REGISTERED NUMBER: 04805003 (England and Wales) |
Group Strategic Report, Report of the Directors and |
Consolidated Financial Statements for the Year Ended 31 December 2023 |
for |
Brasslink Limited |
REGISTERED NUMBER: 04805003 (England and Wales) |
Group Strategic Report, Report of the Directors and |
Consolidated Financial Statements for the Year Ended 31 December 2023 |
for |
Brasslink Limited |
Brasslink Limited (Registered number: 04805003) |
Contents of the Consolidated Financial Statements |
for the Year Ended 31 December 2023 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Directors | 3 |
Report of the Independent Auditors | 5 |
Consolidated Statement of Profit or Loss | 8 |
Consolidated Statement of Profit or Loss and Other Comprehensive Income |
9 |
Consolidated Statement of Financial Position | 10 |
Company Statement of Financial Position | 11 |
Consolidated Statement of Changes in Equity | 12 |
Company Statement of Changes in Equity | 13 |
Consolidated Statement of Cash Flows | 14 |
Notes to the Consolidated Statement of Cash Flows | 15 |
Notes to the Consolidated Financial Statements | 16 |
Brasslink Limited |
Company Information |
for the Year Ended 31 December 2023 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditors |
First Floor |
18 Devonshire Row |
London |
EC2M 4RH |
Brasslink Limited (Registered number: 04805003) |
Group Strategic Report |
for the Year Ended 31 December 2023 |
The directors present their strategic report of the company and the group for the year ended 31 December 2023. |
REVIEW OF BUSINESS |
The loss for the year, after taxation is $3,170,431. No dividends will be distributed for the year ended 31 December 2023. |
The Group's key financial and other performance indicators during the year were as follows: |
2023 | 2022 | Change |
$'000000 | $'000000 | % |
Turnover | 1,726 | 1,837 | (6 | ) |
Operating loss | (1,340 | ) | (563 | ) | 138 |
Loss for the financial year | (3,170 | ) | (3,548 | ) | (11 | ) |
Shareholder's funds | (67,603 | ) | (64,663 | ) | 5 |
Average number of employees | 108 | 120 | (10 | ) |
Group has control over the Ukrainian subsidiary that is continuing to operate bakeries in Kiev. In 2023 these operations were significantly reduced due to the military conflict still ongoing. |
PRINCIPAL RISKS AND UNCERTAINTIES |
The principal risk and uncertainty facing the company is the security situation in Kiev and Ukraine generally. Ukraine is under attack from Russian armed forces. In addition, the Group is also facing fierce competition from the growing number of competitors producing the same range of products and targeting the same market. To face this risk the Group puts emphasis to the concepts of natural and healthy food production. |
The risks are subject for regular review by the Director to mitigate their impact on the Company. |
PAYMENT POLICY |
The Group and the Company do not have a formal code that it follows with regard to payments to suppliers. Content purchase management of the Company generally agrees payment terms with suppliers when they enter into the contracts for the supply of services. Suppliers are in that way made aware of these terms. |
EMPLOYEES |
The Group and the Company are committed to a policy of equal opportunities in employment by which the Company continues to ensure that all aspects of selection and retention are based on merit and suitability for the job without considerations of sex, marital status, nationality, colour, race, ethnicity, sexual orientation or any disability. |
POLITICAL MATTERS |
The Group and the Company could be affected by political instability or social and economic changes in the countries in which it operates. This could include the granting and renewal of permits and changes to foreign trade or legislation that could affect the business environment and negatively impact the Group's business and financial performance. The Director continues to view the political, social and economic environment within the UK favourably and remains optimistic about the conditions for business in the region. |
ON BEHALF OF THE BOARD: |
18 September 2024 |
Brasslink Limited (Registered number: 04805003) |
Report of the Directors |
for the Year Ended 31 December 2023 |
The directors present their report with the financial statements of the company and the group for the year ended 31 December 2023. |
PRINCIPAL ACTIVITY |
The principal activity of the group in the year under review was that of operating bakeries in Ukraine. |
DIVIDENDS |
No dividends will be distributed for the year ended 31 December 2023. |
EVENTS SINCE THE END OF THE YEAR |
Information relating to events since the end of the year is given in the notes to the financial statements. |
DIRECTORS |
Ms M Eden has held office during the whole of the period from 1 January 2023 to the date of this report. |
M C Smith held office during the whole of the period and resigned on 26 June 2023. |
Mr J Kay was appointed as director on 26 June 2023. |
FINANCIAL INSTRUMENTS |
The group's principal financial instruments comprise trade debtors, trade creditors and loans. The group's exposure to risks in respect of these and risk management policies are discussed below: |
Credit Risk |
The group is exposed to credit risk on its trade debtors. Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. The maximum exposure to risk is represented by the carrying value of the financial assets in the balance sheet. |
Liquidity Risk |
The group manages its liquidity by ensuring that it has sufficient funds to meet its liabilities as they fall due. Liquidity is maintained by the use of long term borrowings. Management monitors the maturity of liabilities and ensures that, where necessary, sufficient additional borrowings can be negotiated to meet these. |
Interest Rate Risk |
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's Management monitors the interest rate fluctuations on a continuous basis and acts accordingly. |
Foreign Exchange Risk |
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group's measurement currency. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Ukrainian Hryvnas, the US Dollar and the Euro. The Group's Management monitors the exchange rate fluctuations on a continuous basis and acts accordingly. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 accounting standards. 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 the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
Brasslink Limited (Registered number: 04805003) |
Report of the Directors |
for the Year Ended 31 December 2023 |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
Brasslink Limited |
Opinion |
We have audited the financial statements of Brasslink Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the Consolidated Statement of Profit or Loss, the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, 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 International Financial Reporting Standards (IFRSs) as adopted by the UK. |
In our opinion: |
- the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2023 and of the group's loss for the year then ended; |
- the group and parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards; and |
- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Material uncertainty related to going concern |
We draw attention to note 3 in the financial statements, which discloses that the group net liabilities amount to $67,603,079 (2022: $64,663,433) and a net loss of $3,170,431(2022: $3,548,291) was incurred in the financial year ended 31 December 2023. These circumstances indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. |
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the parent company 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. |
Report of the Independent Auditors to the Members of |
Brasslink Limited |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
In preparing the financial statements, the directors are responsible for assessing the group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so. |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
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: |
We performed risk assessment procedures and obtained an understanding of the group and its environment, the applicable financial reporting framework, the applicable laws and regulations, the group's system of internal control and the fraud risk factors relevant to the group that affect the susceptibility of assertions to material misstatement due to fraud. We made enquiries with management regarding actual or suspected fraud, non-compliance with laws and regulations, potential litigation and claims. The engagement partner led a discussion among the audit team with particular emphasis on how and where the Company's financial statements may be susceptible to material misstatement due to fraud, including how fraud might occur. The engagement partner assessed that the engagement team collectively had the appropriate competence and capability to identify or recognise non-compliance with laws and regulations. |
We considered compliance with UK Companies Act 2006 and the applicable tax legislation as the key laws and regulations which non-compliance cold directly lead to material misstatement due to fraud at the financial statement level. We evaluated whether the selection and application of accounting policies by the group may be indicative of fraudulent financial reporting. The group engagement team shared its risk assessment with the component auditors so that they could conclude appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group engagement team and/or the component auditors responsive to assessed risks of material misstatement due to fraud at the assertion level included but were not limited to: |
- Testing the appropriateness of manual journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements; |
- Making inquiries of individuals involved in the financial reporting process about inappropriate or unusual activity relating to the processing of journal entries; |
- Selecting and testing journal entries and other adjustments made at the end of a reporting period and throughout the period; |
- Reviewing accounting estimates for biases that could represent a risk of material misstatement due to fraud; |
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements due to irregularities, including fraud, may not be detected, even though we have properly planned and performed our audit in accordance with the auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as they may involve collusion, forgery, intentional omissions, override of internal controls, or collusion. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
Report of the Independent Auditors to the Members of |
Brasslink Limited |
Use of our report |
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Statutory Auditors |
First Floor |
18 Devonshire Row |
London |
EC2M 4RH |
Brasslink Limited (Registered number: 04805003) |
Consolidated Statement of Profit or Loss |
for the Year Ended 31 December 2023 |
31.12.23 | 31.12.22 |
Notes | $ | $ |
CONTINUING OPERATIONS |
Revenue | 1,726,043 | 1,836,874 |
Cost of sales | (898,170 | ) | (920,510 | ) |
GROSS PROFIT | 827,873 | 916,364 |
Other operating income | 21,479 | 135,017 |
Administrative expenses | (2,189,004 | ) | (1,614,719 | ) |
OPERATING LOSS | (1,339,652 | ) | (563,338 | ) |
Finance costs | 5 | (1,722,107 | ) | (1,756,957 | ) |
Finance income | 5 | (108,672 | ) | (1,227,996 | ) |
LOSS BEFORE INCOME TAX | 6 | (3,170,431 | ) | (3,548,291 | ) |
Income tax | 7 | - | - |
LOSS FOR THE YEAR | (3,170,431 | ) | (3,548,291 | ) |
Loss attributable to: |
Owners of the parent | (3,170,431 | ) | (3,548,291 | ) |
Brasslink Limited (Registered number: 04805003) |
Consolidated Statement of Profit or Loss and Other Comprehensive Income |
for the Year Ended 31 December 2023 |
31.12.23 | 31.12.22 |
$ | $ |
LOSS FOR THE YEAR | (3,170,431 | ) | (3,548,291 | ) |
OTHER COMPREHENSIVE INCOME |
Item that will not be reclassified to profit or loss: |
Foreign currency translation difference | 230,785 | 1,181,552 |
Income tax relating to item that will not be reclassified to profit or loss |
- |
- |
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX |
230,785 |
1,181,552 |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
(2,939,646 |
) |
(2,366,739 |
) |
Total comprehensive income attributable to: |
Owners of the parent | (2,939,646 | ) | (2,366,739 | ) |
Brasslink Limited (Registered number: 04805003) |
Consolidated Statement of Financial Position |
31 December 2023 |
31.12.23 | 31.12.22 |
Notes | $ | $ |
ASSETS |
NON-CURRENT ASSETS |
Owned |
Intangible assets | 9 | 2,686 | 23,444 |
Property, plant and equipment | 10 | 1,045,010 | 1,064,207 |
Right-of-use |
Property, plant and equipment | 10, 19 | 924,710 | 1,276,429 |
Investment in associates | 11 | - | 1,008,163 |
Investments | 11 | - | - |
1,972,406 | 3,372,243 |
CURRENT ASSETS |
Inventories | 12 | 60,159 | 55,074 |
Trade and other receivables | 13 | 974,306 | 3,147,657 |
Cash and cash equivalents | 14 | 185,294 | 63,224 |
1,219,759 | 3,265,955 |
TOTAL ASSETS | 3,192,165 | 6,638,198 |
EQUITY |
SHAREHOLDERS' EQUITY |
Called up share capital | 15 | 1,996,809 | 1,996,809 |
Other reserves | 16 | 3,437,782 | 3,206,997 |
Retained earnings | 16 | (73,037,670 | ) | (69,867,239 | ) |
TOTAL EQUITY | (67,603,079 | ) | (64,663,433 | ) |
LIABILITIES |
NON-CURRENT LIABILITIES |
Financial liabilities - borrowings |
Interest bearing loans and borrowings | 18 | 70,517,836 | 70,780,728 |
CURRENT LIABILITIES |
Trade and other payables | 17 | 112,799 | 320,405 |
Financial liabilities - borrowings |
Interest bearing loans and borrowings | 18 | 164,609 | 200,498 |
277,408 | 520,903 |
TOTAL LIABILITIES | 70,795,244 | 71,301,631 |
TOTAL EQUITY AND LIABILITIES | 3,192,165 | 6,638,198 |
The financial statements were approved by the Board of Directors and authorised for issue on 18 September 2024 and were signed on its behalf by: |
M Eden - Director |
Brasslink Limited (Registered number: 04805003) |
Company Statement of Financial Position |
31 December 2023 |
31.12.23 | 31.12.22 |
Notes | $ | $ |
ASSETS |
NON-CURRENT ASSETS |
Owned |
Intangible assets | 9 |
Property, plant and equipment | 10 |
Right-of-use |
Investment in associates | 11 |
Investments | 11 | 1 | 1 |
CURRENT ASSETS |
Trade and other receivables | 13 |
Cash and cash equivalents | 14 |
TOTAL ASSETS |
EQUITY |
SHAREHOLDERS' EQUITY |
Called up share capital | 15 |
Retained earnings | 16 | ( |
) | ( |
) |
TOTAL EQUITY | ( |
) | ( |
) |
LIABILITIES |
NON-CURRENT LIABILITIES |
Financial liabilities - borrowings |
Interest bearing loans and borrowings | 18 |
CURRENT LIABILITIES |
Trade and other payables | 17 |
TOTAL LIABILITIES |
TOTAL EQUITY AND LIABILITIES |
The financial statements were approved by the Board of Directors and authorised for issue on |
Brasslink Limited (Registered number: 04805003) |
Consolidated Statement of Changes in Equity |
for the Year Ended 31 December 2023 |
Called up |
share | Retained | Other | Total |
capital | earnings | reserves | equity |
$ | $ | $ | $ |
Balance at 1 January 2022 | 1,996,809 | (66,318,948 | ) | 2,025,445 | (62,296,694 | ) |
Deficit for the year | - | (3,548,291 | ) | - | (3,548,291 | ) |
Other comprehensive income | - | - | 1,181,552 | 1,181,552 |
Total comprehensive income | - | (3,548,291 | ) | 1,181,552 | (2,366,739 | ) |
Balance at 31 December 2022 | 1,996,809 | (69,867,239 | ) | 3,206,997 | (64,663,433 | ) |
Deficit for the year | - | (3,170,431 | ) | - | (3,170,431 | ) |
Other comprehensive income | - | - | 230,785 | 230,785 |
Total comprehensive income | - | (3,170,431 | ) | 230,785 | (2,939,646 | ) |
Balance at 31 December 2023 | 1,996,809 | (73,037,670 | ) | 3,437,782 | (67,603,079 | ) |
Brasslink Limited (Registered number: 04805003) |
Company Statement of Changes in Equity |
for the Year Ended 31 December 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
$ | $ | $ |
Balance at 1 January 2022 | ( |
) | ( |
) |
Changes in equity |
Total comprehensive loss | - | ( |
) | ( |
) |
Balance at 31 December 2022 | ( |
) | ( |
) |
Changes in equity |
Total comprehensive loss | - | ( |
) | ( |
) |
Balance at 31 December 2023 | ( |
) | ( |
) |
Brasslink Limited (Registered number: 04805003) |
Consolidated Statement of Cash Flows |
for the Year Ended 31 December 2023 |
31.12.23 | 31.12.22 |
$ | $ |
Cash flows from operating activities |
Cash generated from operations | 1 | (161,462 | ) | 718,262 |
Net cash from operating activities | (161,462 | ) | 718,262 |
Cash flows from investing activities |
Purchase of intangible fixed assets | (2,896 | ) | (438 | ) |
Purchase of tangible fixed assets | (6,503 | ) | 904,561 |
Sale of tangible fixed assets | - | (1,276,429 | ) |
Sale of fixed asset investments | 491,581 | 1,248,027 |
Interest received | (116 | ) | - |
Net cash from investing activities | 482,066 | 875,721 |
Cash flows from financing activities |
New loans in year | (284,860 | ) | (2,570,588 | ) |
Payment of lease liabilities | (144,459 | ) | - |
Net cash from financing activities | (429,319 | ) | (2,570,588 | ) |
Decrease in cash and cash equivalents | (108,715 | ) | (976,605 | ) |
Cash and cash equivalents at beginning of year | 2 | 63,224 | 1,039,829 |
Effect of foreign exchange rate changes | 230,785 | - |
Cash and cash equivalents at end of year | 2 | 185,294 | 63,224 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Statement of Cash Flows |
for the Year Ended 31 December 2023 |
1. | RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS |
31.12.23 | 31.12.22 |
$ | $ |
Loss before income tax | (3,170,431 | ) | (3,548,291 | ) |
Depreciation charges | 298,504 | 561,193 |
Foreign exchange | 1,613,681 | 179,870 |
Bad debts write off | (865,419 | ) | 1,315,479 |
Leases charges | 84,539 | - |
Finance costs | 1,722,107 | 1,756,957 |
Finance income | 108,672 | 1,227,996 |
(208,347 | ) | 1,493,204 |
(Increase)/decrease in inventories | (5,085 | ) | 71,327 |
Decrease/(increase) in trade and other receivables | 91,467 | (684,428 | ) |
Decrease in trade and other payables | (39,497 | ) | (161,841 | ) |
Cash generated from operations | (161,462 | ) | 718,262 |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts: |
Year ended 31 December 2023 |
31.12.23 | 1.1.23 |
$ | $ |
Cash and cash equivalents | 185,294 | 63,224 |
Year ended 31 December 2022 |
31.12.22 | 1.1.22 |
$ | $ |
Cash and cash equivalents | 63,224 | 1,039,829 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements |
for the Year Ended 31 December 2023 |
1. | GENERAL INFORMATION |
Brasslink Limited ("the Company") is a private limited company incorporated and domiciled in the United Kingdom. The principal activity of the Company is that of a holding and financing company. Brasslink Limited is a holding company to one subsidiary incorporated in Ukraine, that is involved in bakery business. These consolidated financial statements incorporate the results of Brasslink Limited and its subsidiary undertaking ("the Group") as at 31 December 2023. |
2. | STATUTORY INFORMATION |
Brasslink Limited is a |
3. | ACCOUNTING POLICIES |
Basis of preparation |
These financial statements have been prepared in accordance with UK adopted international accounting standards and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified by fair value measurement of certain items as disclosed in the accounting policies below. |
In publishing the parent company financial statements here together with the group financial statements, the company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its individual income statement and related notes. |
The financial statements have been prepared on a going concern basis even though at the balance sheet date the group had net liabilities amounting to $67,603,079 (2022: $64,663,433) and incurred a net loss of $3,170,431 (2022: $3,548,291). |
The directors have concluded that the combination of these circumstances represent a material uncertainty that casts significant doubt upon the group's ability to continue as a going concern. Nevertheless after making enquiries, and considering the uncertainties described above, the director has a reasonable expectation that the group has adequate anticipated resources from its long term borrowings to continue in operational existence for the foreseeable future. A letter of continuing financial support from the ultimate beneficiary was also obtained. For these reasons, the directors continue to adopt the going concern basis in preparing the accounts. |
Basis of consolidation |
The consolidated financial statements incorporate the results of Brasslink Limited and its subsidiary undertaking as at 31 December 2023 using the acquisition method of accounting. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases. |
The cost of an acquisition is measured as the fair value of the assets plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. |
The excess of the cost of acquisition over the fair value of the group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities is recorded as goodwill. If the cost of acquisition is less than the fair value of the group's share of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. |
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated, but only to the extent that there is no evidence of impairment. Accounting policies of the subsidiaries have been updated where necessary to ensure consistency with the policies adopted by the Group. |
Associates are accounted for using the equity method. Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20%-50%. |
Non-controlling interest is the interest in subsidiaries not held by the Group. Non-controlling interest at the balance sheet date represents the non-controlling interest members' portion of the identifiable asset and liabilities of the subsidiary at the acquisition date, and the non-controlling interest members' portion of movements in equity since the date of the combination. Non-controlling interest is presented within the members' equity. |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
3. | ACCOUNTING POLICIES - continued |
Revenue recognition |
Revenue is recorded net of VAT and recognised on the date when the risks and rewards of ownership are transferred to the customers. Revenue is measured at the fair value of the consideration received or receivable. When the fair value of consideration received cannot be measured reliably the revenue is recognised at the fair value of the goods or services provided. |
Group also records revenue derived from services provided under sub-franchise agreement to the extent that there is a right to consideration and is recorded at the value of the consideration due. |
Cash and cash equivalents |
Cash represents cash in hand and deposits held on demand with financial institutions. Cash equivalents are short-term, highly-liquid investments with original maturities of three months or less (as at their date of acquisition). Cash equivalents are readily convertible to known amounts of cash and subject to an insignificant risk of change in that cash value. |
In the presentation of the Statement of Cash Flows, cash and cash equivalents also include bank overdrafts. Any such overdrafts are shown within borrowings under ‘current liabilities’ on the Statement of Financial Position. |
Intangible fixed assets |
Intangible fixed assets are stated at cost less amortisation. |
Intangible assets comprise of franchise fees entitling the franchisee (Brasslink Limited) to an Exclusive Non Compete Zone (Kyiv and Moscow) to use "Volkonskiy" brand unrestrictedly to operate a business. |
Amortisation is provided at the following rate in order to write off intangible assets over their estimated useful life. |
Franchise fees | - 10 years |
Property, plant and equipment |
Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use. Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. |
Depreciation is recognised in profit or loss on a straight line or reducing balance basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Land is not depreciated. |
The estimated useful lives of significant items of property, plant and equipment for the current and comparative periods are as follows: |
Leasehold property - over the term of the lease |
Plant and Machinery - 20% reducing balance |
Fixture and Fittings - 20% reducing balance |
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate. |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
3. | ACCOUNTING POLICIES - continued |
Financial instruments |
i. Financial assets : loans and receivables |
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses unless the effect of discounting would be immaterial. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and losses are recognised in the consolidated statement of comprehensive income when the loans and receivables are derecognised or impaired as well as through the amortisation process. |
Interest income is recognised on a time-proportion basis using the effective interest rate method. |
ii. Cash and cash equivalents |
Cash and cash equivalents include cash in hand, bank accounts, deposits receivable on demand and deposits with maturity dates of three months or less from the date of inception. Bank overdrafts that are repayable on demand and which form an integral part of the company's cash management are also included as a component of cash and cash equivalents where offset conditions are met. |
iii. Financial liabilities: interest bearing loans and borrowings |
All loans and borrowings are valued initially at fair value of the proceeds received (which is determined using the prevailing market rate of interest for a similar instrument, if significantly differs from the transaction price), net of transaction costs incurred. In subsequent periods, interest bearing loans and borrowings are stated at amortised cost using the effective interest method; any difference between fair value of the proceeds (net of transaction costs) and the redemption amount is recognised as interest expense over the period of the loans and borrowings. |
Interest expense is recognised on a time-proportion basis using the effective interest method. |
Interest-free long term debt granted to and by the related parties is initially recognised in accordance with the recognition of the financial instruments policy. The difference between nominal amount of consideration given and the fair value of loans granted and borrowed at other than market terms is recognised in the period the loan is granted and borrowed as initial recognition of loans from related parties at fair value. The resulting gain is accounted as additional paid in capital. Loans with fixed maturities are subsequently measured at amortised cost using the effective interest rate method. Those that do not have fixed maturities are carried at cost. Gains and losses are recognised in the consolidated statement of comprehensive income when the loans and borrowings are derecognised or impaired as well as through the amortisation process. |
Inventories |
Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. |
The cost of inventories is based on the average cost principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. |
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. |
Taxation |
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date. |
The charge for taxation takes into account taxation deferred as a result of timing differences between the treatment of certain items for taxation and accounting purposes. In general, deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. However, deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred taxation is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which the timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. The deferred tax of the Group relates to foreign tax payable or receivable outside of UK. |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
3. | ACCOUNTING POLICIES - continued |
Foreign currencies |
The consolidated financial statements are expressed in US Dollars, which is the Group's functional currency. |
The individual financial statements of each Group company are reported in the currency of the primary economic environment in which it operate. The closing rate method was used for translating the financial statements of the company's overseas subsidiaries and the income statement and cash flow statement are translated at the average exchange rate for the period. The resulting exchange differences are recognised in the translation reserve. |
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate at the balance sheet date. |
Monetary assets and liabilities in foreign currencies are translated into US Dollars at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into US Dollars at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
Leases |
The company applied IFRS 16 Leases for leased assets. |
The company transitioned to IFRS 16 in accordance with modified retrospective method with the date of initial application of 1 January 2019. An entity applies the elected transition method consistently to all leases for which it is a lessee IFRS 16. The company also has elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases). In addition, the company has decided not to apply the new guidance to leases whose term will end within 12 month of the date of initial application. In such cases, the leases has been accounted for as a short-term leases and the lease payments associated with them will be recognised as an expense from short-term leases. |
The lease liability is measured at the present value of the remaining lease payments, discounting using the incremental borrowing rate at the date of initial application. The right-of-use asset is measured at an amount equal to the lease liability at the date of initial application. |
Critical accounting estimates and judgements |
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and operating costs during the reporting period. The most significant estimate is stated below. |
In the normal course of business the Group enters into transactions with its related parties. IAS 39 requires initial recognition of financial instruments based on their fair values. Judgement is applied in determining if transactions are priced at market or non-market interest rates, where there is no active market for such transactions. The basis for judgement is pricing for similar types of transactions with unrelated parties. |
Useful life of property and equipment |
Management assesses the remaining useful lives of items of property and equipment at least at each financial year-end. The future economic benefits embodied in the assets are consumed principally through use. However, other factors, such as technical or commercial obsolescence and wear and tear, often result in the diminution of the economic benefits embodied in the assets. Management assesses the remaining useful lives in accordance with the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group. The following primary factors are considered: (a) expected usage of the assets; (b) expected physical wear and tear, which depends on operational factors and maintenance programme; and (c) technical or commercial obsolescence arising from changes in market conditions. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors". These estimates may have a material impact on the amount of the carrying values of property and equipment and on depreciation recognized in profit or loss. |
Deferred tax assets |
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. |
Investments |
Investments are valued at cost less provision for impairment. |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
3. | ACCOUNTING POLICIES - continued |
New standards and interpretations |
New standards, interpretations and amendments not yet effective |
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. |
The following amendments are effective for the period beginning 1 January 2024: |
IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback) |
IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-current) |
IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants) |
4. | EMPLOYEES AND DIRECTORS |
31.12.23 | 31.12.22 |
$ | $ |
Wages and salaries | 185,187 | 384,772 |
Social security costs | 35,197 | 43,491 |
220,384 | 428,263 |
The average number of employees during the year was as follows: |
31.12.23 | 31.12.22 |
Bakers and specialists | 33 | 84 |
Administrative staff | 54 | 17 |
Management | 21 | 19 |
Management remuneration during the year was as follows: |
2023 | 2022 |
$ | $ |
Total | 90,338 | 118,010 |
Directors fees are included in the overall package of professional services fees. |
5. | NET FINANCE COSTS |
31.12.23 | 31.12.22 |
$ | $ |
Finance income: |
Interest in associate undertakings | (516,582 | ) | (1,744,919 | ) |
Loan interest | 407,910 | 516,923 |
(108,672 | ) | (1,227,996 | ) |
Finance costs: |
Loan interest | 1,658,502 | 1,682,876 |
Leasing | 63,605 | 74,081 |
1,722,107 | 1,756,957 |
Net finance costs | 1,830,779 | 2,984,953 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
6. | LOSS BEFORE INCOME TAX |
31.12.23 | 31.12.22 |
$ | $ |
Cost of inventories recognised as expense | 898,170 | 920,510 |
Depreciation - owned assets | 274,850 | 537,969 |
Depreciation - assets on hire purchase contracts or finance leases | 219,298 | - |
Patents and licences amortisation | 23,654 | 23,224 |
Auditors' remuneration | 12,740 | 9,408 |
Foreign exchange differences | 2,199,024 | 317,382 |
7. | INCOME TAX |
Analysis of tax expense |
No liability to UK corporation tax arose for the year ended 31 December 2023 nor for the year ended 31 December 2022. |
Factors affecting the tax expense |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
31.12.23 | 31.12.22 |
$ | $ |
Loss before income tax | (3,170,431 | ) | (3,548,291 | ) |
Loss multiplied by the standard rate of corporation tax in the UK of 23.521 % (2022 - 19 %) |
(745,717 |
) |
(674,175 |
) |
Effects of: |
Losses carried forward | 675,633 | 656,473 |
Depreciation in excess of capital allowances | 70,084 | 17,702 |
Tax expense | - | - |
The company has unused tax losses for which no deferred tax asset has been recognised of $34,853,856 (£27,368,556) (2022: $32,056,309 (£25,916,654)). |
8. | LOSS OF PARENT COMPANY |
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was $(2,654,498) (2022 - $(1,333,760)). |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
9. | INTANGIBLE ASSETS |
Group |
Patents |
and |
licences |
$ |
COST |
At 1 January 2023 | 245,376 |
Additions | 2,896 |
At 31 December 2023 | 248,272 |
AMORTISATION |
At 1 January 2023 | 221,932 |
Amortisation for year | 23,654 |
At 31 December 2023 | 245,586 |
NET BOOK VALUE |
At 31 December 2023 | 2,686 |
At 31 December 2022 | 23,444 |
Company |
Patents |
and |
licences |
$ |
COST |
At 1 January 2023 |
and 31 December 2023 |
AMORTISATION |
At 1 January 2023 |
Amortisation for year |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
10. | PROPERTY, PLANT AND EQUIPMENT |
Group |
Fixtures |
Short | Plant and | and |
leasehold | machinery | fittings | Totals |
$ | $ | $ | $ |
COST |
At 1 January 2023 | 1,276,429 | 1,981,271 | 68,490 | 3,326,190 |
Additions | 134,759 | 10,794 | - | 145,553 |
Disposals | (262,262 | ) | (21,615 | ) | - | (283,877 | ) |
Exchange differences | (4,918 | ) | (71,418 | ) | - | (76,336 | ) |
At 31 December 2023 | 1,144,008 | 1,899,032 | 68,490 | 3,111,530 |
DEPRECIATION |
At 1 January 2023 | 262,262 | 654,802 | 68,490 | 985,554 |
Charge for year | 219,298 | 274,850 | - | 494,148 |
Eliminated on disposal | (262,262 | ) | (4,291 | ) | - | (266,553 | ) |
Exchange differences | - | (71,339 | ) | - | (71,339 | ) |
At 31 December 2023 | 219,298 | 854,022 | 68,490 | 1,141,810 |
NET BOOK VALUE |
At 31 December 2023 | 924,710 | 1,045,010 | - | 1,969,720 |
At 31 December 2022 | 1,014,167 | 1,326,469 | - | 2,340,636 |
Company |
Plant and |
machinery |
$ |
COST |
At 1 January 2023 |
and 31 December 2023 |
DEPRECIATION |
At 1 January 2023 |
and 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
11. | INVESTMENTS |
Group |
Interest |
in |
associate |
$ |
COST |
At 1 January 2023 | 1,008,163 |
Disposals | (491,581 | ) |
Impairments | (516,582 | ) |
At 31 December 2023 | - |
NET BOOK VALUE |
At 31 December 2023 | - |
At 31 December 2022 | 1,008,163 |
Company |
Shares in | Interest |
group | in |
undertakings | associate | Totals |
$ | $ | $ |
COST |
At 1 January 2023 | 1 | 1,008,163 | 1,008,164 |
Disposals | - | (491,581 | ) | (491,581 | ) |
Impairments | - | (516,582 | ) | (516,582 | ) |
At 31 December 2023 | 1 | - | 1 |
NET BOOK VALUE |
At 31 December 2023 | 1 | - | 1 |
At 31 December 2022 | 1 | 1,008,163 | 1,008,164 |
12. | INVENTORIES |
Group |
31.12.23 | 31.12.22 |
$ | $ |
Raw materials | 48,180 | 45,339 |
Finished goods | 11,979 | 9,735 |
60,159 | 55,074 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
13. | TRADE AND OTHER RECEIVABLES |
Group | Company |
31.12.23 | 31.12.22 | 31.12.23 | 31.12.22 |
$ | $ | $ | $ |
Current: |
Trade debtors | 77,714 | 112,997 |
Other debtors | 135,192 | 195,176 | 13,851 | 12,083 |
Loan to beneficial owner | 664,445 | 2,758,181 | 664,445 | 2,758,182 |
Prepayments and accrued income | - | - | 8,037 | - |
Prepayments | 96,955 | 81,303 |
974,306 | 3,147,657 |
Other receivables include an unsecured loan of $664,445 (equivalent to €601,057), bearing interest of 2.5% to the beneficial owner A Garese. The principal amount is $603,866 (€546,257) and interest $60,579 (€54,800). |
This loan is repayable on 15 September 2027. |
14. | CASH AND CASH EQUIVALENTS |
in USD | 2023 | 2022 |
Group | Company | Group | Company |
Cash and cash equivalents in RUB | 10,839 | 10,839 | 2,611 | 2,611 |
Cash and cash equivalents in GBP(overdraft) |
24,725 |
24,725 |
-97 |
-97 |
Cash and cash equivalents in USD(overdraft) |
-71 |
-71 |
-65 |
-65 |
Cash and cash equivalents in EUR | 113,916 | 113,916 | 47,129 | 47,127 |
Cash and cash equivalents in UAH | 35,885 | - | 13,646 | - |
Cash and cash equivalents in CHF | - | - | - | - |
185,294 | 149,409 | 63,224 | 49,578 |
Cash equivalents represent callable deposits with maturities of three months or less from the acquisition date. |
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 20. |
15. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31.12.23 | 31.12.22 |
value: | $ | $ |
Ordinary | £1.00 | 1,996,809 | 1,996,809 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
16. | RESERVES |
Group |
Retained | Other |
earnings | reserves | Totals |
$ | $ | $ |
At 1 January 2023 | (69,867,239 | ) | 3,206,997 | (66,660,242 | ) |
Deficit for the year | (3,170,431 | ) | (3,170,431 | ) |
Currency exchange | - | 230,785 | 230,785 |
At 31 December 2023 | (73,037,670 | ) | 3,437,782 | (69,599,888 | ) |
Company |
Retained |
earnings |
$ |
At 1 January 2023 | ( |
) |
Deficit for the year | ( |
) |
At 31 December 2023 | ( |
) |
17. | TRADE AND OTHER PAYABLES |
Group | Company |
31.12.23 | 31.12.22 | 31.12.23 | 31.12.22 |
$ | $ | $ | $ |
Current: |
Trade creditors | 36,385 | 44,082 |
Other creditors | 26,139 | 50,930 |
Loan from beneficial owner | - | 168,110 | - | 168,110 |
Accrued expenses | 50,275 | 57,283 | 35,110 | 33,411 |
112,799 | 320,405 |
18. | FINANCIAL LIABILITIES - BORROWINGS |
Group | Company |
31.12.23 | 31.12.22 | 31.12.23 | 31.12.22 |
$ | $ | $ | $ |
Current: |
Leases (see note 19) | 164,609 | 200,498 | - | - |
Non-current: |
Other loans - 1-2 years | 69,669,248 | 69,887,175 | 69,669,248 | 69,887,175 |
Leases (see note 19) | 848,588 | 893,553 | - | - |
70,517,836 | 70,780,728 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
18. | FINANCIAL LIABILITIES - BORROWINGS - continued |
Terms and debt repayment schedule |
Group |
1 year or | More than |
less | 1-2 years | 2-5 years | 5 years | Totals |
$ | $ | $ | $ | $ |
Other loans | - | - | 46,493,751 | 23,175,497 | 69,669,248 |
Leases | 164,609 | 848,588 | - | - | 1,013,197 |
164,609 | 848,588 | 46,493,751 | 23,175,497 | 70,682,445 |
Terms and debt repayment schedule. |
Terms and conditions of outstanding loans for the group were as follows: |
2023 | 2023 | 2022 | 2022 |
Interest rate |
Year |
Face value |
Carrying amount |
Face value |
Carrying amount |
Unsecured loans |
USD |
3% |
2022 |
46,493,751 |
46,493,751 |
45,558,955 |
45,558,955 |
Unsecured loans |
EUR |
4.5% |
2025 |
8,459,926 |
8,459,926 |
10,175,848 |
10,175,848 |
Unsecured loans |
RUB |
4.5% |
2025 |
1,142,554 |
1,142,554 |
1,345,556 |
1,345,556 |
Unsecured loans |
EUR |
3% |
2024 |
13,573,017 |
13,573,017 |
12,806,817 |
12,806,817 |
Total | 69,669,248 | 69,669,248 | 69,887,175 | 69,887,175 |
Terms and conditions of outstanding loans for the company were as follows: |
2023 | 2023 | 2022 | 2022 |
Interest rate |
Year |
Face value |
Carrying amount |
Face value |
Carrying amount |
Unsecured loans |
USD |
3% |
2022 |
46,493,751 |
46,493,751 |
45,558,955 |
45,558,955 |
Unsecured loans |
EUR |
4.5% |
2025 |
8,459,926 |
8,459,926 |
10,175,848 |
10,175,848 |
Unsecured loans |
RUB |
4.5% |
2025 |
1,142,554 |
1,142,554 |
1,345,556 |
1,345,556 |
Unsecured loans |
EUR |
3% |
2024 |
13,573,017 |
13,573,017 |
12,806,817 |
12,806,817 |
Total | 69,669,248 | 69,669,248 | 69,887,175 | 69,887,175 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
19. | LEASING |
IFRS 16 Leases (effective for annual periods beginning on or after 1 January 2019) |
Adoption of IFRS 16 requires that lessees recognise nearly all leases on the balance that will reflect a right of use asset and a lease liability based on the discounted future payments required under the lease. This is in contrast with IAS 17 where only finance leases are recorded on the balance sheet and operating leases are recorded in the profit and loss account with no balance sheet impact. |
The Group's only material lease commitments related to rent payable on the office and coffee shops buildings. Management reviewed the companies rental agreements to calculate the required adjustments. Optional lease periods were excluded from the lease term when calculating the present value of the discounted future payments on the lease as management could not conclude with reasonably certainty that the lease would not be terminated at the next break point as any changes in business circumstances between now and then would dictate whether the properties remain suitable for the business. A discount rate between 7.86% and 8.74% was applied based on incremental borrowing rate. |
Impact on assets, liabilities and equity as at 31 December 2023 |
Right-of-use assets | 1,148,925 |
Right-of-use assets accumulated depreciation | (219,298 | ) |
FX difference | (4,917 | ) |
Net impact on total assets | 924,710 |
Lease liabilities - short term | 164,609 |
Lease liabilities - long term | 848,588 |
Net impact on total liabilities | 1,013,197 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
20. | FINANCIAL INSTRUMENTS |
The Group's principal financial instruments comprise of cash and cash equivalents, trade and other receivables, borrowings, trade accounts payable and accruals. The Company manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. |
The capital structure of the Group consists of debt, cash and cash equivalents and equity, comprising capital and retained earnings. |
The main risks arising from the Group's financial instruments are credit risk, liquidity risk and market risk. |
No active financial risk management is undertaken by the management. |
Credit risk |
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers. |
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows: |
Carrying amount |
2023 | 2022 |
$ | $ |
Cash and cash equivalents | 185,294 | 63,224 |
Trade and other receivables | 974,306 | 3,147,657 |
The Group has a policy of depositing surplus cash balances with reputable UK and Ukranian banks. The purpose of such policy is to secure interest on deposits and at the same time maintain targeted liquidity level. The Group limits its exposure to credit risk by only placing deposits with banks (financial institutions), whose creditworthiness has been certified by UK and European banks rating agencies. |
The management believes that the Group would be able to generate sufficient cash from its bakery business and planned proceeds from coffee shop operations. The Group believes it would be able to receive full repayment of trade and other receivables within the next six months. |
Liquidity risk |
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group'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 Group's reputation. |
Typically the Group ensures that it has sufficient cash on demand to meet current operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. |
The following are the contractual maturities of financial liabilities, including estimated interest payments. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts. |
Up to 1 year |
1-3 years |
More than 3 years |
Total |
$ | $ | $ | $ |
2023 |
Trade and other payables | 277,408 | - | - | 277,408 |
Unsecured long term borrowings | - | - | 69,669,248 | 69,669,248 |
Leases obligations | - | - | 848,588 | 848,588 |
2022 |
Trade and other payables | 520,903 | - | - | 520,903 |
Unsecured long term borrowings | - | - | 69,887,175 | 69,887,175 |
Leases obligations | - | - | 893,553 | 893,553 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
The fair value of financial assets and financial liabilities is as below: |
Carrying amount 2023 |
Fair value 2023 |
Carrying amount 2022 |
Fair value 2022 |
$ | $ | $ | $ |
Financial liabilities at amortised cost | 69,669,248 | 69,669,248 | 69,887,175 | 69,887,175 |
The carrying value less impairment provision of trade payables are assumed to approximate their fair values. The fair value of financial liabilities is calculated by discounting the future contractual cashflows at the current market interest rate that is available to the Company for similar financial instruments. |
Market risk |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. |
Currency risk |
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currency of Group entities, which is the Russian Rouble (RUB) and Ukrainian Hryvnia (UAH). The currencies in which these transactions primarily are denominated are US dollars (USD). |
Interest on borrowings is denominated in the currency of the borrowing. In respect of other monetary assets and liabilities denominated in foreign currencies, the Group's policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. |
Assets and liabilities by denominated currency for the year ended 31 December 2023 is as follows: |
USD | RUB | EUR | UAH | Other | Total |
Trade and other receivables |
75,976 |
- |
- |
211,997 |
21,888 |
309,861 |
Cash and cash equivalents |
-71 |
10,839 |
113,916 |
35,885 |
24,725 |
185,294 |
Loans and borrowings |
-46,493,751 |
-1,142,554 |
-22,032,943 |
-1,013,197 |
- |
-70,682,445 |
Trade and other payables |
- |
- |
- |
-77,687 |
-35,111 |
-112,799 |
========= | ========= | ======== | ======= | ====== | ========= |
Totals | -46,417,846 | -1,131,715 | -21,919,027 | -843,002 | 11,502 | -70,300,089 |
Effect of principal exchange rate fluctuations on the Group's consolidated statement of comprehensive income for the year ended 31 December 2023 is as follows: |
In US dollars: |
Exchange rate fluctuations % |
Estimation of gain/(loss |
) |
USD/RUB | 10% | 113,171 |
USD/RUB | -10% | (113,171 | ) |
USD/EURO | 10% | 2,191,903 |
USD/EURO | -10% | (2,191,903 | ) |
USD/UAH | 10% | 84,246 |
USD/UAH | -10% | (84,246 | ) |
The following significant exchange rates applied during the year: |
In US dollars: | Average rate | Average rate | Spot rate | Spot rate |
2023 | 2022 | 2023 | 2022 |
EURO | 0.9239 | 0.9489 | 0.9060 | 0.9323 |
RUB | 85.5086 | 69.8957 | 89.2492 | 73.7500 |
UAH | 36.7985 | 32.6422 | 38.0945 | 36.8560 |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
Interest rate risk |
Changes in interest rates impact primarily loans and borrowings by changing either their fair value (fixed rate debt) or their future cash flows (variable rate debt). The Group's policy is only to borrow at a fixed rate of interest. |
At the reporting date the Group's interest-bearing financial instruments were $69,669,248 (2022: $69,887,175) in the average effective interest rate of 3.60%. |
Effect of interest rate fluctuations on the Group's consolidated statement of comprehensive income for the year ended 31 December 2023 is as follows: |
Average rate | Adjustments 10% | Amount |
% | % | $ |
10% interest rate increasing | 3.96 | 0.36 | 250,809 |
10% interest rate decreasing | 3.24 | -0.36 | -250,809 |
Fair values versus carrying amounts |
The base for determination of a fair value is disclosed in Note 3 Accounting Policies. The management believes that the fair value of financial assets and liabilities of the Group is approximately equal to their respective carrying amounts. |
Capital Management |
The Group has no formal policy for capital management but management seeks to maintain a sufficient capital base for meeting the Group's operational and strategic needs, and to maintain confidence of market participants. Total comprehensive loss for the year ended 31 December 2023 was principally generated by the businesses in countries with declining economic climate, and further depreciation of the local currencies. The management, however, concentrates on efficient production and cash management, constant monitoring of Group's revenues and long-term investment plans to be mainly financed by the Group's operating cash flows. With these measures the Group aims for steady profit growth. |
Master netting or similar agreement |
The Group may enter into sales and purchase agreements with the same counterparty in the normal course of business. The related amount receivable and payable do not always meet the criteria for offsetting in the statement of financial position. This is because the Group may not have any currently legally enforceable right to offset recognised amounts, because the right to offset may be enforceable only on the occurrence of future events. In particular, in accordance with the Russian civil law an obligation can be settled by offsetting against a similar claim if it is due, has no maturity or is payable on demand. The total amount of financial instruments does not meet the offsetting criteria. |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
21. | CONTINGENT LIABILITIES |
Taxation contingencies |
The taxation system in Ukraine continues to evolve and is characterised by frequent changes in legislation, official pronouncements and court decisions, which are sometimes contradictory and subject to varying interpretation by different tax authorities. Taxes are subject to review and investigation by a number of authorities, which have the authority to impose severe fines, penalties and interest charges. A tax year remains open for review by the tax authorities during the three subsequent calendar years; however, under certain circumstances a tax year may remain open longer. Recent events within the Russian Federation suggest that the tax authorities are taking a more assertive and substance-based position in their interpretation and enforcement of tax legislation. |
These circumstances may create tax risks in Ukraine that are substantially more significant than in other countries. Management believes that it has provided adequately for tax liabilities based on its interpretations of applicable Russian and Ukrainian tax legislation, official pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant. |
Management believes that the Group has been in compliance with all requirements of effective tax legislation and currently is assessing the possible impact of the introduced amendments. |
Ukrainian economic environment |
The Group conducts some of its operations in Ukraine. |
The Ukrainian economy while deemed to be of market status continues to display certain characteristics consistent with that of an economy in transition. These characteristics include, but are not limited to, low levels of liquidity in the capital markets, unstable political situation and continuing war conflict in the Eastern parts of Ukraine, high inflation, and significant imbalances in the public finance and foreign trade. |
In terms of currency regulations, the new currency law was adopted in 2018 and came into force on 7 February 2019. It purports to enable the National Bank of Ukraine to promote more liberal currency regulation and soften a number of currency restrictions. |
The known and estimable effects of the above events on the financial position and performance of the Group in the reporting period have been taken into account in preparing these consolidated financial statements. |
Management is monitoring the developments in the current environment and taking actions, where appropriate, to minimise any negative effects to the extent possible. Further adverse developments in the political, macroeconomic and/or international trade conditions may further adversely affect the Group's financial position and performance in a manner not currently determinable. |
22. | RELATED PARTY DISCLOSURES |
At the balance sheet date, the following amounts are included within non-current borrowings after more than one year. |
2023 | 2022 |
$ | $ |
Garese & Associates | 8,459,926 | 10,175,848 |
Nexia Limited | 14,715,571 | 14,152,372 |
The company was charged interest of $266,863 (2022: $342,136) by Garese & Associates, a company under common control. |
The company was charged interest of $405,909 (2022: $405,944) by Nexia Limited, a company under common control. |
At the end of the year, Mr A Garese owed to group $664,445 (2022: $2,758,182), interest charged on this loan was $60,579. |
23. | AUDITOR LIABILITY LIMITATION AGREEMENT |
An auditors' limitation of liability agreement has been approved by the members for the financial year ended 31 December 2023. The principal terms and conditions are as below: |
- The agreement limits the amount of any liability owed to the Company by the auditors in respect of any negligence default, breach of duty or breach of trust, occurring in the course of audit of the Company's accounts and pursuant to this agreement the auditor may be guilty in relation to the Company. |
- The agreement also stipulates the maximum aggregated amount payable in event of any of the circumstances stated above. |
Brasslink Limited (Registered number: 04805003) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 December 2023 |
24. | EVENTS AFTER THE REPORTING PERIOD |
Nuxley Limited, a company incorporated in the British Virgin Islands and Eversight Limited, a company incorporated in British Virgin Islands both transfered all their shareholdings in Brasslink Limited to Mr A Garese after the year end date. |
25. | ULTIMATE CONTROLLING PARTY |
In the opinion of the directors the ultimate controlling party is |
26. | SIGNIFICANT SUBSIDIARIES |
Subsidiary | Country of incorporation | Ownership/voting |
2023 | 2022 |
OOO Konditerskaya Volkonskogo | Ukraine | 100% | 100% |