimate parent company, Sandvik AB: Software subscription and software rental contracts contain multiple performance obligations. All components of which are recognised over the contract period.

1.4
Property, plant and equipment

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:

Fixtures and fittings
20% Straight line
ROU asset
Straight line over the term of the lease

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.

1.5
Non-current investments

Investments in subsidiary undertakings are recognised at cost.

DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 11 -
1.6
Impairment of tangible and intangible assets

At each reporting end date, the company reviews the carrying amounts of its tangible 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.

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.

1.7
Inventories

Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.

 

Inventories held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

1.8
Cash and cash equivalents

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.

1.9
Financial assets

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.

DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 12 -
Financial assets at fair value through profit or loss

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 assets held at amortised cost

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.

Financial assets at fair value through other comprehensive income

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 the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.

Impairment of financial assets

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.

Derecognition of financial assets

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.

DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 13 -
1.10
Financial liabilities

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 at fair value through profit or loss

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:

 

 

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

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.

Derecognition of financial liabilities

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

1.11
Equity instruments

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.

1.12
Taxation

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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.

DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 14 -
Deferred tax

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.

1.13
Employee benefits

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

1.14
Retirement benefits

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

1.15
Leases

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 15 -

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

1.16
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Revenue
2022
2021
£
£
Revenue analysed by class of business
Consultancy fees
1,084,586
779,279
Software commission
1,073,923
1,280,350
2,158,509
2,059,629
Dividends received
440,000
-
0
2022
2021
£
£
Revenue analysed by geographical market
UK
97,825
92,797
Europe
1,761,446
1,310,116
Rest of the World
299,238
656,716
2,158,509
2,059,629
DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 16 -
3
Operating (loss)/profit
2022
2021
£
£
Operating (loss)/profit for the year is stated after charging/(crediting):
Exchange (gains)/losses
(1,631)
21,292
Fees payable to the company's auditor for the audit of the company's financial statements
8,100
7,300
Depreciation of property, plant and equipment
30,036
25,699
Depreciation of right-of-use assets
59,524
59,463
(Profit)/loss on disposal of property, plant and equipment
(383)
2,128
Work in progress recognised as an expense
320,212
131,895
4
Employees

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

2022
2021
Number
Number
13
12

Their aggregate remuneration comprised:

2022
2021
£
£
Wages and salaries
1,864,961
1,348,658
Pension costs
32,292
40,325
1,897,253
1,388,983
5
Investment income
2022
2021
£
£
Interest income
Interest on bank deposits
22
73
Income from fixed asset investments
Income from shares in group undertakings
440,000
-
0
Total income
440,022
73
DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 17 -
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
541,302
276,684
Remuneration disclosed above include the following amounts paid to the highest paid director:
541,302
276,684
7
Finance costs
2022
2021
£
£
Interest on other financial liabilities:
Interest on lease liabilities
3,283
8,095
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
62,758
75,942
Deferred tax
Origination and reversal of temporary differences
(96,473)
(19,228)
Total tax charge/(credit)
(33,715)
56,714
DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
8
Taxation
(Continued)
- 18 -

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

2022
2021
£
£
(Loss)/profit before taxation
(3,256)
292,855
Expected tax (credit)/charge based on a corporation tax rate of 19.00% (2021: 19.00%)
(619)
55,642
Effect of expenses not deductible in determining taxable profit
1,279
16,645
Deferred tax movement
(96,473)
(19,228)
Unutilised tax losses
128,367
-
Withholding tax
50,834
-
Dividend income
(83,600)
-
Capital allowance in excess of depreciation
(3,399)
3,655
Release of unpaid bonus accrual brought forward
(30,104)
-
Taxation (credit)/charge for the year
(33,715)
56,714
9
Dividends
2022
2021
2022
2021
Amounts recognised as distributions:
per share
per share
Total
Total
£
£
£
£
Ordinary
Interim dividend paid
-
7,000
-
700,000
10
Property, plant and equipment
Fixtures and fittings
ROU asset
Total
£
£
£
Cost
At 30 June 2021
183,096
276,052
459,148
Additions
36,867
-
0
36,867
Disposals
-
0
(43,828)
(43,828)
Adjustment to IFRS 16 lease
-
0
(71,596)
(71,596)
At 30 June 2022
219,963
160,628
380,591
Accumulated depreciation and impairment
At 30 June 2021
99,255
63,941
163,196
Charge for the year
30,036
59,524
89,560
Eliminated on disposal
-
0
(21,149)
(21,149)
Adjustment to IFRS 16 lease
-
0
(71,596)
(71,596)
At 30 June 2022
129,291
30,720
160,011
DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
10
Property, plant and equipment
Fixtures and fittings
ROU asset
Total
£
£
£
(Continued)
- 19 -
Carrying amount
At 30 June 2022
90,672
129,908
220,580
At 30 June 2021
83,841
212,111
295,952
11
Subsidiaries

Details of the company's subsidiaries at 30 June 2022 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Voting
Deswik RUS OOO
ul. Petrovka 27, 107031, Moscow,
Russian Federation
Ordinary
100.00
100.00
12
Investments
Current
Non-current
2022
2021
2022
2021
£
£
£
£
Investments in subsidiaries
-
0
-
0
113
113
Movements in non-current investments
Shares in group undertakings
£
Cost or valuation
At 1 July 2021 & 30 June 2022
113
Carrying amount
At 30 June 2022
113
At 30 June 2021
113
13
Inventories
2022
2021
£
£
Work in progress
48,502
39,350
DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 20 -
14
Trade and other receivables
Current
Non-current
2022
2021
2022
2021
£
£
£
£
Trade receivables
502,837
338,500
-
-
Amounts owed by fellow group undertakings
51,461
84,503
-
0
-
0
Other receivables
38,657
7,745
28,186
28,186
Prepayments and accrued income
941,228
426,249
-
-
1,534,183
856,997
28,186
28,186
Deferred tax asset
129,181
-
-
30,619
1,663,364
856,997
28,186
58,805
15
Liabilities
Current
Non-current
2022
2021
2022
2021
Notes
£
£
£
£
Trade and other payables
16
2,053,923
1,023,580
-
0
158,442
Taxation and social security
37,252
196,277
-
0
-
0
Lease liabilities
18
57,710
81,598
73,384
133,758
2,148,885
1,301,455
73,384
292,200
16
Trade and other payables
Current
Non-current
2022
2021
2022
2021
£
£
£
£
Trade payables
28,397
23,488
-
0
-
0
Amounts owed to fellow group undertakings
124,414
88,324
-
-
Accruals and deferred income
1,836,945
906,628
-
0
158,442
Other payables
64,167
5,140
-
-
2,053,923
1,023,580
-
158,442
DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 21 -
17
Deferred taxation
2022
2021
£
£
Deferred tax liabilities
15,118
13,029
Deferred tax assets
(129,181)
(30,619)
(114,063)
(17,590)

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

Accelerated capital allowances
Tax losses
Unpaid bonus
Total
£
£
£
£
Deferred tax liability at 1 July 2020
15,922
-
0
-
15,922
Deferred tax asset at 1 July 2020
-
0
-
0
(14,284)
(14,284)
Deferred tax movements in prior year
Charge/(credit) to profit or loss
(2,893)
-
(16,335)
(19,228)
Deferred tax liability at 1 July 2021
13,029
-
0
-
13,029
Deferred tax asset at 1 July 2021
-
0
-
0
(30,619)
(30,619)
Deferred tax movements in current year
Charge/(credit) to profit or loss
2,089
(128,367)
29,805
(96,473)
Deferred tax liability at 30 June 2022
15,118
-
0
-
15,118
Deferred tax asset at 30 June 2022
-
0
(128,367)
(814)
(129,181)
18
Lease liabilities

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2022
2021
£
£
Current liabilities
57,710
81,598
Non-current liabilities
73,384
133,758
131,094
215,356
DESWIK EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
18
Lease liabilities
(Continued)
- 22 -
2022
2021
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
3,283
8,095
19
Retirement benefit schemes
Defined contribution schemes

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 £38,409 (2021 - £40,325).

20
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Authorised
Ordinary of £1 each
100
100
100
100
Issued and fully paid
Ordinary of £1 each
100
100
100
100
21
Related party transactions

The Company has taken advantage of the exemption of FRS 101 not to disclose details of transactions with other wholly owned group undertakings.

22
Controlling party

The company is a wholly owned subsidiary undertaking of Deswik Group Pty Ltd (incorporated in Australia).

The group in which the results of the company are consolidated is that headed by Deswik Group Pty Ltd. No other group financial statements include the results of the company. The consolidated financial statements of the group can be obtained from Level 9, 348 Edward St, Brisbane, Queensland 4000, Australia.

 

On 4 April 2022 the group was acquired by Sandvik AB (incorporated in Sweden) who are now the ultimate controlling party.

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