Exela Technologies Limited - Limited company accounts 20.1

REGISTERED NUMBER: 01283512 (England and Wales)

for

Page

Company Information  

1

Strategic Report  

2

Report of the Directors  

5

Report of the Independent Auditors  

6

Income Statement  

9

Other Comprehensive Income  

10

Balance Sheet  

11

Statement of Changes in Equity  

12

Notes to the Financial Statements

13

DIRECTORS:

J H Chhaya

V Robu

SECRETARY:

J H Chhaya

REGISTERED OFFICE:

Baronsmede

The Avenue

Egham

TW20 9AB

REGISTERED NUMBER:

01283512 (England and Wales)

AUDITORS:

Butler & Co LLP

Chartered Accountants

& Statutory Auditor

Third Floor

126-134 Baker Street

London

W1U 6UE

The directors present their strategic report for the year ended 31 December 2020.

Exela Technologies Limited, (the Company), is a leader in providing business process outsourcing services (BPO), integrated solutions and support services to most business sectors including financial services, banking, telecommunications and utilities. Its portfolio of products includes systems for payments, document content management, data capture, mortgage processing, pre-paid card servicing, metals trading and the development of turn-key imaging systems. Maintenance and support services are provided via a nationwide network of support staff.

REVIEW OF BUSINESS

The Company's recurring revenues remain strong and provide a firm basis for it to continue to develop products and services.

The Company will continue to invest in all parts of the business to develop and provide products and solutions that align with this strategy.

The Company operates a branch in the Republic of Ireland and Serbia. Serbia is the cost center and does not have any revenue.

Key performance indicators used by management are structured around growth, profitability and efficiency of service.

PRINCIPAL RISKS AND UNCERTAINTIES

The Company's activities expose it to a number of financial risks including credit risk, cash flow risk and liquidity risk. The Company does not use financial derivatives.

Credit risk

The Company's principal financial assets are bank balances, cash, trade and other receivables.

Any exposure to credit risk arises primarily from the Company's trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. The credit risk is limited as the Company's major customers are banks with high credit ratings assigned by international credit rating agencies. The Company trades with a varied spread of customers mainly from diverse blue chip sectors and therefore has no significant concentration of credit risk.

Cash flow risk

The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The Company does not use foreign exchange forward contracts.

Liquidity risk

In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Company actively monitors its cash flows, expected liabilities and ensures that it has the resources to meet its liabilities as they fall due at all times.

Coronavirus

The Company has taken all measures required by the UK Government for the safety of employees, property and customers. There has been no significant impact on supply of services and goods required to service delivery to customers. Employees can work remotely where this is possible and continue to do so in the current climate.

GOING CONCERN

The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.

The majority of revenues are derived from large financial institutions and other government departments/similarly large organisations. After the initial coronavirus lockdown in March 2020, the Company experienced a decline in daily volumes at processing centres however volumes returned to normal by the end of Q2 2020 as restrictions were eased. A similar pattern has been seen in the subsequent lockdowns. There has been slower than hoped growth from new customers and projects during the pandemic. The Company has not encountered a significant impact on the recoverability of trade debtors. The Company has obtained additional external funding through additional bank loans.

The directors have prepared cashflow forecasts for the period to 31 Dec 2022 which indicate that, taking into account the current and anticipated impact of the COVID pandemic, including severe but plausible downsides in revenues and working capital movements, the Company will have sufficient funds, through funding from its ultimate parent company, Exela Technologies Inc. to meet its liabilities as they fall due for that period.

Exela Technologies Inc. has indicated its intention to continue to provide financial and other support to the Company, including not seeking repayment of amounts currently made available, for at least for the next twelve months from the date of approval of these financial statements to enable it to meet its financial liabilities as they fall due and continue to trade. As with any company placing reliance on other group entities for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.

Consequently, the directors are confident that the Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

SECTION 172 (1) STATEMENT AND STATEMENTS ON ENGAGEMENT WITH EMPLOYEES,

SUPPLIERS, CUSTOMERS AND OTHERS

We report here on how the Company's directors have performed their duty under Section 172 (S.172) of the Companies Act 2006. S.172 sets out a series of matters to which the directors' must have regard in performing their duty to promote the success of the Company for the benefits of its shareholders while also having due regard to other stakeholders.

Stakeholder

Why are they important to Exela

Our approach

Customers

They are the reasons why we exist.

Understanding their needs is key to

our long term success

The Board receives regular reports on customer

requirements and customer feed-back and

monitors these metrics

Our people

Our staff are the key to providing a

cost effective and efficient service

There is employee engagement through staff

reviews, employee forums, project meetings and

rewards structures.

Suppliers

Strong and reliable relationships are

vital to enable us to provide an

efficient service to customers

Regular board assessments of protocols in

procurement and out- sourcing are done.There is

adherence to anti-slavery Protocols.

Communities

Our customers and staff are part of

the UK and global community we

operate in. A reputation of being

ethical, diverse and eco- friendlyis

vital to our success.

The board encourages the use of eco-friendly

work policies.The board regularly monitors

company policies for matters like diversity and

ethical behaviour.

Regulators

We are not subject to specific

protocols in terms of a defined

Regulator. However, compliance in

all statutory matters is a culture that

provides good governance.

The board reviews regular updates on all

compliance issues and time limits

Shareholders

We are part of a group that is

ultimately controlled by retail and

institutional shareholders.

The board provides regular updates to the Group

Board on all matters that impact this company.

Long term

sustainability

The long-term sustainability ofthe

Company is at the forefront of

decision-making, particularly

inresponse to the challenging

business conditions and, since the

year end, the Coronavirus

pandemic.

The board aims to balance the needof the

employees, the customers and other stakeholders

to ensure good and healthy relationship.The

board aims to make sufficient Profit to sustain the

entity's commercial vitality.

This report was approved by the Board of directors and signed on its behalf by:

ON BEHALF OF THE BOARD:

J H Chhaya - Director

29 September 2021

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

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2020.

DIRECTORS

J H Chhaya has held office during the whole of the period from 1 January 2020 to the date of this report.

Other changes in directors holding office are as follows:

V Robu was appointed as a director after 31 December 2020 but prior to the date of this report.

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

DIRECTORS' RESPONSIBILITIES STATEMENT

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

AUDITORS

The auditors,  Butler & Co LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

J H Chhaya - Director

29 September 2021

Opinion

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.

The impact of uncertainties due to the COVID19 pandemic on our audit

Uncertainties related to the effects of COVID19 are relevant to understanding our audit of the financial statements. All audits assess and challenge the reasonableness of estimates made by the directors, and related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the company's future prospects and performance.

COVID19 is one of the most significant public health, social and economic event and at the date of this report, its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. We applied a standardise firm-wide approach in response to that uncertainty when assessing the company's future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for the company and this is particularly the case in relation to COVID19.

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.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the company will continue in operation.

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 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 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 Directors' Responsibilities Statement set out on page five, 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:

- Enquiries of management, concerning the company's policies and procedures relating to:

- Identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance

- Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud.

- Discussions among the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

- Performed analytical procedures to identify any unusual relationships.

- Tested journal entries to identify unusual transactions.

We also obtained an understanding of the legal and regulatory frameworks that the company operates in.

As a result of performing the above, we did not identify any key audit matters related to the potential risk of fraud or non-compliance.

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.

Sanjeev Phadke (Senior Statutory Auditor)

for and on behalf of Butler & Co LLP

Chartered Accountants

& Statutory Auditor

Third Floor

126-134 Baker Street

London

W1U 6UE

29 September 2021

TURNOVER

3

32,205

36,958

Cost of sales

24,976

29,150

GROSS PROFIT

7,229

7,808

Administrative expenses

10,623

9,838

(3,394

)

(2,030

)

Other operating income

4,278

2,517

OPERATING PROFIT

5

884

487

Interest payable and similar expenses

6

335

252

Other finance costs

19

404

451

739

703

PROFIT/(LOSS) BEFORE TAXATION

145

(216

)

Tax on profit/(loss)

7

5

(2

)

PROFIT/(LOSS) FOR THE FINANCIAL

YEAR

140

(214

)

PROFIT/(LOSS) FOR THE YEAR

140

(214

)

OTHER COMPREHENSIVE INCOME  

Remeasurement of the net defined benefit

(4,893

)

(2,410

)

Income tax on other comprehensive income

Income tax relating to other comprehensive

income

1,184

410

OTHER COMPREHENSIVE INCOME

FOR THE YEAR, NET OF INCOME TAX

(3,709

)

(2,000

)

TOTAL COMPREHENSIVE INCOME

FOR THE YEAR

(3,569

)

(2,214

)

FIXED ASSETS

Intangible assets

8

322

483

Tangible assets

9

3,682

4,140

Investments

10

1,156

1,156

5,160

5,779

CURRENT ASSETS

Stocks

11

749

747

Debtors

12

56,822

50,528

Cash at bank and in hand

3,738

279

61,309

51,554

CREDITORS

Amounts falling due within one year

13

29,079

24,105

NET CURRENT ASSETS

32,230

27,449

TOTAL ASSETS LESS CURRENT

LIABILITIES

37,390

33,228

CREDITORS

Amounts falling due after more than one

year

14

(13,016

)

(9,022

)

PROVISIONS FOR LIABILITIES

16

(100

)

(100

)

PENSION LIABILITY

19

(21,775

)

(18,038

)

NET ASSETS

2,499

6,068

CAPITAL AND RESERVES

Called up share capital

17

100

100

Retained earnings

18

2,399

5,968

SHAREHOLDERS' FUNDS

2,499

6,068

The financial statements were authorised for issue by the Board of Directors and authorised for issue on 29 September 2021 and were signed on its behalf by:

J H Chhaya - Director

V Robu - Director

Called up

share

Retained

Total

capital

earnings

equity

£'000

£'000

£'000

Balance at 1 January 2019

100

8,182

8,282

Changes in equity

Total comprehensive income

-

(2,214

)

(2,214

)

Balance at 31 December 2019

100

5,968

6,068

Changes in equity

Total comprehensive income

-

(3,569

)

(3,569

)

Balance at 31 December 2020

100

2,399

2,499

1.

STATUTORY INFORMATION

Exela Technologies Ltd (the "Company") is a company limited by shares and incorporated and domiciled in the UK.

The Company is exempt by virtue of s401 of the Companies Act 2006 from the requirement to prepare group financial statements. These financial statements present information about the Company as an individual undertaking and not about its group.

These financial statements were prepared in accordance with Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland ("FRS 102") as issued in August 2014. The amendments to FRS 102 issued in July 2015 and effective immediately have been applied. The presentation currency of these financial statements is sterling. All amounts in the financial statements have been rounded to the nearest £1,000.

The Company's ultimate parent undertaking, Exela Technologies, Inc., incorporated in the USA, whose principal place of business is at 2701 E Grauwyler Road, Irving, Texas 75061 includes the Company in its consolidated financial statements. The group accounts of Exela Technologies, Inc. prepared in accordance with US GAAP can be obtained from this address or www.sec.gov. In these financial statements, the company is considered to be a qualifying entity (for the purposes of this FRS) and has applied the exemptions available under FRS 102 in respect of the following disclosures:

- Reconciliation of the number of shares outstanding from the beginning to end of the period;

- Cash Flow Statement and related notes;

- Disclosures in respect of transactions with wholly owned subsidiaries; and

- Key Management Personnel compensation.

As the consolidated financial statements of intermediate parent undertaking include the equivalent disclosures, the Company has also taken the exemptions under FRS 102 available in respect of the disclosures required by FRS102.11 Basic Financial Instruments and FRS 102.12 Other Financial Instrument Issues in respect of financial instruments not falling within the fair value accounting rules of Paragraph 36(4) of Schedule 1.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.

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.  

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption 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.

Revenue recognition

The Company recognises hardware and software revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is probable. For those transactions that involve acceptance certificates, the Company recognises revenue upon receipt of the acceptance certificate, or when it can be objectively demonstrated that acceptance criteria have been met. For hardware transactions where software is considered incidental, or no software is included, revenue is recognised when the product has been delivered and all obligations have been fulfilled.

The Company recognises revenue from sales of equipment and supplies upon delivery and transfer of title or upon customer acceptance.

The Company undertakes to maintain customers' software under maintenance contracts for which the Company receives payment quarterly, half-yearly and annually in advance. Such income is released to the profit and loss account on a straight-line basis over the life of the contract. Where contracts consist of multiple elements, revenue is allocated based on the fair value of the individual elements. Maintenance costs are expensed as they are incurred.

The Company's service revenue is primarily billed based on contractual rates and terms, and the Company generally recognises revenue as these services are performed which, in some cases, is rateably over the contract term. Certain customers advance funds prior to the performance of the services. The Company recognises revenue related to these advances rateably over the contract term.

Intangible assets

Tangible fixed assets

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is based on the weighted average principle and includes expenditure incurred in acquiring the stocks, production or conversion costs and other costs in bringing them to their existing location and condition.

Taxation