Registration number:
for the Year Ended 31 December 2021
Elring Parts Limited
Contents
Company Information |
|
Strategic Report |
|
Directors' Report |
|
Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
|
Income Statement |
|
Statement of Comprehensive Income |
|
Statement of Financial Position |
|
Statement of Changes in Equity |
|
Statement of Cash Flows |
|
Notes to the Financial Statements |
Elring Parts Limited
Company Information
Directors |
G Waite D Willers T Jessulat Dr S Wolf |
Company secretary |
T Jensen |
Registered office |
|
Auditor |
|
Elring Parts Limited
Strategic Report for the Year Ended 31 December 2021
The directors present their strategic report for the year ended 31 December 2021.
Fair review of the business
Sales decreased in 2021 by 0.89% from prior year, Gross margin has decreased by 3.70% and Administrative expenses have increased by 9.41%, resulting in an decrease in net profit before tax on prior year.
The motor industry saw many constraints around the world with shortages of raw materials and disrupted supply chains leading to major availability issues and increased costs for the aftermarket sector. Taking these conditions into account along with the continued Coronavirus repercussions, Directors consider the year overall as being successful.
The first quarter of 2022 saw slow but positive signs of improvement in availability, achieving sales above targets and a profit before tax of 10%. We are seeing signs of business returning to more acceptable levels during May 2022, however we must remain cautious with the continued unrest in Eastern Europe and continuing price rises.
Directors remain optimistic for 2022 with sales growth anticipated. We will achieve the target growth forecast and estimate to be around 13% up on the previous year. Increased costs are being carefully managed and Directors are optimistic that we will continue to achieve PBT above 10%.
The directors are satisfied with the position of the company's business at the end of the year having increased reserves by £454,539 after the payment of a final dividend of £700,000 in respect of 2020.
Measurement
Given the straightforward nature of the business, the company’s directors are of the opinion that analysis using KPI’s is not necessary development, for an understanding of the performance or position of the business.
Proposed dividend
A final dividend was paid amounting to £700,000 in respect of the previous financial year. The directors agreed a final dividend at the board meeting in July 2022 in respect of 2021 amounting to £850,000 to be paid in August 2022.
Principal risks and uncertainties
The strength of the pound against the Euro, Covid19 repercussions and continuing price rises in many sectors are the main risks of exposure for the remainder of 2022.
While the above mentioned risks continue to be monitored, procedures are in place with the assistance of ElringKlinger AG, additional administration strategies have been considered and actioned to ensure the company can operate with minimal disruption.
Approved by the
......................................... |
Elring Parts Limited
Directors' Report for the Year Ended 31 December 2021
The directors present their report and the financial statements for the year ended 31 December 2021.
Directors' of the company
The directors, who held office during the year, were as follows:
Financial instruments
Objectives and policies
The company finances its activities with a combination of finance leases and hire purchase contracts, and cash and short term deposits. Other financial assets and liabilities, such as trade debtors and trade creditors, arise directly from the Company's operating activities.
Price risk, credit risk, liquidity risk and cash flow risk
The main risks associated with the company’s financial assets and liabilities are set out below.
Market Risk
Expenditure in foreign currencies continue to make up a significant part of the company’s business, these being mainly in Euro’s. The company is therefore exposed to movements in exchange rates. The company maintains a Euro bank account and enters into forward exchange purchases of Euros when rates are favourable which partly mitigates this risk.
Credit risk
The company undertakes assessments of its customers in order to manage credit risk where there is a likelihood of default.
Liquidity risk
The company aims to mitigate risk by managing cash generated by its operations.
Future developments
The Company's principle activities continues to be the distribution of engine parts. The Directors are not aware at the date of this report of any intended major changes in the companies activities in the next year.
The Company intends to continue sales growth and increase profitability in 2022.
Elring Parts Limited
Directors' Report for the Year Ended 31 December 2021 (continued)
Going concern
The financial statements have been prepared on a going concern basis.
The company meets its day to day working capital requirements through cash generated from operations.
The company’s forecasts and projections for the next twelve months show that the company should be able to continue in operational existence for that period, taking into account reasonable possible changes in trading performance and the potential impact on the business of possible future scenarios. This also considers the effectiveness of available measures to assist in mitigating the impact. In the directors assessment of reasonably possible changes in trading performance for the next twelve months they have considered a fall in demand should the global economic impact widen.
Although the forecasts prepared taking account of the matters above, support the ability of the company to remain a going concern and to be able to trade and meet its debts as they fall due, the underlying trading assumptions used in forecasting are extremely judgemental and difficult to predict and could be subject to significant variation.
Based on the factors set out above the directors believe that there is no material uncertainty in relation to going concern and that the company has adequate financial resources to continue in operational existence for at least twelve months from the date of signing the financial statements and therefore the directors believe it remains appropriate to prepare the financial statements on a going concern basis.
Directors' liabilities
There were no qualifying third party indemnity provisions in force for the benefit of any of the Directors during the financial year.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.
Reappointment of auditor
Azets Audit Services Limited were appointed auditor to the company following their acquisition of the trade of Tait Walker LLP, trading as MHA Tait Walker, on 1 May 2022.
In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Azets Audit Services as auditors of the company is to be proposed at the forthcoming Annual General Meeting.
Approved by the
......................................... |
Elring Parts Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities 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 UK adopted International Financial Reporting Standards (IFRSs). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
• | select suitable accounting policies and apply them consistently; |
• | make judgements and accounting estimates that are reasonable and prudent; |
• | state whether applicable UK adopted International Financial Reporting Standards (IFRSs) have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Elring Parts Limited
Independent Auditor's Report to the Members of Elring Parts Limited
Qualified opinion
We have audited the financial statements of Elring Parts Limited (the 'company') for the year ended 31 December 2021, which comprise the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted International Financial Reporting Standards (IFRSs).
In our opinion, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the financial statements:
• | give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its profit for the year then ended; |
• | have been properly prepared in accordance with UK adopted IFRSs; and |
• | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for qualified opinion on 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 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 qualified opinion.
Other matters
The financial statements of Elring Parts Limited for the year ended 31 December 2020 were unaudited.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 original financial statements were 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.
Elring Parts Limited
Independent Auditor's Report to the Members of Elring Parts Limited (continued)
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the 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.
Opinion on other matter prescribed by the Companies Act 2006
Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
Except for the matter described in the basis for qualified opinion section of our report, in the light of our 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. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities [set out on page 5], 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.
Elring Parts Limited
Independent Auditor's Report to the Members of Elring Parts Limited (continued)
Auditor 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• |
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness; |
• |
enquiries of management about any known or suspected instances of non-compliance with laws and regulations and fraud; |
• |
challenging assumptions and judgements made by management in their significant accounting estimates; |
• |
auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias; and |
• |
reviewing financial statement disclosures and testing to support documentation. |
Because of the field in which the client operates, we identified the following areas as those most likely to have a material impact on the financial statements: Health and Safety; employment law (including the Working Time Directive); and compliance with the UK Companies Act.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Elring Parts Limited
Independent Auditor's Report to the Members of Elring Parts Limited (continued)
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.
......................................
For and on behalf of
Chartered Accountants
Statutory Auditor
Bulman House
Regent Centre
Newcastle upon Tyne
NE3 3LS
Azets Audit Services is a trading name of Azets Audit Services Limited
Elring Parts Limited
Income Statement for the Year Ended 31 December 2021
Note |
2021 |
(As restated) |
|
Revenue |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Other operating income |
|
|
|
Operating profit |
|
|
|
Finance income |
|
|
|
Finance expense |
( |
( |
|
Profit before tax |
|
|
|
Income tax expense |
( |
( |
|
Profit for the year |
|
|
The above results were derived from continuing operations.
Elring Parts Limited
Statement of Comprehensive Income for the Year Ended 31 December 2021
2021 |
(As restated) |
|
Profit for the year |
|
|
Total comprehensive income for the year |
|
|
Elring Parts Limited
(Registration number: 03132212)
Statement of Financial Position as at 31 December 2021
Note |
2021 |
(As restated) |
|
Assets |
|||
Non-current assets |
|||
Property, plant and equipment |
|
|
|
Right of use assets |
411,137 |
263,062 |
|
|
|
||
Current assets |
|||
Inventories |
|
|
|
Trade and other receivables |
|
|
|
Cash and cash equivalents |
|
|
|
|
|
||
Total assets |
|
|
|
Liabilities |
|||
Current liabilities |
|||
Trade and other payables |
( |
( |
|
Loans and borrowings |
( |
( |
|
Income tax liability |
( |
( |
|
( |
( |
||
Non-current liabilities |
|||
Loans and borrowings |
(292,659) |
(192,200) |
|
Deferred tax liabilities |
(10,373) |
(9,492) |
|
( |
( |
||
Total liabilities |
( |
( |
|
Net assets |
|
|
|
Equity |
|||
Share capital |
|
|
|
Retained earnings |
|
|
|
Total equity |
|
|
Approved by the
......................................... |
Elring Parts Limited
Statement of Changes in Equity for the Year Ended 31 December 2021
Share capital |
Retained earnings |
Total |
|
At 1 January 2020 |
|
|
|
Profit for the year |
- |
|
|
Total comprehensive income |
- |
|
|
Dividends |
- |
( |
( |
At 31 December 2020 |
|
|
|
Share capital |
Retained earnings |
Total |
|
At 1 January 2021 |
|
|
|
Profit for the year |
- |
|
|
Total comprehensive income |
- |
|
|
Dividends |
- |
( |
( |
At 31 December 2021 |
|
|
|
Elring Parts Limited
Statement of Cash Flows for the Year Ended 31 December 2021
Note |
2021 |
(As restated) |
|
Cash flows from operating activities |
|||
Profit for the year |
|
|
|
Adjustments to cash flows from non-cash items |
|||
Depreciation and amortisation |
|
|
|
Depreciation on right of use assets |
78,904 |
121,587 |
|
Loss on disposal of property plant and equipment |
|
- |
|
Finance income |
( |
( |
|
Finance expense |
|
|
|
Income tax expense |
|
|
|
|
|
||
Working capital adjustments |
|||
(Increase)/decrease in inventories |
( |
|
|
Increase in trade and other receivables |
( |
( |
|
(Decrease)/increase in trade and other payables |
( |
|
|
Increase in lease liability |
14,609 |
- |
|
Cash generated from operations |
|
|
|
Income taxes paid |
( |
( |
|
Net cash flow from operating activities |
|
|
|
Cash flows from investing activities |
|||
Interest received |
|
|
|
Acquisitions of property plant and equipment |
( |
( |
|
Payments made on leased assets during the year |
(120,794) |
(120,850) |
|
Net cash flows from investing activities |
( |
( |
|
Cash flows from financing activities |
|||
Interest expense on leases |
( |
( |
|
Dividends paid |
( |
( |
|
Movement on group loans |
(65,498) |
476,528 |
|
Net cash flows from financing activities |
( |
( |
|
Net (decrease)/increase in cash and cash equivalents |
( |
|
|
Cash and cash equivalents at 1 January |
2,220,850 |
1,307,834 |
|
Cash and cash equivalents at 31 December |
1,868,098 |
2,220,850 |
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
General information |
The company is a private company limited by share capital, incorporated, registered and domiciled in England.
The address of its registered office is:
These financial statements were authorised for issue by the
Accounting policies |
Statement of compliance
The company financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations adopted by the UK ("UK adopted IFRSs").
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with adopted IFRSs and under historical cost accounting rules.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies.
The financial statements are presented in pounds sterling, rounded to the nearest thousand and are prepared on the historical cost basis. Non-current assets are stated at the lower of carrying amount and fair value less costs to sell.
Going concern
The financial statements have been prepared on a going concern basis.
The company meets its day to day working capital requirements through cash generated from operations.
The company’s forecasts and projections for the next twelve months show that the company should be able to continue in operational existence for that period, taking into account reasonable possible changes in trading performance and the potential impact on the business of possible future scenarios.This also considers the effectiveness of available measures to assist in mitigating the impact. In the directors assessment of reasonably possible changes in trading performance for the next twelve months they have considered a fall in demand should the global economic impact widen.
Although the forecasts prepared taking account of the matters above, support the ability of the company to remain a going concern and to be able to trade and meet its debts as they fall due, the underlying trading assumptions used in forecasting are extremely judgemental and difficult to predict and could be subject to significant variation.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Based on the factors set out above the directors believe that there is no material uncertainty in relation to going concern and that the company has adequate financial resources to continue in operational existence for at least twelve months from the date of signing the financial statements and therefore the directors believe it remains appropriate to prepare the financial statements on a going concern basis.
Changes in accounting policy
New standards, interpretations and amendments effective
The following have been applied for the first time from 1 January 2021, none of which have had a material impact on the financial statements:
Interest Rate Benchmark Reform Phase 2
New standards, interpretations and amendments not yet effective
The following newly issued but not yet effective standards, interpretations and amendments, which have not been applied in these financial statements, and are not expected to have a material impact on the financial statements:
Annual Improvements to IFRS Standards 2018–2020
effective 1 January 2022
Reference to the Conceptual Framework
effective 1 January 2022
Property, Plant and Equipment: Proceeds before intended use
effective 1 January 2022
Onerous Contracts—Cost of Fulfilling a Contract
effective 1 January 2022
Deferred Tax related to Assets and Liabilities arising from a single transaction
effective 1 January 2023
Definition of Accounting Estimates
effective 1 January 2023
Disclosure of Accounting Policies
effective 1 January 2023
Classification of Liabilities as Current or Non-current
effective 1 January 2023
Prior period adjustments
During the year the following prior period adjustments were identified.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
During the period it was brought to the attention of management that the presentation of volume rebates is not treated in accordance with IFRS 15. This resulted in the following prior period adjustment:
(Unaudited) |
|
Revenue |
(565,466) |
Cost of sales |
565,466 |
Impact on profit after tax |
- |
During the period it was identified that balances owed to related entities that were included on the payables ledger had not been presented correctly in the financial statements. This resulted in the following prior period adjustment:
(Unaudited) |
|
Trade payables |
513,098 |
Balances owed by related entities |
(513,098) |
Impact on net current assets |
- |
Revenue recognition
Recognition
The company earns revenue from the sale of Revenue from the sale of goods is recognised in the statement of comprehensive income when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.. This revenue is recognised in the accounting period when control of the product has been transferred, at an amount that reflects the consideration to which the entity expects to be entitled in exchange for fulfilling its performance obligations to customers.
Government grants
Government grants are recognised based on the accruals model and are measured at the fair value of the asset received or receivable. Grants are classified as related either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of the grant relating to an asset is deferred, it is recognised as deferred income.
Geographical reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board, who make strategic operating decisions.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Foreign currency transactions and balances
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new technical know ledge and understanding, is recognised in the statement of comprehensive income as an expense as incurred.
Tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity', in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided for using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for in relation to the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Property, plant and equipment
Items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within administration expenses in the statement of comprehensive income as incurred.
The Company recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred, if it is probable that the future economic benefits embodied with the item will flow to the Company and the cost of item can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense as incurred.
Depreciation
Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.The estimated useful lives are as follows:
Asset class |
Depreciation method and rate |
Fixtures and fittings |
5-10 years straight line |
Plant and equipment |
12 years straight line |
Computer Equipment |
3-5 years straight line |
Leasehold property |
Term of lease |
Cash and cash equivalents
Cash comprises cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash for the purpose only of the cash flow statement. The Company does not hold any cash equivalent balances.
Trade receivables
Trade and other receivables are recognised initially at fair value. Impairments on doubtful receivables involve to a considerable extent estimates and judgements of the individual receivables based on the creditworthiness of the customer concerned. Should this not be possible or appropriate under certain circumstances, an average rating (which is based on the average of all the ratings obtained in the reporting period) is applied.
Elringklinger considers this estimate regarding ratings as appropriate.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Inventories
Inventories are stated at the lower of cost or net realisable value.
The cost of inventories is based on the weighted average purchase price principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Trade payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.
Borrowings
All interest-bearing loans and borrowings are initially recognised at net proceeds. After initial recognition the debt is increased by the finance cost in respect of the reporting period and reduced by repayments made in the period.
Provisions
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the risks specific to the liability.
Operating lease payments
With effect from 1 January 2019 operating leases are accounted for in accordance with IFRS 16. Assets are recognised in the Balance Sheet as right of use assets and the liability under the contract is also recognised. Assets are depreciated over the useful life and interest charged to the income statement over the length of the contract.
Impairment of financial assets
The carrying amounts of the Company’s assets, other than cash and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of comprehensive income.Calculation of recoverable amount.The recoverable amount of assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flow are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash¬generating unit to which the asset belongs.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Share capital
Ordinary shares are classified as equity. Dividend distribution to the company’s shareholders is recognised as a liability in the company’s financial statements in the year in which the dividends are approved by the company’s shareholders.
Dividends
Dividend distribution to the company’s shareholders is recognised as a liability in the company’s financial statements in the period in which the dividends are approved by the company’s shareholders.
Defined contribution pension obligation
A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into a separate entity' and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the statement of comprehensive income in the years during which services are rendered by employees.
Financial instruments
Classification and measurement
Financial instruments issued by the Company are treated as equity (i.e. forming part of shareholders’ funds) only to the extent that they meet the following two conditions:
(i) they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company; and
(ii) where the instrument will or may be settled in the Company’s own equity instruments it is either a non¬derivative that includes no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and trade and other payables.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Critical accounting judgements and key sources of estimation uncertainty |
In the preparation of the financial statements, it is necessary for the management of the company to make estimates and certain presumptions that can affect the valuation of the assets and liabilities and the outcome of the income statement. The actual outcome may differ from these estimates and presumptions. The most significant estimates made in these accounts relate to
Useful lives of tangible fixed assets and licence rights
The directors have applied a useful economic life of 20 years to tangible fixed assets and 20 years to licence rights and consider this to be appropriate based upon their expected lives.
Non-recognition of a deferred tax asset
A deferred tax asset has not been recognised in full due to uncertainty surrounding its future recovery.
Revenue |
The analysis of the company's revenue for the year from continuing operations is as follows:
2021 |
(As restated) |
|
Sale of goods |
|
|
The analysis of the company's revenue for the year by geographical destination is as follows:
2021 |
(As restated) |
|
UK |
9,672,364 |
9,912,615 |
Europe |
1,257,545 |
1,114,941 |
Rest of World |
3,775 |
3,775 |
|
|
|
Other operating income |
The analysis of the company's other operating income for the year is as follows:
2021 |
(Unaudited) |
|
Government grants |
38,271 |
125,862 |
Foreign currency gains/(losses) |
21,111 |
(40,181) |
|
|
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Operating profit |
Arrived at after charging/(crediting)
2021 |
(Unaudited) |
|
Depreciation expense |
|
|
Depreciation on right of use assets - machinery |
33,835 |
60,298 |
Depreciation on right of use assets - property |
45,069 |
61,289 |
Foreign exchange (gains)/losses |
( |
|
Loss on disposal of property, plant and equipment |
|
- |
Finance income and costs |
2021 |
(Unaudited) |
|
Finance income |
||
Interest income on bank deposits |
- |
|
Other finance income |
|
|
Total finance income |
|
|
Finance costs |
||
Interest expense on leases |
(6,723) |
(15,541) |
Net finance income |
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2021 |
(Unaudited) |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
|
|
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
2021 |
(Unaudited) |
|
Administration and support |
|
|
Sales, marketing and distribution |
|
|
|
|
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Directors' remuneration |
The directors' remuneration for the year was as follows:
2021 |
(Unaudited) |
|
Remuneration |
|
|
During the year the number of directors who were receiving benefits and share incentives was as follows:
2021 |
(Unaudited) |
|
Accruing benefits under money purchase pension scheme |
|
|
Auditor's remuneration |
2021 |
(Unaudited) |
|
Audit of the financial statements |
|
- |
For the financial year ending 31 December 2020 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.
Income tax |
Tax charged/(credited) in the income statement
2021 |
(Unaudited) |
|
Current taxation |
||
UK corporation tax |
|
|
UK corporation tax adjustment to prior periods |
|
( |
|
|
|
Deferred taxation |
||
Arising from origination and reversal of temporary differences |
|
( |
Tax expense in the income statement |
|
|
The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2020 - higher than the standard rate of corporation tax in the UK) of 19% (2020 - 19%).
The differences are reconciled below:
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
11 |
Income tax (continued) |
2021 |
(As restated) |
|
Profit before tax |
|
|
Corporation tax at standard rate |
|
|
Increase/(decrease) in current tax from adjustment for prior periods |
|
( |
Increase from effect of expenses not deductible in determining taxable profit (tax loss) |
|
|
Total tax charge |
|
|
In the Spring Budget 2020, the Government announced that from 1 April 2020 the corporation tax rate would remain at 19% (rather than reducing to 17% as previously enacted). This new law was deemed substantively enacted on 17 March 2020. In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate will increase from 19% to 25%. This new law was deemed substantively enacted on 24 May 2021 and the deferred tax balances at the year end have been calculated based on this rate.
Deferred tax
Deferred tax assets and liabilities
2021 |
Asset |
Liability |
Net deferred tax |
Accelerated tax depreciation |
- |
( |
( |
- |
( |
( |
2020 |
Asset |
Liability |
Net deferred tax |
Accelerated tax depreciation |
- |
( |
( |
- |
( |
( |
Deferred tax movement during the year:
At 1 January 2021 |
Recognised in income |
At |
|
Accelerated tax depreciation |
( |
( |
( |
( |
( |
( |
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
11 |
Income tax (continued) |
Deferred tax movement during the prior year:
At 1 January 2020 |
Recognised in income |
At |
|
Accelerated tax depreciation |
( |
|
( |
( |
|
( |
Property, plant and equipment |
Furniture, fittings and equipment |
Other property, plant and equipment |
Total |
|
Cost or valuation |
|||
At 1 January 2020 |
|
|
|
Additions |
|
- |
|
Disposals |
( |
- |
( |
At 31 December 2020 |
|
|
|
At 1 January 2021 |
|
|
|
Additions |
|
- |
|
Disposals |
( |
( |
( |
At 31 December 2021 |
|
|
|
Depreciation |
|||
At 1 January 2020 |
|
|
|
Charge for year |
|
|
|
Eliminated on disposal |
( |
- |
( |
At 31 December 2020 |
|
|
|
At 1 January 2021 |
|
|
|
Charge for the year |
|
|
|
Eliminated on disposal |
( |
( |
( |
At 31 December 2021 |
|
|
|
Carrying amount |
|||
At 31 December 2021 |
|
|
|
At 31 December 2020 |
|
|
|
At 1 January 2020 |
|
|
|
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Right of use assets |
Machinery |
Property |
Total |
|
Cost or valuation |
|||
At 1 January 2020 |
67,868 |
338,504 |
406,372 |
Additions |
52,303 |
- |
52,303 |
Disposals |
(52,312) |
- |
(52,312) |
At 31 December 2020 |
67,859 |
338,504 |
406,363 |
At 1 January 2021 |
67,859 |
338,504 |
406,363 |
Additions |
32,647 |
401,894 |
434,541 |
Disposals |
(18,605) |
(338,504) |
(357,109) |
At 31 December 2021 |
81,901 |
401,894 |
483,795 |
Depreciation |
|||
At 1 January 2020 |
21,536 |
52,490 |
74,026 |
Charge for year |
60,298 |
61,289 |
121,587 |
Eliminated on disposal |
(52,312) |
- |
(52,312) |
At 31 December 2020 |
29,522 |
113,779 |
143,301 |
At 1 January 2021 |
29,522 |
113,779 |
143,301 |
Charge for the year |
33,835 |
45,069 |
78,904 |
Eliminated on disposal |
(17,492) |
(132,055) |
(149,547) |
At 31 December 2021 |
45,865 |
26,793 |
72,658 |
Carrying amount |
|||
At 31 December 2021 |
36,036 |
375,101 |
411,137 |
At 31 December 2020 |
38,337 |
224,725 |
263,062 |
Inventories |
2021 |
(Unaudited) |
|
Finished goods and goods for resale |
|
|
The cost of inventories recognised as an expense in the year amounted to £
The amount of write-down of inventories recognised as an expense in the year is £
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Trade and other receivables |
2021 |
(As restated) |
|
Current |
||
Trade debtors |
2,136,110 |
2,081,538 |
Provision for impairment of trade debtors |
(16,021) |
(10,829) |
Receivables from related parties |
1,140,325 |
1,070,739 |
Other prepayments |
41,327 |
45,708 |
|
|
The company's exposure to credit and market risks, including maturity analysis, relating to trade and other receivables is disclosed in note 23 "Financial risk review".
The ageing of trade receivables at the balance sheet date was:
2021 |
(Unaudited) |
|
7 to 30 days |
|
|
31 to 60 days |
|
|
61 to 90 days |
|
( |
91 to 120 days |
|
|
|
|
Cash and cash equivalents |
2021 |
(Unaudited) |
|
Cash at bank |
|
|
Loans and borrowings |
2021 |
(Unaudited) |
|
Non-current loans and borrowings |
||
Long term lease liabilities |
292,659 |
192,200 |
2021 |
(Unaudited) |
|
Current loans and borrowings |
||
Current portion of long term lease liabilities |
105,288 |
84,953 |
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
17 |
Loans and borrowings (continued) |
The company's exposure to market and liquidity risks, including maturity analysis, relating to loans and borrowings is disclosed in note 23 "Financial risk review".
Leases |
Lease liabilities maturity analysis
A maturity analysis of lease liabilities based on undiscounted gross cash flow is reported in the table below:
2021 |
(Unaudited) |
|
Less than one year |
|
|
2 years |
|
|
3 years |
|
- |
4 years |
|
- |
5 years |
|
- |
Total lease liabilities (undiscounted) |
|
|
Total cash outflows related to leases
Total cash outflows related to leases are presented in the table below:
Payment |
2021 |
(Unaudited) |
Other |
38,481 |
20,924 |
Trade and other payables |
2021 |
(As restated) |
|
Current |
||
Trade payables |
|
|
Accrued expenses |
|
|
Amounts due to related parties |
|
- |
Social security and other taxes |
|
|
|
|
The company's exposure to market and liquidity risks, including maturity analysis, relating to trade and other payables is disclosed in note 23 "Financial risk review".
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £67,655 (2020 - £67,264).
Share capital |
Allotted, called up and fully paid shares
2021 |
(Unaudited) |
|||
No. |
£ |
No. |
£ |
|
|
|
300,000 |
|
300,000 |
Dividends |
Final dividends paid
2021 |
(Unaudited) |
|||
Final dividend of £ |
|
|
||
Financial risk review |
This note presents information about the company’s exposure to financial risks and the company’s management of capital.
Capital risk management |
Capital management
The Board of Directors has overall responsibility' for the establishment and oversight of the Company’s risk management framework.
The Company’s risk management policies are established to identify and analyse the risk faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.
The Company’s treasury policy has as its principal objective the achievement of the maximum interest rate on any cash balances whilst maintaining an acceptable level of risk.
There was no change in the Company’s approach to capital management during the year. The Company uses cash held, working capital balances and undrawn facilities to enable the Company to continue as a going concern and to maximise returns for stakeholders. The Company is not subject to externally imposed capital requirements.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
23 |
Financial risk review (continued) |
Credit risk
The company's definition of credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers. A long standing trading relationship is held with most customers, with a low level of debt default.
The risk is mitigated by the company by The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of the industry' and country in which customers operate, has less of an influence on credit risk. The company has continued to spread the credit risk with 54% of the debt now spread across 7 customers.
The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings where available. Purchase limits are established for each customer. These limits are reviewed regularly.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the Company may have a secured claim. The Company does not require collateral in respect of trade and other receivables. The Company does not have insurance in place related to credit risk. The Company ensures that it credit checks new and existing customers as required. A system of collecting outstanding balances is in place to minimise exposure to bad debts..
Credit quality analysis
The following tables set out information about the credit quality of financial assets measured at amortised cost and FVOCI debt investments. Unless specifically indicated for all the financial assets, the amounts represent gross carrying amounts.
Debt investments at amortised cost |
Total |
Total prior year |
Trade receivables |
|
|
Trade receivables due from related parties |
|
|
Other receivables |
|
|
Cash and cash equivalents |
|
|
Gross carrying amount |
|
|
|
Liquidity risk
The company's definition of liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
23 |
Financial risk review (continued) |
Maturity analysis for financial liabilities and financial assets
The following tables set out the remaining contractual maturities of the company’s financial assets and financial liabilities by type.
2021 |
Carrying amount |
Gross nominal inflow/-outflow |
Less than 1 month |
1-3 months |
3 months - 1 year |
1-5 years |
Non-current financial liabilities |
292,659 |
307,045 |
- |
- |
- |
|
Current financial liabilities |
105,288 |
100,718 |
|
|
|
- |
Trade payables |
203,374 |
203,374 |
6,330 |
197,044 |
- |
- |
Social security and other taxes |
465,495 |
465,495 |
394,596 |
70,899 |
- |
- |
Amounts due to related parties |
4,088 |
4,088 |
4,088 |
- |
- |
- |
|
2020 |
Carrying amount |
Gross nominal inflow/-outflow |
Less than 1 month |
1-3 months |
3 months - 1 year |
1-5 years |
Non-current financial liabilities |
192,200 |
25,169 |
- |
- |
- |
|
Current financial liabilities |
84,953 |
73,133 |
|
|
|
- |
Trade payables |
170,795 |
170,795 |
69 |
170,726 |
- |
- |
Social security and other taxes |
1,061,714 |
1,061,714 |
536,665 |
525,049 |
- |
- |
|
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
23 |
Financial risk review (continued) |
Market risk
Foreign exchange risk |
The Company is exposed to currency risk on sales and purchases that are denominated in a currency other than the functional currency of the Company, primarily the Euro. No formal hedging arrangements are entered into by the Company however management aim to match foreign expenditure with similar foreign income.
2021 |
Sterling |
Euro |
Total |
Cash and cash equivalents |
1,841,065 |
27,033 |
1,868,098 |
Trade receivables |
2,104,309 |
31,801 |
2,136,110 |
Trade payables |
(189,778) |
(498,527) |
(688,305) |
Net exposure |
3,755,596 |
(439,693) |
3,315,903 |
|
2020 |
Sterling |
Euro |
Total |
Cash and cash equivalents |
1,132,016 |
175,818 |
1,307,834 |
Trade receivables |
1,595,821 |
21,647 |
1,617,468 |
Trade payables |
(40,909) |
(696,376) |
(737,285) |
Net exposure |
2,686,928 |
(498,911) |
2,188,017 |
|
Interest rate risk |
No formal hedging arrangements are entered into by the Company.
Sensitivity analysis
An increase or decrease of 1 percent in interest rates during the year ended 31 December 2021 would have increased or decreased equity' and profit before tax by £16,212. The analysis at 31 December 2020 on the basis of a 1 percent increase or decrease in interest rates would have decreased or increased equity and profit before tax by £15,269.
A 10% strengthening or weakening in the value of Sterling against the Euro during the year ended 31 December 2021 would have increased or decreased equity and profit before tax by £732,651. The analysis at 31 December 2020 on the basis of a 10% strengthening or weakening in the value of Sterling against the Euro would have increased or decreased equity and profit before tax by £670,420.
The above calculations assume that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date, assuming all other variables remain constant.
Elring Parts Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Related party transactions |
Income and receivables from related parties
2021 |
Parent |
Amounts receivable from related party |
|
|
2020 |
Parent |
Amounts receivable from related party |
|
|
Expenditure with and payables to related parties
2021 |
Parent |
Entities with joint control or significant influence |
Purchase of goods |
|
|
Amounts payable to related party |
|
|
|
2020 |
Parent |
Entities with joint control or significant influence |
Purchase of goods |
|
|
Amounts payable to related party |
|
- |
|
Parent and ultimate parent undertaking |
Max Eyth - Strasse 2,
D-72581, Detlingen/Erms,
Germany
The ultimate controlling party is