EMSC Global Limited

Consolidated Statement of Cash Flows

for the Period from 1 June 2024 to 31 December 2024

	31 December 2024 £	31 May 2024 £
Cash flows from operating activities
Loss for the period	(4,977,398)	(4,715,660)
Adjustments to cash flows from non-cash items
Depreciation and amortisation	(33,387)	425,567
Loss/(profit) on disposal of tangible assets	643	(446,081)
Finance income	(1,966)	-
Finance costs	1,044,428	1,160,439
Working capital adjustments
(Increase)/decrease in stocks	(1,762,317)	2,776,824
Decrease/(increase) in trade debtors	1,097,059	(352,644)
Decrease in trade creditors	(786,045)	(11,632,848)
(Decrease)/increase in provisions	(337,816)	1,658,694
Cash generated from operations	(5,756,799)	(11,125,709)
Income taxes received	85,348	15,455
Net cash flow from operating activities	(5,671,451)	(11,110,254)
Cash flows from investing activities
Interest received	1,966	-
Acquisitions of tangible assets	(26,759)	(424,840)
Proceeds from sale of tangible assets	-	2,622,284
Acquisition of intangible assets	(46,105)	(250,661)
Net cash flows from investing activities	(70,898)	1,946,783
Cash flows from financing activities
Interest paid	(672,528)	(333,091)
Payments to bank borrowing draw downs	-	(5,014,980)
Payments to finance lease creditors	(1,737)	(4,983)
Loans received from group undertakings	6,580,571	14,360,063
Net cash flows from financing activities	5,906,306	9,007,009
Net increase/(decrease) in cash and cash equivalents	163,957	(156,462)
Cash and cash equivalents at 1 June	321,967	478,429
Cash and cash equivalents at 31 December	485,924	321,967

EMSC Global Limited

Consolidated Statement of Cash Flows

for the Period from 1 June 2024 to 31 December 2024 (continued)

Analysis of net debt

	At 1 June 2024		Net Cash flows		Non-cash movements		At 31 December 2024
	£		£		£		£
Cash and cash equivalents
Cash at bank and in hand	321,967		163,957		-		485,924
Bank overdrafts	-		-		-		-
	321,967		163,957		-		485,924
Borrowings
Trade finance	-		-		-		-
Debt due within one year	-		-				-
Debt due after one year	-		-				-
Finance leases due within one year	(1,737)		1,737		-		-
Finance leases due after one year	-		-		-		-
Related party loans due within one year	(15,687,411)		(6,580,571)		(371,900)		(22,639,882)
	(15,689,148)		(6,578,834)		(371,900)		(22,639,882)
Total net debt	(15,367,181)		(6,414,877)		(371,900)		(22,153,958)

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024

1	Accounting policies

Statutory information
EMSC Global Limited is a private company, limited by shares, domiciled in England and Wales, company number 08479148. The registered office is at EMS House Unit 2, 4 Cowley Way, Ecclesfield, Sheffield, South Yorkshire, S35 1QP.

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value. The presentation currency is United Kingdom pounds sterling, which is the functional currency of the company. The financial statements are those of an individual entity.

Summary of disclosure exemptions

The company has taken advantage of the following reduced disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•	the requirements of section 4 Statement of Financial Position paragraph 4.12(a)(iv);

•	the requirements of section 7 Statement of Cash Flows;

•	the requirements of section 11 Financial Instruments paragraphs 11.41(b), 11.41(c), 11.41(e), 11.41(f), 11.32, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(b) and 11.48(c);

•	the requirements of section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b), and 12.29A; and

•	the requirements of section 33 Related Party Disclosures paragraph 33.7.

This information is included in these consolidated financial statements.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2024.

Subsidiary undertakings are included using the acquisitions method of accounting. Under this method the group profit and loss account includes the results of subsidiaries from the date of acquisition to the date of sale outside the group in the case of disposals of subsidiaries. The purchase consideration has been allocated to the assets and liabilities on the basis of fair value at the date of acquisition.

No profit and loss account is presented for the company as permitted by Section 408 of the Companies Act 2006.

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

1	Accounting policies (continued)

Going concern

After due consideration of all relevant factors, the directors have a reasonable expectation that the group and company has adequate resources to continue in operational existence for the foreseeable future. These considerations include the significant financial support provided by the group's parent company, D2Zero Limited. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

Judgements

In preparing these financial statements, the directors have had to make the following judgements:

•

Determine whether there are indicators of impairment of the group's tangible and intangible assets, including goodwill and investments. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.

Key sources of estimation uncertainty

Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account.

Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

The group absorbs labour and overheads into stock cost for manufactured goods. This involves an element of estimation on the rate of labour and overhead cost being absorbed into stock. This level is updated annually to allow for changes in process or cost.

The company has recognised rectification provisions for known issues with units in the field. Management have estimated the costs to be measured to rectify these issues using the experience and knowledge based upon previous rectifications.

Revenue recognition

Revenue represents sales to external customers at invoiced amounts less value added tax or local taxes on sales.

For certain sales, the company recognises revenue when the installation of goods is complete. When no installation takes place, revenue is recognised when the goods are delivered to customers.

For other sales, the company recognises revenue proportionally based on factory acceptance and site acceptance.

Amounts invoiced for which the revenue recognition criteria have yet to be satisfied are held within creditors and released to revenue in the period when the above revenue recognition criteria have been met.

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

1	Accounting policies (continued)

Government grants

Grants are accounted under the accruals method as permitted by FRS 102. Grants relating to the expenditure on tangible fixed assets are credited to the Statement of Comprehensive Income at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.

Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure

Research and development
Expenditure on research and development is written off in the year in which it is incurred.

Foreign currency transactions and balances

The company's functional currency is GBP.

Foreign currency transactions are translated into the functional currency using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Statement of Comprehensive Income within 'other operating income'.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the consolidated financial statements.

Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

1	Accounting policies (continued)

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class	Depreciation method and rate
Freehold property	2% straight line
Plant and machinery	25% reducing balance
Motor vehicles	25% reducing balance

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis over 10 years to the Statement of Comprehensive Income

Intangible assets

Intangible fixed assets relate to trademarks and patents. The trademark rights are recognised at cost and patents are recognised when applied for.

Trademarks and patents have a finite useful life and are carried at cost less accumulated amortisation.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class	Amortisation method and rate
Goodwill	10% straight line
Patents	80% reducing balance
Trademarks	10% straight line

Investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Where the trade and assets previously held in the subsidiary are hived-up, an element of investment value held on the balance sheet is transferred to goodwill. The amount transferred is capped at the level of goodwill that would have been recognised had the trade and assets been hived-up on acquisition, less and subsequent amortisation that would have been incurred to the date of the
hive-up. The goodwill will then be recognised inline with the group's accounting policy.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

1	Accounting policies (continued)

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the statement of comprehensive income over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Provisions

Provisions are recognised when the group has an obligation at the reporting date as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

1	Accounting policies (continued)

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the statement of comprehensive income and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the company is presented as a liability in the balance sheet. The corresponding dividends relating to the liability component are charged as interest expense in the statement of comprehensive income.

2

Revenue

The analysis of the group's turnover for the period from continuing operations is as follows:

	31 December 2024 £	31 May 2024 £
United Kingdom	5,087,100	18,872,829
Europe	9,729	327,172
Rest of the World	33,000	1,990,422
	5,129,829	21,190,423

Turnover is wholly attributable to the principal activity of the group.

3	Other operating income

The analysis of the group's other operating income for the period is as follows:

	31 December 2024 £	31 May 2024 £
Government grants	933	48,737

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

4	Operating loss

Arrived at after charging/(crediting):

	31 December 2024 £	31 May 2024 £
Depreciation expense	(34,840)	421,990
Amortisation expense	1,357	3,577
Foreign exchange losses	9,802	23,662
Operating lease expense	131,927	71,660
Loss/(profit) on disposal of fixed assets	643	(446,081)
Auditor's remuneration - audit	37,300	36,600
Auditor's remuneration - tax	8,950	6,100
Auditor's remuneration - other	6,850	5,550

5	Interest payable and similar expenses

	31 December 2024 £	31 May 2024 £
Interest on bank overdrafts and borrowings	3,290	332,928
Interest on obligations under finance leases and hire purchase contracts	14	56
Interest expense on other finance liabilities	1,041,124	827,455
	1,044,428	1,160,439

6	Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

	31 December 2024 £	31 May 2024 £
Wages and salaries	3,338,621	6,175,984
Social security costs	400,821	678,910
Pension costs, defined contribution scheme	80,942	118,298
	3,820,384	6,973,192

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

6	Staff costs (continued)

The average number of persons employed by the group (including directors) during the period, analysed by category was as follows:

	31 December 2024 No.	31 May 2024 No.
Production	113	116
Administration	15	16
Sales, marketing and distribution	13	10
	141	142

7	Directors' remuneration

The directors' remuneration for the period was as follows:

	31 December 2024 £	31 May 2024 £
Remuneration	100,196	533,197
Contributions paid to money purchase schemes	9,190	10,008
	109,386	543,205

During the period the number of directors who were receiving benefits and share incentives was as follows:

	31 December 2024 No.	31 May 2024 No.
Accruing benefits under money purchase pension scheme	2	2

In respect of the highest paid director:

	31 December 2024 £	31 May 2024 £
Remuneration	87,916	275,555
Company contributions to money purchase pension schemes	8,750	8,688

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

8

Taxation

Tax charged/(credited) in the consolidated statement of comprehensive income:

	31 December 2024 £	31 May 2024 £
Tax expense in the income statement	-	-

The tax on profit before tax for the period is higher than the standard rate of corporation tax in the UK (2024 - higher than the standard rate of corporation tax in the UK) of 25% (2024 - 25%).

The differences are reconciled below:

	31 December 2024 £	2024 £
Loss before tax	(4,977,398)	(4,715,660)
Corporation tax at standard rate	(1,244,350)	(1,178,915)
Expense not deductible in determining taxable profit	2,293	-
Deferred tax expense from unrecognised tax loss	1,242,057	1,200,797
Deferred tax credit relating to changes in tax rates or laws	-	(21,882)
Total tax charge/(credit)	-	-

9	Intangible assets

Group

	Goodwill £	Patents £	Trademarks £	Total £
Cost or valuation
At 1 June 2024	890,604	95,743	296,557	1,282,904
Additions	-	-	46,105	46,105
At 31 December 2024	890,604	95,743	342,662	1,329,009
Amortisation
At 1 June 2024	890,604	94,022	14,588	999,214
Amortisation charge	-	658	699	1,357
At 31 December 2024	890,604	94,680	15,287	1,000,571
Carrying amount
At 31 December 2024	-	1,063	327,375	328,438
At 31 May 2024	-	1,721	281,969	283,690

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

10	Tangible assets

Group

	Land and buildings £	Plant and machinery £	Motor vehicles  £	Total £
Cost or valuation
At 1 June 2024	663,345	2,291,745	221,403	3,176,493
Additions	-	26,759	-	26,759
Disposals	-	(771)	-	(771)
At 31 December 2024	663,345	2,317,733	221,403	3,202,481
Depreciation
At 1 June 2024	98,498	1,814,812	86,700	2,000,010
Charge for the period	7,739	115,140	19,021	141,900
Eliminated on disposal	-	(128)	-	(128)
Reversal of policy change	(209)	(172,326)	(4,109)	(176,644)
At 31 December 2024	106,028	1,757,498	101,612	1,965,138
Carrying amount
At 31 December 2024	557,317	560,235	119,791	1,237,343
At 31 May 2024	564,847	476,933	134,703	1,176,483

Included within the net book value of land and buildings above is £557,317 (2024 - £564,847) in respect of freehold land and buildings. Freehold land and buildings includes land of £nil (2024 - £nil) which is not depreciated.
 

In the previous period the directors changed the accounting policy for depreciation which resulted in an additional £153,910 depreciation to be charged in the year to 31 May 2024. In the current period the directors decided to revert to the previous depreciation policy.

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

	31 December 2024 £	31 May 2024 £
Plant and machinery	-	-
Motor vehicles	-	8,070
	-	8,070

Depreciation charged on assets held under finance lease and hire purchase contracts of £nil (2024 - £2,320) was charged in the year.

EMSC Global Limited

Notes to the Financial Statements for the Period from 1 June 2024 to 31 December 2024 (continued)

11	Investments

Company

	31 December 2024 £	31 May 2024 £
Investments in subsidiaries	3,652,100	3,652,100