Entec International Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02370079 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JANUARY 2020

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 2020.

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 continued move into new international markets resulted in a 20% increase in turnover to £20.5m. In making those investments the company has continued to compete aggressively in markets and as a result its gross profit margin has remained consistent over the two years at 21%.

Its continued commitment to maintain operating costs at a low level has enabled the company to benefit from the increased turnover and mitigated any erosion of operating margin, which has fell slightly by 0.8% to 5.4%, to return a post-tax profit of £1m.

The company's results have also strengthened cash to £867,547 and improved net assets by £824,100 to £4.4m.

The company continues to show strong sales in the current year as it develops its market share in new markets in the world 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 multi-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.

ECONOMIC RISK

Since the year end the world has been hit by an unprecedented pandemic, Covid-19. This has resulted in Governments shutting down parts of their economies to protect public health. Whilst this has effected the company it has benefited from its global customer base and continued demand for its customers products.

The different rates at which countries have been effected by the pandemic and the measures put in place to control it has meant that reduced demand in one geographical area has been balanced by increased demand in another as countries entered and emerged from lockdowns.

The company has put procedures in place to enable it to react quickly to any changes in Government regulations or changes in demand and continues to monitor economic and political activity in its main trading markets to ensure protection of its core business.

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 remained stable at 21% during the two years. With margin pressures in key trading territories and investment in new customer relationships and markets, the company has worked to maintain its core margin. 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

4 December 2020

The directors present their report with the financial statements of the company for the year ended 31 January 2020.

DIVIDENDS

The total distribution of dividends for the year ended 31 January 2020 is £176,000 (2019 £405,000)

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

The directors shown below have held office during the whole of the period from 1 February 2019 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 - resigned 1 February 2019

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

4 December 2020

Opinion

We have audited the financial statements of Entec International Limited (the 'company') for the year ended 31 January 2020 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 2020 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.

Nicola Davies FCCA (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

4 December 2020

TURNOVER

3

20,506,079

17,079,465

Cost of sales

16,211,084

13,474,625

GROSS PROFIT

4,294,995

3,604,840

Distribution costs

133,593

63,081

Administrative expenses

3,065,487

2,518,002

3,199,080

2,581,083

1,095,915

1,023,757

Other operating income

13,676

22,472

Gain/loss on revaluation of investment property

-

10,000

OPERATING PROFIT

5

1,109,591

1,056,229

Interest payable and similar expenses

6

9,573

5,286

PROFIT BEFORE TAXATION

1,100,018

1,050,943

Tax on profit

7

99,918

139,300

PROFIT FOR THE FINANCIAL YEAR

1,000,100

911,643

PROFIT FOR THE YEAR

1,000,100

911,643

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,000,100

911,643

FIXED ASSETS

Tangible assets

9

261,861

164,746

Investments

10

976

976

Investment property

11

-

325,000

262,837

490,722

CURRENT ASSETS

Stocks

12

461,280

1,030,439

Debtors

13

9,181,682

7,673,593

Cash at bank and in hand

867,547

613,982

10,510,509

9,318,014

CREDITORS

Amounts falling due within one year

14

6,274,004

6,216,810

NET CURRENT ASSETS

4,236,505

3,101,204

TOTAL ASSETS LESS CURRENT LIABILITIES

4,499,342

3,591,926

CREDITORS

Amounts falling due after more than one year

15

(103,971

)

(32,727

)

PROVISIONS FOR LIABILITIES

19

(44,573

)

(32,501

)

NET ASSETS

4,350,798

3,526,698

CAPITAL AND RESERVES

Called up share capital

20

101

101

Share premium

21

94,996

94,996

Non-distributable reserve

21

-

128,545

Retained earnings

21

4,255,701

3,303,056

SHAREHOLDERS' FUNDS

4,350,798

3,526,698

The financial statements were approved by the Board of Directors and authorised for issue on 4 December 2020 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 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

Changes in equity

Dividends

-

(176,000

)

-

-

(176,000

)

Total comprehensive income

-

1,128,645

-

(128,545

)

1,000,100

Balance at 31 January 2020

101

4,255,701

94,996

-

4,350,798

1.	STATUTORY INFORMATION

Entec International 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.

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

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 as modified by the revaluation of certain assets.

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 paragraphs 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 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;

•

the requirement of 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.

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

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.

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.

Financial Instruments - continued

(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 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

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.

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.

3.

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:

2020

2019

£

£

United Kingdom

-

10,022

South America

48,724

3,481

Asia

4,585,126

2,602,280

Africa

12,491,583

13,752,306

North America

217

181,991

Australia

3,380,429

529,385

20,506,079

17,079,465

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

4.	EMPLOYEES AND DIRECTORS

2020

2019

£

£

Wages and salaries

1,687,026

1,203,486

Social security costs

144,670

113,900

Other pension costs

50,717

34,392

1,882,413

1,351,778

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

2020

2019

Management

5

5

Administration & Operations

41

37

46

42

2020

2019

£

£

Directors' remuneration

246,522

230,818

Directors' pension contributions to money purchase schemes

10,788

8,405

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

2

2

Information regarding the highest paid director is as follows:

2020

2019

£

£

Emoluments etc

72,870

72,147

5.	OPERATING PROFIT

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

2020

2019

£

£

Depreciation - owned assets

50,967

80,951

Depreciation - assets on hire purchase contracts

22,586

17,808

Profit on disposal of fixed assets

(13,078

)

-

Auditors' remuneration

18,000

17,000

Operating lease payments - property

52,500

52,500

Operating lease payments - other

46,793

62,338

Foreign exchange rate losses/(gains)

75,335

(8,120

)

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2020

2019

£

£

Bank interest

6,687

1,529

Hire purchase

2,886

3,757

9,573

5,286

7.

TAXATION

Analysis of the tax charge

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

2020

2019

£

£

Current tax:

UK corporation tax

88,226

139,000

Under/(over) provision in

respect of the prior year

(380

)

5,577

Total current tax

87,846

144,577

Deferred tax

12,072

(5,277

)

Tax on profit

99,918

139,300

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2020

2019

£

£

Profit before tax

1,100,018

1,050,943

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

209,003

199,679

Effects of:

Expenses not deductible for tax purposes

936

21,928

Depreciation in excess of capital allowances

756

-

Adjustments to tax charge in respect of previous periods

(380

)

5,577

Research and Development enhanced deduction

(111,151

)

(88,264

)

Chargeable gain

1,894

-

Group relief

(1,140

)

-

Rounding

-

380

Total tax charge

99,918

139,300

8.

DIVIDENDS

2020

2019

£

£

Ordinary shares of £1 each

Interim

176,000

405,000