Entec International Limited - Limited company accounts 18.2

REGISTERED NUMBER: 02370079 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JANUARY 2019

FOR

ENTEC INTERNATIONAL LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Income Statement

8

Other Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTORS:

P G Carter

A J Gechie

M Robinson

B Walters

REGISTERED OFFICE:

No 3 Caroline Court

13 Caroline Street

St Pauls Square

Birmingham

West Midlands

B3 1TR

REGISTERED NUMBER:

02370079 (England and Wales)

AUDITORS:

Prime

Chartered Accountants

Statutory Auditor

No. 3 Caroline Court

13 Caroline Street

St Paul's Square

Birmingham

B3 1TR

The directors present their strategic report for the year ended 31 January 2019.

REVIEW OF BUSINESS

The results for the year and financial position of the company are as shown in the annexed financial

statements.

During the year, the company continued to provide the core of the Entec Global Limited group's activities.

The company's continued investment in new customer relationships and its move into new international

markets resulted in a 55% increase in turnover to £17.1m. In making those investments the company has

competed aggressively in markets and as a result has reduced its gross profit margin from 24.4% in 2018 to

21.1%.

Its continued commitment to maintain operating costs at a low level has enabled the company to benefit from

the increased turnover and mitigated significant erosion of operating margin, which has fallen 0.7% to 6.2%,

to return a post-tax profit of £911,643.

The company's results have also strengthened cash to £613,982 and improved net assets by £506,643 to

£3.5m.

The company continues to show strong sales in the current year and will remain focused on further

profitability and cost improvement.

PRINCIPAL RISKS AND UNCERTAINTIES

The company's activities expose it to a number of financial risks including cash flow risk, credit risk and

technology risk.

CASH FLOW RISK

The company's trading currencies are limited to the GBP, USD and Euro, which reduce the financial risks of

changes in foreign currency exchange rates. The company uses a variety of exchange control measures to

further mitigate the risk. Interest bearing assets and liabilities are held at fixed rate, if considered appropriate,

to ensure certainty of cash flows.

CREDIT RISK

The company's principal financial assets are trade and other receivables. The company's credit risk is primary

attributable to its trade receivables. The amounts presented in the balance sheets are net of allowances for

doubtful receivables.

TECHNOLOGY RISK

The company faces risks in developing markets from the increased availability of product information online

and this continues to put pressure on margins. The company is approaching this risk by furthering its adoption

of technology and through the continued development of online trading platforms which reduce transactional

and processing costs.

POLITICAL RISK

A large proportion of the company's trade is in Africa. The company trades only in political stable countries

and with a primarily mult-national blue chip client base. The company further mitigates territory risk by

operating under global and regional contracts with its major customers. The company also monitors any

changes within region's political and social frameworks and its relations with the United Kingdom Government

for any issues which may pose a threat.

KEY PERFORMANCE INDICATORS

The main key performance indicator (KPI) for the company is the gross profit margin (being the ratio of gross

profit to turnover) which has decreased from 24.4% in 2018 to 21.1% in the current year. With margin

pressures in key trading territories and investment in new customer relationships and markets, the gross

profit margin fell by 3.3%. Further operating cost control has enabled the company to reduce the erosion of

operating profit and the company continues to monitor its gross profit margin to enable it to assess the effects

of its investments for future sales and take decisive action if required.

ON BEHALF OF THE BOARD:

P G Carter - Director

23 October 2019

The directors present their report with the financial statements of the company for the year ended 31 January 2019.

DIVIDENDS

The total distribution of dividends for the year ended 31 January 2019 is £405,000 (2018 £135,000)

DIRECTORS

The directors shown below have held office during the whole of the period from 1 February 2018 to the date

of this report.

P G Carter

A J Gechie

M Robinson

B Walters

Other changes in directors holding office are as follows:

C P Syner ceased to be a director after 31 January 2019 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the 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 United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including

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

Ireland'. 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, Prime, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

P G Carter - Director

23 October 2019

Opinion

We have audited the financial statements of Entec International Limited (the 'company') for the year ended

31 January 2019 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 January 2019 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

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 there is a

material misstatement in the financial statements or a material misstatement of the other information. 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 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 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 company and its environment obtained in the course of

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

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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.

Peter Hewston FCA (Senior Statutory Auditor)

for and on behalf of Prime

Chartered Accountants

Statutory Auditor

No. 3 Caroline Court

13 Caroline Street

St Paul's Square

Birmingham

B3 1TR

23 October 2019

TURNOVER

2

17,079,465

11,010,960

Cost of sales

13,474,625

8,319,274

GROSS PROFIT

3,604,840

2,691,686

Distribution costs

63,081

68,233

Administrative expenses

2,518,002

1,913,080

2,581,083

1,981,313

1,023,757

710,373

Other operating income

22,472

21,694

Gain/loss on revaluation of investment property

10,000

22,423

OPERATING PROFIT

4

1,056,229

754,490

Interest payable and similar expenses

5

5,286

27,526

PROFIT BEFORE TAXATION

1,050,943

726,964

Tax on profit

6

139,300

84,329

PROFIT FOR THE FINANCIAL YEAR

911,643

642,635

PROFIT FOR THE YEAR

911,643

642,635

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

911,643

642,635

FIXED ASSETS

Tangible assets

8

164,746

199,379

Investments

9

976

976

Investment property

10

325,000

315,000

490,722

515,355

CURRENT ASSETS

Stocks

11

1,030,439

608,786

Debtors

12

7,673,593

7,099,813

Cash at bank and in hand

613,982

285,201

9,318,014

7,993,800

CREDITORS

Amounts falling due within one year

13

6,216,810

5,409,513

NET CURRENT ASSETS

3,101,204

2,584,287

TOTAL ASSETS LESS CURRENT LIABILITIES

3,591,926

3,099,642

CREDITORS

Amounts falling due after more than one year

14

(32,727

)

(41,809

)

PROVISIONS FOR LIABILITIES

18

(32,501

)

(37,778

)

NET ASSETS

3,526,698

3,020,055

CAPITAL AND RESERVES

Called up share capital

19

101

101

Share premium

20

94,996

94,996

Non-distributable reserve

20

128,545

118,545

Retained earnings

20

3,303,056

2,806,413

SHAREHOLDERS' FUNDS

3,526,698

3,020,055

The financial statements were approved by the Board of Directors on 23 October 2019 and were signed on its behalf by:

P G Carter - Director

Called up

share

Retained

Share

Non-distributable

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1 February 2017

101

2,298,778

94,996

118,545

2,512,420

Changes in equity

Dividends

-

(135,000

)

-

-

(135,000

)

Total comprehensive income

-

642,635

-

-

642,635

Balance at 31 January 2018

101

2,806,413

94,996

118,545

3,020,055

Changes in equity

Dividends

-

(405,000

)

-

-

(405,000

)

Total comprehensive income

-

901,643

-

10,000

911,643

Balance at 31 January 2019

101

3,303,056

94,996

128,545

3,526,698

1.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with the provisions of Section 1A "Small

Entities" of Financial Reporting Standard 102 (FRS 102) "The Financial Reporting Standard applicable

in the UK and Republic of Ireland", issued by the Financial Reporting Council and the Companies Act

2006. The financial statements have been prepared under the historical cost convention, modified to

include certain items at fair value, where required by FRS 102.

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 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

The results of the company are consolidated in the ultimate parent's financial statements and these

can be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102

'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related

party transactions with its parent and wholly owned subsidiaries within the group.

Significant judgements and estimates

In the application of the company's accounting policies the directors are required to make judgements,

estimates and assumptions about the carrying amounts of assets and liabilities that are not readily

apparent from other sources. The estimates and associated assumptions are based on historical

experience and other factors that are considered to be relevant. Actual results may differ from these

estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised if the revision

effects only that period, or in the period of revision and future periods if the revision effects both current

and future periods.

In preparing these financial statements, the directors have made the following judgements:

The company reviews the carrying value of all assets for indications of impairment at each period. If

indicators of impairment exist, the carrying value of the asset is subject to further testing to determine

whether its carrying value exceeds its recoverable amount. This process will usually involve the

estimation of future cash flows which are likely to be generated by the asset.

A provision is recognised when the company has a present legal or constructive obligation as a result

of a past event for which it is probable that an outflow of resources will be required to settle the

obligation and the amount can be reliably estimated. If the effect is material, provisions are determined

by discounting the expected future cash flows at a rate that reflects the time value of money and the

risk specific to the liability.

Whether a present obligation is probable or not requires judgement. The nature and type of risks for

these provisions differ and management's judgement is applied regarding the nature and extent of

obligations in deciding if an outflow of resources is probable or not.

Significant judgements and estimates - continued

The directors have reviewed the asset lives and associated residual values of all fixed assets classes.

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 projects disposal values.

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 or, if held under a finance lease, over the lease term, whichever is the shorter.

Leasehold improvements

-

20% on cost

Fixtures and fittings

-

20% on cost

Motor vehicles

-

25% on reducing balance

From 1 February 2018, the company changed their accounting policy in respect of the depreciation of

fixtures and fittings to 20% straight line from 15% reducing balance as it is considered a more

representative rate.

Investment property

Investment properties for which fair value can be measured on an ongoing basis are measured at fair

value annually with any changes recognised in profit and loss.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for

obsolete and slow moving items.

Financial instruments

(i) Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call

with banks, other short-term liquid investments with original maturities of three months or less, and

bank overdrafts.

(ii) Financial assets and liabilities

All financial assets and liabilities are recognised when the company becomes party to the contractual

provisions of the instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractual

arrangements entered into. An equity instrument is any contract that evidences a residual interest in

the assets of the company after deducting all its liabilities.

All financial assets and liabilities are initially measured at transaction price (including transaction

costs), except for those financial assets classified as at fair value through profit and loss, which are

initially measured at fair value unless the arrangement constitutes a financing transaction. If an

arrangement constitutes a financing transaction, the financial asset or liability is measured at the

present value of the future payments discounted at a market rate of interest for a similar debt

instrument.

Financial assets and liabilities are only offset at the balance sheet date when, and only when there

exists a legally enforceable right to set off the recognised amounts and the company intends either to

settle on a net basis, or to realise the asset and settle the liability simultaneously.

Financial Instruments - continued

(ii) Financial assets and liabilities - continued

Debt instruments that have no stated interest rate and are classified as payable or receivable within

one year are initially measured at an undiscounted amount of the cash or other consideration expected

to be paid or received, net of impairment. Other debt instruments not meeting these conditions are

measured at fair value through profit and loss.

Commitments to make or receive loans which meet the conditions mentioned above are measured at

cost less impairment.

Financial assets are derecognised when and only when the contractual rights to the cash flows for the

financial asset expire or are settled, when the company transfers to another party substantially all the

risks and rewards of ownership of the financial asset, or the company, despite having retained some,

but not all, significant risks and rewards of ownership, has transferred control of the asset to another

party.

Financial liabilities are derecognised only when the obligation specified in the contract is discharged,

cancelled or expires.

(iii) Investments

Investments in non-puttable ordinary shares, which are publicly traded, are measured at fair value

through profit and loss. Where fair value cannot be measured reliably, investments are measured at

cost less impairment.

(iv) Fair value measurement

The best evidence of fair value is a quoted price for an identical asset on an active market. When

quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence

of fair value as long as there has not been a significant changes in economic circumstances or a

significant lapse of time since the transaction took place. If the market is not active and recent

transactions of an identical asset on their own are not a good estimate of fair value, the fair value is

estimated using a valuation technique.

Current and deferred 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 that have been

enacted or substantively enacted by the balance sheet date.

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.

Current and Deferred taxation - continued

Deferred tax relating to investment property is measured using the tax rates and allowances that apply

to sale of the asset.

Where items recognised in other comprehensive income and equity are chargeable to or deductible for

tax purposes, the resulting current or deferred tax expense or income is presented in the same

component of comprehensive income or equity as the transaction or other event that resulted in the tax

expense or income.

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.

Research and development

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

Foreign currencies

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are

reported at the rates of exchange prevailing at that balance sheet date. Transactions in foreign

currencies are recorded at the rate of exchange ruling at the date of transaction. Exchange differences

are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet.

Those held under hire purchase contracts are depreciated over their estimated useful lives. Those

held under finance leases are depreciated over their estimated useful lives or the lease term,

whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The

capital element of the future payments is treated as a liability.

Rentals paid and received under operating leases are charged or credited to profit and 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 and loss in the period to which they relate.

Differences between contributions payable in the year and contributions actually paid are shown as

either accruals or prepayments in the balance sheet.

Share-based payments

Share options issued in the group scheme as consideration for employment services provided are

treated as an expense of the company in the period and credited to a capital contribution reserve at

their fair value.

Impairment of assets

Assets, other than those measured at fair value, are assessed for indicators of impairment at each

balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in

profit or loss.

For financial assets carried at amortised costs, the amount of an impairment is the difference between

the asset's carrying amount and the present value of estimated future cash flows, discounted at the

financial asset's original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the

asset's carrying amount and the best estimate of the amount that would be received for the asset if it

were to be sold at the reporting date.

Where indicators exist for the decrease in impairment loss, and the decrease can be related

objectively to an event occuring after the impairment was recognised, the prior impairment loss is

tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset

to the extent that the revised recoverable value does not lead to a revised carrying amount higher than

the carrying value had no impairment been recognised.

2.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2019

2018

£

£

United Kingdom

10,022

38,097

South America

3,481

2,172

Asia

2,602,280

199,813

Africa

13,752,306

10,086,654

North America

181,991

134,108

Australia

529,385

550,116

17,079,465

11,010,960

The whole of the turnover is attributable to the principal activity of the company.

3.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

1,203,486

964,660

Social security costs

113,900

92,919

Other pension costs

34,392

28,757

1,351,778

1,086,336