Syntec Limited - Limited company accounts 20.1

REGISTERED NUMBER: 03529985 (England and Wales)

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE PERIOD 1 JULY 2020 TO 31 DECEMBER 2020

FOR

SYNTEC LIMITED

Page

Company Information

1

Report of the Directors

2

Report of the Independent Auditors

4

Income Statement

8

Statement of Financial Position

9

Statement of Changes in Equity

10

Statement of Cash Flows

11

Notes to the Statement of Cash Flows

12

Notes to the Financial Statements

13

DIRECTORS:

C P Westlake

J S Campbell

J M Graham

S C Beeching

D M Cresswell

J F Butler

REGISTERED OFFICE:

Building E Ealing Studios

Ealing Green

London

W5 5EP

REGISTERED NUMBER:

03529985 (England and Wales)

SENIOR STATUTORY AUDITOR:

William Neville

AUDITORS:

Lewis Brownlee (Chichester) Limited

Chartered Accountants

Statutory Auditors

Appledram Barns

Birdham Road

Chichester

West Sussex

PO20 7EQ

SOLICITORS:

Birketts LLP

24-26 Museum Street

Ipswich

Suffolk

IP1 1HZ

The directors present their report with the financial statements of the company for the period 1 July 2020 to 31 December 2020.

The Directors are pleased with the accelerated growth in turnover and profits in the period, driven by new and recurring international revenues from Syntec's patented CardEasy payment security software-as-a-service. With continued investment in R&D, new channels to market and a strong sales pipeline, in particular in the USA, prospects for continued business expansion look very positive, underpinned by multi-year CardEasy service contracts.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2020 to the date of this report.

C P Westlake

J S Campbell

J M Graham

S C Beeching

D M Cresswell

Other changes in directors holding office are as follows:

J F Butler - appointed 1 September 2020

A J Dunning ceased to be a director after 31 December 2020 but prior to the date of this report.

RESULTS AND APPROPRIATIONS

The results and the state of affairs of the company for the period are set out in the financial statements on pages eight to sixteen. In the 6 month period ended 31 December 2020 the EBITDA for the period was £1,061,410 (15 months to 30 June 2020: £457,032) and dividends of £Nil (June 2020: £275,910) were paid out of the reserves.

DIRECTORS' RESPONSIBILITIES STATEMENT

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), 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, Lewis Brownlee (Chichester) Limited, will be proposed for re-appointment by Member's Resolution.

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:

C P Westlake - Director

21 April 2021

Opinion

We have audited the financial statements of Syntec Limited (the 'company') for the period ended 31 December 2020 which comprise the Income Statement, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and 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 2020 and of its profit for the period 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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the 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 prepare the financial statements in accordance with the small companies regime and 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 Directors' Responsibilities Statement 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

-

the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

-

we identified the laws and regulations applicable to the company through discussions with directors and other management;

-

we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company;

-

we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

-

identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

-

making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

-

considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

-

performed analytical procedures to identify any unusual or unexpected relationships;

-

tested journal entries to identify unusual transactions;

-

assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

-

investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

-

agreeing financial statement disclosures to underlying supporting documentation;

-

reading the minutes of meetings of those charged with governance;

-

enquiring of management as to actual and potential litigation and claims; and

-

reviewing correspondence with HMRC and the company’s legal advisors.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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.

William Neville (Senior Statutory Auditor)

for and on behalf of Lewis Brownlee (Chichester) Limited

Chartered Accountants

Statutory Auditors

Appledram Barns

Birdham Road

Chichester

West Sussex

PO20 7EQ

23 April 2021

TURNOVER

3,614,369

6,252,309

Cost of sales

1,021,806

2,124,477

GROSS PROFIT

2,592,563

4,127,832

Administrative expenses

1,577,851

3,777,954

OPERATING PROFIT

4

1,014,712

349,878

Interest receivable and similar income

5

4,127

4,449

1,018,839

354,327

Interest payable and similar expenses

-

1,283

PROFIT BEFORE TAXATION

1,018,839

353,044

Tax on profit

6

122,113

(100,352

)

PROFIT FOR THE FINANCIAL PERIOD

896,726

453,396

FIXED ASSETS

Tangible assets

7

219,001

202,138

CURRENT ASSETS

Stocks

8

47,464

105,084

Debtors

9

1,024,749

1,776,618

Cash at bank and in hand

1,724,420

550,749

2,796,633

2,432,451

CREDITORS

Amounts falling due within one year

10

1,528,861

2,048,142

NET CURRENT ASSETS

1,267,772

384,309

TOTAL ASSETS LESS CURRENT LIABILITIES

1,486,773

586,447

PROVISIONS FOR LIABILITIES

37,046

33,446

NET ASSETS

1,449,727

553,001

CAPITAL AND RESERVES

Called up share capital

350,100

350,100

Retained earnings

1,099,627

202,901

SHAREHOLDERS' FUNDS

1,449,727

553,001

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the Board of Directors and authorised for issue on 15 April 2021 and were signed on its behalf by:

J F Butler - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2019

350,100

25,415

375,515

Changes in equity

Dividends

-

(275,910

)

(275,910

)

Total comprehensive income

-

453,396

453,396

Balance at 30 June 2020

350,100

202,901

553,001

Changes in equity

Total comprehensive income

-

896,726

896,726

Balance at 31 December 2020

350,100

1,099,627

1,449,727

Cash flows from operating activities

Cash generated from operations

1

721,676

1,279,225

Interest paid

-

(1,283

)

Net cash from operating activities

721,676

1,277,942

Cash flows from investing activities

Purchase of tangible fixed assets

(56,999

)

(121,759

)

Sale of tangible fixed assets

-

511

Change in intra group balances

504,867

(526,038

)

Interest received

4,127

4,449

Net cash from investing activities

451,995

(642,837

)

Cash flows from financing activities

Equity dividends paid

-

(275,910

)

Net cash from financing activities

-

(275,910

)

Increase in cash and cash equivalents

1,173,671

359,195

Cash and cash equivalents at beginning of period

2

550,749

191,554

Cash and cash equivalents at end of period

2

1,724,420

550,749

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

Period

Period

1/7/20

1/4/19

to

to

31/12/20

30/6/20

£

£

Profit before taxation

1,018,839

353,044

Depreciation charges

40,136

107,155

Finance costs

-

1,283

Finance income

(4,127

)

(4,449

)

1,054,848

457,033

Decrease/(increase) in stocks

57,620

(95,241

)

Decrease/(increase) in trade and other debtors

164,061

(187,096

)

(Decrease)/increase in trade and other creditors

(554,853

)

1,104,529

Cash generated from operations

721,676

1,279,225

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Period ended 31 December 2020

31/12/20

1/7/20

£

£

Cash and cash equivalents

1,724,420

550,749

Period ended 30 June 2020

30/6/20

1/4/19

£

£

Cash and cash equivalents

550,749

191,554

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1/7/20

Cash flow

At 31/12/20

£

£

£

Net cash

Cash at bank and in hand

550,749

1,173,671

1,724,420

550,749

1,173,671

1,724,420

Total

550,749

1,173,671

1,724,420

1.	COMPANY INFORMATION

Syntec Limited is a private limited company incorporated and domiciled in England and Wales. The principal place of business and the registered office is Building E Ealing Studios, Ealing Green, London, W5 5EP. The principal activity of the company is the provision of integrated contact centre management systems including secure payment technology and telecommunications services; and the research and development of new services and service platforms; and the protection by patents and otherwise of the intellectual property deriving from such research and development.

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" including the provisions of Section 1A "Small Entities" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The financial statements are presented in Sterling (£), which is also the functional currency of the company.

The principal accounting policies, and details of significant judgements and estimations, adopted in the preparation of the financial statements, are set out below:

Turnover

Turnover represents the total value, excluding Value Added Tax, of sales invoiced during the period, adjusted for accrued income at the beginning and end of the period.

Revenue is recognised in the period in which services generating that revenue are supplied.

Tangible fixed assets

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

Short leasehold

-

at varying rates on cost

Plant and machinery

-

at varying rates on cost

Fixtures and fittings

-

at varying rates on cost

Tangible fixed assets are stated at cost less depreciation.

Stocks (inventories)

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Financial instruments

Financial instruments are classified by the directors as basic or advanced following the conditions in FRS102 Section 11. Basic financial instruments are recognised at amortised cost using the effective interest method. The company has no advanced financial instruments.

Research and development

Research expenditure is written off in the year in which it is incurred.

Development expenditure is written off in the year in which it is incurred.

Debtors

Short-term debtors are measured at transaction value less any impairment.

At each balance sheet date, debtors are assessed for objective evidence of impairment. If an asset is impaired, the impairment loss is measured as the difference between the carrying amount and the amount expected to be received.

Creditors

Short-term trade creditors are measured at transaction value.

Taxation

The tax charge or credit recognised in the profit and loss account is the aggregate of current and deferred tax recognised in the reporting period.

Current tax is recognised for the amount of corporation tax payable, less research and development tax credits repayable or carried forward, in respect of the taxable profit for the current and prior reporting periods.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

3.	EMPLOYEES AND DIRECTORS

The average number of employees and directors during the period was 30 (June 2020: 28).

4.	OPERATING PROFIT

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

Period

Period

1/7/20

1/4/19

to

to

31/12/20

30/6/20

£

£

Depreciation - owned assets

40,136

107,154

Foreign exchange differences

95,555

(18,953

)

Research & development costs

311,376

733,442

5.

INTEREST RECEIVABLE AND SIMILAR INCOME

During the period the company charged interest of £4,108 (June 2020: £4,046) on loans to group undertakings.

6.

TAXATION

Analysis of the tax charge/(credit)

The tax charge/(credit) on the profit for the period was as follows:

Period

Period

1/7/20

1/4/19

to

to

31/12/20

30/6/20

£

£

Current tax:

UK corporation tax

118,189

(107,871

)

Tax amendment to prior periods

324

-

Total current tax

118,513

(107,871

)

Deferred tax

3,600

7,519

Tax on profit

122,113

(100,352

)

UK corporation tax has been charged at 19% (2020 - 19%).

Reconciliation of total tax charge/(credit) included in profit and loss

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

Period

Period

1/7/20

1/4/19

to

to

31/12/20

30/6/20

£

£

Profit before tax

1,018,839

353,044

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2020 - 19%)

193,579

67,078

Effects of:

Expenses not deductible for tax purposes

1,050

5,684

Adjustments to tax charge in respect of previous periods

324

-

Research and development enhanced deduction

(72,840

)

(181,160

)

Increase deferred tax brought forward to 19%

-

8,046

Total tax charge/(credit)

122,113

(100,352

)

7.	TANGIBLE FIXED ASSETS

Fixtures

Short

Plant and

and

leasehold

machinery

fittings

Totals

£

£

£

£

COST

At 1 July 2020

45,527

333,680

95,192

474,399

Additions

-

45,674

11,325

56,999

Disposals

-

(98,348

)

(11,337

)

(109,685

)

At 31 December 2020

45,527

281,006

95,180

421,713

DEPRECIATION

At 1 July 2020

4,425

222,174

45,662

272,261

Charge for period

2,795

27,326

10,015

40,136

Eliminated on disposal

-

(98,348

)

(11,337

)

(109,685

)

At 31 December 2020

7,220

151,152

44,340

202,712

NET BOOK VALUE

At 31 December 2020

38,307

129,854

50,840

219,001

At 30 June 2020

41,102

111,506

49,530

202,138

8.

STOCKS

2020

2020

£

£

Stocks

47,464

105,084

9.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020

2020

£

£

Trade debtors

766,828

1,014,169

Amounts owed by group undertakings

23,844

497,310

Other debtors

58,084

44,662

Tax

-

102,158

VAT

4,171

-

Prepayments

84,990

118,319

Accrued income

86,832

-

1,024,749

1,776,618

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020

2020

£

£

Trade creditors

272,380

320,980

Amounts owed to group undertakings

31,401

-

Corporation Tax

40,181

-

Social security and other taxes

48,657

44,433

Pensions

5,607

4,968

VAT

-

106,971

Other creditors

120,810

19,361

Accruals and deferred income

1,009,825

1,551,429

1,528,861

2,048,142

11.	LEASING AGREEMENTS

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

2020

2020

£

£

Within one year

205,524

85,092

Between one and five years

928,464

585,937

In more than five years

96,715

134,277

1,230,703

805,306

12.	PARENT UNDERTAKING

The company is a subsidiary of Syntec Holdings Limited, a company incorporated in England and Wales. Syntec Holdings Ltd prepares consolidated financial statements. The principal place of business of the company and its registered office is Building E Ealing Studios, Ealing Green, London, W5 5EP.

13.	SHARE OPTION SCHEME

Certain employees of the company were awarded share options within a group share option scheme, some of which were exercised during the period. A charge of £3,467 (June 2020: £16,503) in respect of this scheme is recognised within this company's Income Statement and made against the group holding company's (Syntec Holdings Ltd) Share Scheme Reserves.