Far East Facade (UK) Limited - Limited company accounts 18.2

REGISTERED NUMBER: 06665536 (England and Wales)

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

FOR

FAR EAST FACADE (UK) LIMITED

Page

Company Information

1

Report of the Directors

2

Report of the Independent Auditors

4

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Notes to the Financial Statements

11

DIRECTORS:

S W Chan

S Y A Lau

H Wang

C Zhang

REGISTERED OFFICE:

1 Great Cumberland Place

London

W1H 7AL

REGISTERED NUMBER:

06665536 (England and Wales)

AUDITORS:

Burnside

Chartered Accountants

and Statutory Auditor

61 Queen Square

Bristol

BS1 4JZ

The directors present their report with the financial statements of the company for the year ended 31 December 2017.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the design and installation of

structural property facades.

DIRECTORS

S W Chan has held office during the whole of the period from 1 January 2017 to the date of this report.

Other changes in directors holding office are as follows:

S Y A Lau , H Wang and C Zhang were appointed as directors after 31 December 2017 but prior to the date of this report.

W M R Ho and J Zhu ceased to be directors after 31 December 2017 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing 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 United Kingdom

Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

Under company law the directors must not approve the financial statements unless they are satisfied

that they give a true and fair view of the state of affairs of the company and of the profit or loss of the

company for that period. In preparing these financial statements, the directors are required to:

-	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 transactions and disclose with reasonable accuracy at any time the financial

position of the company and enable them to ensure that the financial statements comply with the

Companies Act 2006. They are also responsible for safeguarding the assets of the company and

hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT 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 company's auditors are unaware, and each director has taken

all the steps that he ought to have taken as a director in order to make himself aware of any relevant

audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Burnside, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

This report has been prepared in accordance with the provisions of Part 15 of the Companies Act

2006 relating to small companies.

ON BEHALF OF THE BOARD:

S W Chan - Director

21 September 2018

Opinion

We have audited the financial statements of Far East Facade (UK) Limited (the 'company') for the

year ended 31 December 2017 which comprise the Income Statement, Other Comprehensive Income,

Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a

summary of significant accounting policies. The financial reporting framework that has been applied in

their preparation is applicable law and United Kingdom Accounting Standards, including Financial

Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of

Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2017 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	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 company in accordance with the ethical requirements that are relevant to our audit of the financial

statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical

responsibilities in accordance with these requirements. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require

us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the

information in 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 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, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report

in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Report of the Directors has 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 company and its environment obtained in the

course of the audit, we have not identified material misstatements in 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, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit; or

-	the directors were not entitled to take advantage of the small companies' exemption from the requirement to prepare a Strategic Report or in preparing the Report of the Directors.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page two, 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 company's ability

to continue as a going concern, disclosing, as applicable, matters related to going concern and using

the going concern basis of accounting unless the directors either intend to liquidate the company or to

cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue 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.

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.

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.

Steven Coombe FCA (Senior Statutory Auditor)

for and on behalf of Burnside

Chartered Accountants

and Statutory Auditor

61 Queen Square

Bristol

BS1 4JZ

21 September 2018

TURNOVER

663,808

997,911

Cost of sales

41,133

2,777,615

GROSS PROFIT/(LOSS)

622,675

(1,779,704

)

Administrative expenses

456,688

636,422

OPERATING PROFIT/(LOSS)

4

165,987

(2,416,126

)

Interest payable and similar expenses

5

-

115,020

PROFIT/(LOSS) BEFORE TAXATION

165,987

(2,531,146

)

Tax on profit/(loss)

6

-

821,200

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

165,987

(3,352,346

)

PROFIT/(LOSS) FOR THE YEAR

165,987

(3,352,346

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(3,352,346

)

Note

Prior year adjustment

7

(761,971

)

TOTAL COMPREHENSIVE INCOME SINCE LAST ANNUAL REPORT

(595,984

)

FIXED ASSETS

Tangible assets

8

-

1,367

CURRENT ASSETS

Debtors

9

3,530,599

3,394,110

Cash at bank

101,803

77,502

3,632,402

3,471,612

CREDITORS

Amounts falling due within one year

10

12,642,424

12,648,988

NET CURRENT LIABILITIES

(9,010,022

)

(9,177,376

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(9,010,022

)

(9,176,009

)

CAPITAL AND RESERVES

Called up share capital

13

1

1

Retained earnings

(9,010,023

)

(9,176,010

)

SHAREHOLDERS' FUNDS

(9,010,022

)

(9,176,009

)

The financial statements were approved by the Board of Directors on 21 September 2018 and were signed on its behalf by:

S W Chan - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2016

1

(5,823,664

)

(5,823,663

)

Changes in equity

Total comprehensive income

-

(2,590,375

)

(2,590,375

)

Balance at 31 December 2016

1

(8,414,039

)

(8,414,038

)

Prior year adjustment

-

(761,971

)

(761,971

)

As restated

1

(9,176,010

)

(9,176,009

)

Changes in equity

Total comprehensive income

-

165,987

165,987

Balance at 31 December 2017

1

(9,010,023

)

(9,010,022

)

1.	STATUTORY INFORMATION

Far East Facade (UK) Limited is a private company, limited by shares , registered in England

and Wales. The company's registered number and registered office address can be found on

the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The presentation currency of the financial statements is the Pound Sterling (£).

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these

financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in

the UK and Republic of Ireland":

•

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), 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

•

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

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding

discounts, rebates, value added tax and other sales taxes.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant and machinery

-

25% on cost

Fixtures and fittings

-

25% on cost

Computer equipment

-

25% on cost

Financial instruments

Financial assets and liabilities are recognised in the balance sheet when the company becomes

party to the contractual provisions of the instrument.

Trade and other debtors and creditors are classified as basic financial instruments and are

measured on initial recognition at transaction price. Debtors and creditors are subsequently

measured at amortised cost using the effective interest rate method. A provision is established

when there is objective evidence that the company not be able to collect all amounts due.

Cash and cash equivalents are classified as basic financial instruments and comprise cash in

hand and at bank.

Financial liabilities and equity instruments issued by the company are classified in accordance

with the substance of the contractual arrangements entered into and the definitions of a

financial liability and an equity instrument. An equity instrument is any contract that evidences a

residual interest in the assets of the company after deducting all of its liabilities. Equity

instruments issued by the company are recorded at the proceeds received, net of any direct

issue costs.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income

Statement, except to the extent that it relates to items recognised in other comprehensive

income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have

been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not

reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in

periods different from those in which they are recognised in financial statements. Deferred tax is

measured using tax rates and laws that have been enacted or substantively enacted by the year

end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is

probable that they will be recovered against the reversal of deferred tax liabilities or other future

taxable profits.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over

the period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the

company's pension scheme are charged to profit or loss in the period to which they relate.

Going concern

The financial statements have been prepared on a going concern basis which assumes that the

company will continue in operational existence for the foreseeable future.

The company incurred a profit for the year ended 31 December 2017 of £165,987 (2016 as

restated - loss of £3,352,346), and has net liabilities at 31 December 2017 of £9,010,022 (2016

as restated - £9,176,009), and therefore the validity of this assumption depends on the

continuing financial support from the company's parent undertaking and fellow group

companies.

The parent undertaking, Far East Global Group Limited, has confirmed this financial support will

continue to be provided for the foreseeable future, and that amounts owed to the parent and

other group undertakings will only be repayable to the extent that funds allow. The directors

have also confirmed that they believe the results and asset position of the company will improve

in future years as the number of contracts the company secures increases.

The directors therefore consider that the going concern assumption remains appropriate.

3.	EMPLOYEES AND DIRECTORS

2017

2016

as

restated

£

£

Wages and salaries

360,779

299,393

Social security costs

45,621

97,916

Other pension costs

8,077

13,409

414,477

410,718

The average number of employees during the year was as follows:

2017

2016

as

restated

Management and administrative

5

6

2017

2016

as

restated

£

£

Directors' remuneration

199,123

198,595

4.	OPERATING PROFIT/(LOSS)

The operating profit (2016 - operating loss) is stated after charging/(crediting):

2017

2016

as

restated

£

£

Hire of plant and machinery

7,087

950

Other operating leases

116,820

51,975

Depreciation - owned assets

1,367

8,201

Auditors' remuneration

4,000

3,190

Auditors' remuneration for non audit work

1,000

-

Foreign exchange differences

(200,664

)

-

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

as

restated

£

£

HMRC interest payable

-

18,403

HMRC penalties and fines

-

96,617

-

115,020

6.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2017

2016

as

restated

£

£

Deferred tax

-

821,200

Tax on profit/(loss)

-

821,200

At 31 December 2017 the company has tax losses carried forward available to offset future

taxable profits totalling £9,500,340 (2016 as restated - £9,670,115), and therefore in addition to

the deferred tax asset recognised of £783,766 (2016 as restated - £783,766) has an

unrecognised deferred tax asset totalling £913,793 (2016 as restated - £942,655).

7.	PRIOR YEAR ADJUSTMENT

In preparing the financial statements for the year ended 31 December 2017, errors were

identified in the closing balance sheet entries for deferred and accrued expenses in the prior

year which are considered to be material to the financial statements, and therefore a prior year

adjustment has been recognised to correct these errors.

In addition the company has recognised its liability under a settlement agreement with HMRC

for understated CIS liabilities, interest and penalties relating to tax years up to 5 April 2016

totalling £300,287 as a prior year adjustment.

This prior year adjustment has resulted in an increase in purchases and in the loss after tax

reported for the year ended 31 December 2016 of £761,971, and an increase in net liabilities at

31 December 2016 of the same amount.

Certain other entries have been reclassified to more accurately reflect their nature in a

consistent and accurate manner, although these have not affected the reported loss or net

liability position in the year or at the year end.

8.	TANGIBLE FIXED ASSETS

Fixtures

Short

Plant and

and

Computer

leasehold

machinery

fittings

equipment

Totals

£

£

£

£

£

COST

At 1 January 2017

73,792

28,542

13,904

14,076

130,314

Disposals

(73,792

)

-

-

-

(73,792

)

At 31 December 2017

-

28,542

13,904

14,076

56,522

DEPRECIATION

At 1 January 2017

73,792

28,482

12,647

14,026

128,947

Charge for year

-

60

1,257

50

1,367

Eliminated on disposal

(73,792

)

-

-

-

(73,792

)

At 31 December 2017

-

28,542

13,904

14,076

56,522

NET BOOK VALUE

At 31 December 2017

-

-

-

-

-

At 31 December 2016

-

60

1,257

50

1,367

9.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2017

2016

as

restated

£

£

Trade debtors

108,631

197,045

Amounts owed by group undertakings

2,459,987

2,259,323

Other debtors

49,500

53,680

VAT recoverable

25,020

781

Deferred tax asset

Tax losses carried forward

783,766

783,766

Prepayments and accrued income

103,695

99,515

3,530,599

3,394,110

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2017

2016

as

restated

£

£

Trade creditors

7,819

24,778

Amounts owed to group undertakings

12,259,419

12,254,484

Social security and other taxes

19,899

15,039

Accruals and deferred income

355,287

354,687

12,642,424

12,648,988

11.	LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

2017

2016

as

restated

£

£

Within one year

56,700

56,700

Between one and five years

42,525

99,225

99,225

155,925

12.	DEFERRED TAX

£

Balance at 1 January 2017

(783,766

)

Balance at 31 December 2017

(783,766

)

At 31 December 2017, in addition to the above deferred tax asset, the company had an

unrecognised deferred tax asset in respect of tax losses carried forward and available to offset

future taxable profits totalling £913,793 (2016 as restated - £942,655).

13.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2017

2016

value:

as restated

£

£

1

Ordinary

£1.00

1

1

14.	ULTIMATE PARENT COMPANY

China State Construction Engineering Corporation Limited (incorporated in People's Republic of China

) is regarded by the directors as being the company's ultimate parent company.

The immediate parent undertaking is Far East Facade Investments Limited, a private limited

company incorporated in the British Virgin Islands

The smallest group to which the company belongs and for which consolidated financial

statements are prepared is headed by Far East Global Group Limited, a company incorporated

in the Cayman Islands and listed on The Stock Exchange of Hong Kong.

The consolidated financial statements of Far East Global Group Limited can be obtained from:

16/F, Eight Commercial Tower

8 Sun Yip Street

Chai Wan

Hong Kong.