Registered number: 05586163
ELEMENTS (EUROPE) LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
ELEMENTS (EUROPE) LIMITED
COMPANY INFORMATION
|
Mr John Roland Pickstock (resigned 26 May 2023)
|
|
|
|
|
|
Mr Doyong An (resigned 14 March 2023)
|
|
Mr Do Young Kim (appointed 14 March 2023)
|
|
Mr Simon Antony Underwood (appointed 26 May 2023)
|
|
|
|
|
|
|
|
|
|
|
|
2 Mile Oak Industrial Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chartered Accountants & Statutory Auditors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
CONTENTS
|
|
|
|
|
|
Independent Auditors' Report
|
|
Statement of Profit or Loss and Other Comprehensive Income
|
|
Statement of Financial Position
|
|
Statement of Changes in Equity
|
|
|
|
Notes to the Financial Statements
|
|
|
ELEMENTS (EUROPE) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors have pleasure in presenting their Strategic Report for the year ended 31 December 2022.
Turnover for the year was £21,923,929 (2021 - £15,459,519). The directors are pleased with the Company’s performance during the period under review which has seen the business benefit from an increased focus on modern methods of construction in a difficult market.
Financial key performance indicators
|
The principal key performance indicators used by management to monitor performance are:
• Turnover
• Gross margin and operating profit
The results of the Company for the year are set out In the profit and loss account and in the related notes.
Principal risks and uncertainties
|
The directors consider that the following are principal risk factors that could materially and adversely affect the Company’s future operating profits or financial position:
Competition risk
The directors manage competition risk through close attention to customer service levels and product innovation.
Liquidity risk
The Company trades with recognised, creditworthy third parties. it is Company policy that all third party customers who wish to trade on credit terms are subject to vetting procedures. in addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant.
Contract Loss risk
The risk of making a loss on contracts is managed by utilising the skills and knowledge of experienced staff. This applies from the tendering stage through to completion of each contract. The progress of all contracts is reviewed by the directors regularly so that issues can be identified and dealt with at an early stage.
This report was approved by the board and signed on its behalf.
................................................
Mr Do Young Kim
Director
|
|
|
|
ELEMENTS (EUROPE) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
Directors' responsibilities statement
|
The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements, in accordance with applicable law.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK.
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 the financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgments and estimates that are reasonable and prudent;
∙state whether they have been prepared in accordance with IFRS as adopted by the UK, subject to any material departures disclosed and explained in the financial statements;
∙assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
∙use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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 responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect 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 and other information included in Directors' Reports may differ from legislation in other jurisdictions.
The principal activity of the Company continued to be that of a modular manufacturer. There has been no significant change in the Company's activities during the year.
The loss for the year, after taxation, amounted to £5,709,764 (2021 - loss £1,611,777).
|
ELEMENTS (EUROPE) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors who served during the year were:
Mr John Roland Pickstock (resigned 26 May 2023)
|
|
|
Mr Doyong An (resigned 14 March 2023)
|
The directors will continue to focus on the principal activity of the Company, being that of a modular manufacturer.
Engagement with employees
|
During the year, the policy of providing employees with information about the Company has been continued through Company inductions, staff engagement events and employee newsletters along with suggestion boxes in which employees have also been encouraged to present their suggestions and views on the company's performance. Regular meetings are held between local management and employees to allow a free flow of information and ideas. This is conducted as a daily meeting between senior management and employees to allow an open forum of suggestions and observations of the business.
Greenhouse gas emissions, energy consumption and energy efficiency action
|
Total kwh for consumption of fuel including transportation is 331,862 kwh. This is calculated as litres of fuel purchased, multiplied by 10 kwh per litre. The Company seeks to maximise the efficiency of deliveries through ensuring full load deliveries wherever possible. The Company consumes 0.015 kwh of fuel per £ of turnover.
Total kwh for consumption of electricity including transportation is 890,146 kwh. This is calculated from actual meter readings provided. The Company monitors monthly consumption for variances. PIR lighting has been installed where appropriate. The Company consumes 0.04 kwh of electricity per £ of turnover.
Total kwh for consumption of energy from gas is 224,602 kwh. This is calculated as kg of propane purchased multiplied by 14 kwh per kg. The Company target the use of propane heating to only the areas where required operationally. The Company consumes 0.01 kwh of gas per £ of turnover.
Disclosure of information to auditors
|
Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the directors are aware, there is no relevant audit information of which the Company's auditors are unaware, and
∙the directors have taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
The auditors, MA Partners Audit LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
|
ELEMENTS (EUROPE) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
This report was approved by the board and signed on its behalf.
................................................
Mr Do Young Kim
Director
|
|
|
|
ELEMENTS (EUROPE) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ELEMENTS (EUROPE) LIMITED
We have audited the financial statements of Elements (Europe) Limited for the year ended 31 December 2022 which comprise the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies set out on pages 18 - 26. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom.
In our opinion the financial statements:
∙give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its loss for the year then ended;
∙have been properly prepared in accordance with IFRSs as adopted by the United Kingdom; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our work in this area included:
• Evaluation of the assumptions used in forecasts and whether these are appropriate in line with historic
performance;
• Assessment of the arithmetical accuracy of the forecasts;
• Assessment of the continued support of the Group.
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.
|
ELEMENTS (EUROPE) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ELEMENTS (EUROPE) LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report, other than the financial statements and our auditors' 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.
Opinion on other matters prescribed by the Companies Act 2006
|
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
|
ELEMENTS (EUROPE) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ELEMENTS (EUROPE) LIMITED (CONTINUED)
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 Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which 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 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 responsibilities statement on page 2, 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.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the Company.
|
ELEMENTS (EUROPE) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ELEMENTS (EUROPE) LIMITED (CONTINUED)
Our approach was as follows:
• We obtained an understanding of the legal and regulatory requirements applicable to the Company and
considered that the most significant are the Companies Act 2006, International Financial Reporting Standards as adopted in the UK, and UK taxation legislation.
• We obtained an understanding of how the Company complies with these requirements by discussions
with management and those charged with governance.
• We assessed the risk of material misstatement of the financial statements, including the risk of material
misstatement due to fraud and how it might occur, by holding discussions with management and those
charged with governance.
• We inquired of management and those charged with governance as to any known instances of
noncompliance or suspected non-compliance with laws and regulations.
• Based on this understanding, we designed specific appropriate audit procedures to identify instances of
noncompliance with laws and regulations. This included making enquiries of management and those
charged with governance and obtaining additional corroborative evidence as required.
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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' 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 auditors' 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.
Frank Shippam BSc FCA DChA (Senior Statutory Auditor)
for and on behalf of
MA Partners Audit LLP
Chartered Accountants & Statutory Auditors
7 The Close
Norwich
Norfolk
NR1 4DJ
16 October 2023
|
ELEMENTS (EUROPE) LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
Total comprehensive income
|
|
|
|
Earnings per share attributable to the ordinary equity holders of the parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit or loss from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 18 to 46 form part of these financial statements.
|
|
ELEMENTS (EUROPE) LIMITED
REGISTERED NUMBER: 05586163
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
REGISTERED NUMBER: 05586163
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued capital and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements on pages 9 to 46 were approved and authorised for issue by the board of directors and were signed on its behalf by:
................................................
Mr Do Young Kim
|
|
|
|
The notes on pages 18 to 46 form part of these financial statements.
|
ELEMENTS (EUROPE) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
Total contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
The notes on pages 18 to 46 form part of these financial statements.
|
|
ELEMENTS (EUROPE) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment
|
|
|
|
Impairment of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
Movements in working capital:
|
|
|
|
(Increase)/decrease in trade and other receivables
|
|
|
|
Decrease/(increase) in contract assets
|
|
|
|
Decrease/(increase) in inventories
|
|
|
|
Increase in trade and other payables
|
|
|
|
|
|
|
|
Cash generated from operations
|
|
|
|
Net cash used in operating activities
|
|
|
|
Cash flows from investing activities
|
|
|
|
Purchases of property, plant and equipment
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
|
Cash flows from financing activities
|
|
|
|
Payments of finance lease creditors
|
|
|
|
|
|
|
|
Payment of lease liabilities
|
|
|
|
Net cash used in financing activities
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
Cash and cash equivalents at the beginning of year
|
|
|
|
Cash and cash equivalents at the end of the year
|
|
|
|
The notes on pages 18 to 46 form part of these financial statements.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Elements (Europe) Limited (the Company) is a private company limited by shares and is incorporated and domiciled in England and Wales. Its ultimate controlling party is GS Global Corporation. The registered office is located at 2 Mile Oak, Maesbury Road, Oswestry, Shropshire, SY10 8GA.
The Company's principal activity is modular manufacturing.
The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations as adopted by the UK (collectively IFRSs). They were authorised for issue by the Company's board of directors on 09 October 2023.
Details of the Company's accounting policies, including changes during the year, are included in note 4.
In preparing these financial statements, management has made judgments, estimates and assumptions that affect the application of the Company accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
The areas where judgments and estimates have been made in preparing the financial statements and their effects are disclosed in note 5.
The financial statements have been prepared on the historical cost basis except for the following items, which are measured on an alternative basis on each reporting date.
|
|
|
See accounting policies note 4 for details.
|
|
2.2 Changes in accounting policies
i) New standards, interpretations and amendments effective from 1 January 2022
|
There are no new standards which are effective for annual periods beginning on or after 1 January 2022 that impact the Company. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
Amendments to Annual Improvements 2018-2020
This includes amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards, simplify the application of IFRS 1 by a subsidiary that becomes a first-time adopter of IFRS Accounting Standards after its parent. If such a subsidiary applies IFRS 1.D16(a), it may elect to measure cumulative translation differences at amounts included in the consolidated financial statements of the parent, based on the parent’s date of transition to IFRS Accounting Standards.
It also includes amendments to IFRS 9, Financial Instruments, which clarifies which fees to include in the ’10%’ test to determine whether a financial liability has been substantially modified (i.e. the derecognition analysis). A borrower includes only fees paid or received between itself and the lender, including fees paid or received by either the borrower or lender on the other’s behalf.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Basis of preparation (continued)
|
2.2 Changes in accounting policies (continued)
|
|
i) New standards, interpretations and amendments effective from 1 January 2022 (continued)
|
Business Combinations (Amendments to IFRS 3)
This amendment updates references to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. The amendments introduce new exceptions to the recognition and measurement principles in IFRS 3 to ensure that this update does not change which assets and liabilities qualify for recognition in a business combination or create new Day 2 gains or losses.
Property, Plant Equipment (Amendments to IAS 16)
This amendment introduces new guidance. The proceeds from selling items (e.g. samples) before the related property, plant equipment is available for its intended use can no longer be deducted from the cost of property, plant equipment. Instead, such proceeds are recognised in profit or loss, together with the cost of producing those items (to which IAS 24 applies). Therefore, a company will need to distinguish between:
(a) costs of producing and selling items before the PPE is available for its intended use; and
(b) costs of making the PPE available for its intended use.
Provisions, Contingent Liabilities and Contingent Assets (Amendments to IAS 37 )
This amendment clarifies that when assessing if a contract is onerous, the cost of fulfilling it includes all costs related directly to the contract. Such costs include both:
(a) the incremental costs of the contract (i.e. costs a company would avoid if it did not have the contract, like direct labour and materials); and
(b) an allocation of other costs that relate directly to fulfilling the contract (e.g. contract management and supervision, or depreciation of equipment used in fulfilling it).
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Basis of preparation (continued)
|
|
|
New standards, interpretations and amendments not yet effective
|
The following standards and interpretations to published standards are not yet effective:
|
New standard or interpretation
|
|
Mandatory effective date (period beginning)
|
|
IFRS 17 Insurance Contracts (issued on 18 May 2017); including Amendments to IFRS 17 (issued on 25 June 2020)
|
Endorsed on 19 November 2021
|
|
|
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021)
|
|
|
|
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued on 12 February 2021)
|
|
|
|
Amendments to IFRS 16: Lease Liability in a Sale and Leaseback (issues on 22 September 2022)
|
|
|
|
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (issued 23 January 2020)
|
|
|
|
Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants (issued on 31 October 2022)
|
|
|
The directors anticipate that the adoption of these Standards in future periods may have an impact on the results and net assets of the Company, however, it is too early to quantify this.
The directors anticipate that the adoption of other Standards and interpretations that are not yet effective in future periods will only have an impact on the presentation in the financial statements of the Company.
|
Functional and presentation currency
|
These financial statements are presented in pound sterling, which is the Company's functional currency. All amounts have been rounded to the nearest pound, unless otherwise indicated.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies
Having given consideration to the anticipated financial performance of the Company in the foreseeable future and in conjunction with the continued support expected from the parent company GS Engineering & Construction Corp, the directors are of the opinion that the going concern basis of preparation of the financial statements is appropriate. In reaching their assessment, the directors have considered financial forecasts covering a period of 12 months from the date of approval of the financial statements and obtained confirmation from GS Engineering & Construction Corp of their continued support of the Company for the foreseeable future, being a period of at least 12 months from the date of approval of these financial statements.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognises revenue when it transfers control over a product or service to a customer.
The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.
Contract balances
Contract assets
A contract asset is initially recognised for revenue earned from the subcontract works in progress and completed because the receipt of consideration is conditional on successful completion of the project. Upon completion of the project, and subject to the terms in the contract, the amount recognised as contract assets is reclassified to trade receivables.
Trade receivables
A receivable is recognised if an amount of consideration that is unconditional is due from the customer and only the passage of time is required before payment of the consideration is due.
Contract liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Company transfers the related goods or services. Contract liabilities are recognised as revenue when the Company performs under the contract (i.e. transfers control of the related goods or services to the customer).
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies (continued)
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or loss in the period in which they become receivable.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
Income tax expense represents the sum of the tax currently payable and deferred tax.
|
Current and deferred tax for the year
|
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
|
|
Defined contribution schemes
|
Contributions to defined contribution pension schemes are charged to the statement of comprehensive income in the year to which they relate.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies (continued)
|
|
Property, plant and equipment
|
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost of certain items of property, plant and equipment at 1 April 2019, the Company's date to transition to IFRS, was determined with reference to its fair value at that date.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Depreciation is provided on all other items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following range:
|
|
Short-term leasehold property
|
|
|
|
years (over the life of the lease)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies (continued)
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate which is determined as the incremental borrowing rate applicable to the Company at the time the lease was taken out.
Lease payments included in the measurement of the lease liability comprise fixed lease payments (including in-substance fixed payments), less any lease incentives.
The lease liability is presented as a separate line in the Statement of Financial Position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are included in the 'Property, Plant and Equipment' line, as applicable, in the Statement of Financial Position.
The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in note 4.6.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies (continued)
|
|
Cash and cash equivalents
|
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies (continued)
|
|
Financial assets (continued)
|
|
(i) Classification of financial assets
|
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
∙the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; 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.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (FVOCI):
∙the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the 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.
By default, all other financial assets are subsequently measured at fair value through profit or loss (FVTPL).
Despite the aforegoing, the Company may make the following irrevocable election/designation at initial recognition of a financial asset:
∙the Company may irrevocably elect to present subsequent changes in fair value of an equity instrument in other comprehensive income if certain criteria are met; and
∙the Company may irrevocably designate a debt investment that meets the amortised cost or FVOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies (continued)
|
|
Financial assets (continued)
|
|
(ii) Measurement and recognition of expected credit losses
|
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets' gross carrying amount at the reporting date; for loan commitments and financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Company's understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate. For a lease receivable, the cash flow used for determining the expected credit losses is consistent with the cash flows used in measuring the lease receivable in accordance with IAS 17 Leases.
For a financial guarantee contract, as the Company is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Company expects to receive if the loan is drawn down.
For undrawn loan commitments, the expected credit loss is the present value of the difference between the contractual cash flows that are due to the Company if the holder of the loan commitment draws down the loan, and the cash flows that the Company expects to receive if the loan is drawn down.
Where lifetime ECL is measured on a collective basis to cater for cases where evidence of significant increases in credit risk at the individual instrument level may not yet be available, the financial instruments are grouped on the following basis:
∙Nature of financial instruments;
∙Past-due status;
∙Nature, size and industry of debtors;
∙Nature of collaterals for finance lease receivables; and
∙External credit ratings where available.
The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.
If the Company has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Company measures the loss allowance at an amount equal to 12m ECL at the current reporting date.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies (continued)
|
|
Financial assets (continued)
|
|
(ii) Measurement and recognition of expected credit losses (continued)
|
The Company recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVOCI, for which the loss allowance is recognised in other comprehensive income and accumulated in the investments revaluation reserve, and does not reduce the carrying amount of the financial asset in the Statement of Financial Position.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading, or (iii) designated as at FVTPL, are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
∙the amount of the loss allowance determined in accordance with IFRS 9; and
∙the amount initially recognised less, where appropriate, cumulative amount of income recognised in accordance with the revenue recognition policies.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange gains and losses are recognised in the 'finance income' or 'finance expense' line item, for gains and losses respectively, in profit or loss for financial liabilities that are not part of a designated hedging relationship.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4.Accounting policies (continued)
|
|
Financial liabilities (continued)
|
|
Financial liabilities (continued)
|
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss for financial liabilities that are not part of a designated hedging relationship.
See note regarding the recognition of exchange differences where the foreign currency risk component of a financial liability is designated as a hedging instrument for a hedge of foreign currency risk.
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first in, first out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
|
Accounting estimates and judgments
|
Recoverability of balances due from group companies
The directors have considered the recoverability of loans and balances due from group companies to be recoverable in full. This judgment is based on assessment of the net assets available to the directors of those companies and their ability to settle balances outstanding.
Construction contract revenue
Recognised amounts of construction contract revenues and related receivables reflect management’s best estimate of each contract’s outcome and stage of completion. Costs to complete and contract profitability are subject to significant estimation uncertainty
Inventories
Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by market-driven changes that may reduce future selling prices.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
The following is an analysis of the Company's revenue for the year from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All turnover arose within the United Kingdom.
|
|
Timing of revenue recognition:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goods and services transferred at a point in time
|
|
|
|
Goods and services transferred over time
|
|
|
|
|
|
|
|
Performance obligations
The Company typically works to a subcontract agreement based on standard Joint Contracts Tribunal ("JCT") wording. The period of works can often be a year or more. The Company submits monthly applications under the subcontract agreement based on the amount of works completed for that month towards the overall performance obligation. These applications are based on a pre agreed value of each section of the works included in the subcontract and are typically separated into factory works, delivery of completed product and any on site requirements. The monthly applications are valued on the basis on the level of works completed for that month and the amounts can vary dependant on the amount of work completed.
Payment terms are generally 28 - 35 days from the payment application date. The amounts claimed and paid can vary but the underlying calculation of the quantity of works completed is fixed by the sums within the contract.
The Company produces bathroom pods from raw materials. The pods are completed in a factory environment and are delivered to construction sites. Each pod is unique to a contract and are not built and stored as a standard product. The goods transfer to the customer upon payment; this includes pods stored at the Company's premises which are covered by a vesting certificate favouring the customer.
The pods are produced for a specific purpose and the client has no option of a return or refund.
The Company remain liable for defects for the period of the contract and the defect period which is normally one year following completion of the contract works. There is a further 12 year latent defect period covered by insurance.
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
6.Revenue (continued)
|
Performance obligations (continued)
Revenue expected to be recognised in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the year end is summarised as follows:
|
|
|
|
|
|
The Company applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance obligations where revenue is recognised in the amount to which the Company has a right to invoice based on the Company's performance completed to date.
|
|
|
|
|
|
|
|
|
|
Government grants receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year, the Company obtained the following services from the Company's auditors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees payable to the Company's auditors for the audit of the Company's financial statements
|
|
|
|
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
|
|
At the beginning of the financial period
|
|
|
|
|
|
|
|
Released to the statement of profit or loss and other comprehensive income
|
|
|
|
At the end of the financial period
|
|
|
|
Government grants have been received in the form of the Coronavirus Job Retention Scheme. There are no unfulfilled conditions or contingencies attached to these grants.
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
Employee benefit expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee benefit expenses (including directors) comprise:
|
|
|
|
|
|
|
|
|
|
|
|
Defined contribution pension cost
|
|
|
|
|
|
|
|
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including the directors of the Company listed on page , and the Financial Controller of the Company.
Key management personnel compensation relates to directors who were in office for the year. Total remuneration for key management personnel during the year was £Nil (2021 - £Nil).
|
|
The monthly average number of persons, including the directors, employed by the Company during the year was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
Finance income and expense
|
|
Recognised in profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income arising from financial assets measured at amortised cost or FVOCI
|
|
|
|
|
|
|
|
Other interest receivable
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases (interest portion)
|
|
|
|
Hire purchase interest payable
|
|
|
|
|
|
|
|
|
|
|
|
Net finance income recognised in profit or loss
|
|
|
|
The above financial income and expense include the following in respect of assets (liabilities) not at fair value through profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income on financial assets
|
|
|
|
Total interest expense on financial liabilities
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
12.1 Income tax recognised in profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Origination and reversal of timing differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense excluding tax on sale of discontinued operation and share of tax of equity accounted associates and joint ventures
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
12.Tax expense (continued)
|
12.1 Income tax recognised in profit or loss (continued)
|
|
|
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to losses for the year are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax using the Company's domestic tax rate of 19% (2021:19%)
|
|
|
|
Expenses not deductible for tax purposes, other than goodwill, amortisation and impairment
|
|
|
|
Capital allowances for the year in excess of depreciation
|
|
|
|
Adjustments to tax charge in respect of prior periods
|
|
|
|
Unrelieved tax losses carried forward
|
|
|
|
|
|
|
Changes in tax rates and factors affecting the future tax charges
There were no factors that may affect future tax charges.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
(i) Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations attributable to the ordinary equity holders of the Company
|
|
|
|
Total basic earnings per share attributable to the ordinary equity holders of the Company
|
|
|
|
(ii) Weighted average number of shares used as the denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
|
|
|
|
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
14.Property, plant and equipment (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
Charge owned for the year
|
|
|
|
|
|
Charged financed for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge owned for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amount of inventories recognised as an expense during 2022 was £6,487,668 (2021 - £6,376,099).
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
Contract assets relate to revenue earned from ongoing modular manufacturing services. As such, the balances of this account vary and depend on the number of ongoing contracts at the end of the year. As at 31 December 2022, £Nil (2021 - £1,397) was recognised as provision for expected credit losses on contract assets.
All revenue recognised in the reporting period relates to performance obligations satisfied (or partially satisfied) in the reporting period. No revenue is recognised in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods.
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: provision for impairment of trade receivables
|
|
|
|
|
|
|
|
Receivables from related parties
|
|
|
|
Total financial assets other than cash and cash equivalents classified as loans and receivables
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
|
Total trade and other receivables
|
|
|
|
Less: current portion - trade receivables
|
|
|
|
Less: current portion - prepayments and accrued income
|
|
|
|
Less: current portion - other receivables
|
|
|
|
Less: current portion - receivables from related parties
|
|
|
|
|
|
|
|
Total non-current portion
|
|
|
|
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 90 days and are therefore all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognised at fair value. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Information about the impairment of trade receivables and the Company's exposure to credit risk can be found in Note 23.
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.
For terms and conditions relating to receivables from related parties, refer to note 25
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
Contract assets have increased as the Company has provided more services ahead of the agreed payment schedules for fixed-price contracts.
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost
|
|
|
|
Other payables - tax and social security payments
|
|
|
|
Total trade and other payables
|
|
|
|
Less: current portion - trade payables
|
|
|
|
Less: current portion - other payables
|
|
|
|
Less: current portion - accruals
|
|
|
|
|
|
|
|
Total non-current position
|
|
|
|
Trade payables are unsecured and are usually paid within 90 days of recognition.
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature
|
|
|
|
The Company has lease contracts for a short-term leasehold property and various motor vehicles used in its operations. Leases of short-term leasehold property and motor vehicles generally have lease terms of 3 years. The Company's obligations under its leases are secured by the lessor’s title to the leased assets. The lease contract for the short-term leasehold property includes a 6 month extension option which is reasonably certain to be exercised and has been considered in this note disclosure.
|
|
Lease liabilities are due as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual undiscounted cash flows due
|
|
|
|
|
|
|
|
Between one year and five years
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
20.Leases (continued)
|
There is no significant liquidity risk in relation to lease liabilities.
|
|
The following amounts in respect of leases have been recognised in profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense on lease liabilities
|
|
|
|
Expenses relating to short-term leases
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
|
|
|
Due after more than one year
|
|
|
|
|
Other provision 1
The provision relates to a contract which had no provision for inflation. The UK, and specific sectors including construction, have been significantly impacted by inflationary factors on labour, plant and materials. These unforeseen additional costs cannot be passed onto other entities involved in the contract. The provision is based on management's best estimate of the losses under the contract.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
|
|
|
|
Ordinary shares of £1.00 each
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of £1.00 each
|
|
|
|
|
|
At 1 January and 31 December
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
Financial instruments - fair values and risk management
|
|
23.1 Financial risk management objectives
|
The Company’s principal financial liabilities comprise loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade receivables, and cash and short-term deposits that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. Senior management ensures that the financial risk governance framework is appropriate for the Company, that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The directors review and agree policies for managing each of these risks, which are summarised below.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings and bank deposits and overdrafts.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations. The risk is managed by entering into long term agreements with fixed interest rates which protects the Company from sensitivities arising from fluctuating interest rates.
Currency risk
Currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company only transacts in Sterling so the Company’s exposure to the risk of changes in foreign exchange rates is £nil.
Other price risk
The Company does not have equity investments so the Company does not have exposure to equity price risk.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
23.Financial instruments - fair values and risk management (continued)
|
|
23.3 Credit risk management
|
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions.
Trade receivables and contract assets
Customer credit risk is managed subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables and contract assets are regularly monitored and any deliveries to major customers are generally covered by letters of credit or other forms of credit insurance obtained from reputable banks and other financial institutions. At 31 December 2022, the Company had 11 customers (2021 - 15) that owed it more than £100,000 each and accounted for approximately 91% (2021 - 95%) of all the receivables and contract assets outstanding. There were 2 customers (2021 - 3 customers) with balances greater than £1 million accounting for approximately 49% (2021 - 60%) of the total amounts of receivable and contract assets.
An impairment analysis is performed each month and expected credit losses are reflected in the projected final account value, on which the transaction price allocated to the remaining performance obligations is calculated. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the period about past events, current conditions and forecasts of future economic conditions. The Company does not hold collateral as security.
The Company evaluates the concentration of risk with respect to trade receivables and contract assets as low because there are long term Joint Contracts Tribunal contracts in place for most customers and all customers are large suppliers with strong balance sheets. Historically the Company has only suffered one loss through liquidation or bankruptcy which was not material and there has been no increase in credit risk over the financial period. The Company has applied this historical loss rate and calculated the expected credit loss for the financial period is £Nil (2021 - £28,150).
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company’s finance department in accordance with the Company’s policy.
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
23.Financial instruments - fair values and risk management (continued)
|
|
23.4 Liquidity risk management
|
|
|
The Company monitors its risk of a shortage of funds using a liquidity planning tool.
The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, and lease contracts.
Approximately 82% of the Company’s debt will mature in less than one year at 31 December 2022 (2021 - 100%) based on the carrying value of borrowings reflected in the financial statements. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the Company’s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. Selective hedging is used within the Company to manage risk concentrations at both the relationship and industry levels.
|
|
|
Liquidity and interest risk tables
The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.
|
|
|
|
|
|
|
|
ELEMENTS (EUROPE) LIMITED
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
23.Financial instruments - fair values and risk management (continued)
|
23.4 Liquidity risk management (continued)
|
|
ELEMENTS (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
Notes supporting statement of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank available on demand
|
|
|
|
|
|
|
|
Cash and cash equivalents in the statement of financial position
|
|
|
|
|
|
|
|
Cash and cash equivalents in the statement of cash flows
|
|
|
|
Related party transactions
|
The Company had transactions with J. R. Pickstock Limited, a company with a director in common. The Company made sales to J. R. Pickstock Limited of £ 218,797 (2021 - £ 2,636,171) and purchases from J. R. Pickstock Limited of £ 155,731 (2021 - £ 134,384). At the year end, the Company was owed £ 604,779 (2021 - £ 1,708,520) from J. R. Pickstock Limited and the Company owed J. R. Pickstock £Nil (2021 - £14,771).
The Company had transactions with Concierge 11 Limited, a company with a director in common. The Company made sales to Concierge 11 Limited of £5,117,790 (2021 - £279,745) and purchases from Concierge 11 Limited of £Nil (2021 - £Nil). At the year end, the Company was owed £399,572 (2021 - £215,436) from Concierge 11 Limited and the Company owed Concierge 11 Limited £Nil (2021 - £Nil).
The immediate parent undertaking is GS Engineering & Construction Corp. The registered office of the immediate parent undertaking is 33, Jong-ro, Jongno-gu, Seoul, Republic of Korea. Copies of the group accounts are publicly available and can be obtained from the address of the registered office.
The ultimate parent undertaking is GS Holdings Corp. The registered office of the ultimate parent undertaking is 508 Nonhyeon-ro, Gangnam-gu Seoul, Seoul, Seoul, Republic of Korea.
|