REGENCY_TRADE_FINANCE_LIM - Accounts
REGENCY_TRADE_FINANCE_LIM - Accounts
The directors present the strategic report for the period ended 31 December 2021.
The principal activity of the company remains the provision of asset based lending.
In March 2021, following the company's acquisition, the company entered into a receivables purchase agreement ("RPA") with Cubitt Trade Capital LLC (the "purchaser") and other parties, under which the company will sell its receivables to the purchaser who will immediately resell to the issuer on the same terms and conditions. Pursuant to the RPA, the company sells, conveys, and assigns to the purchaser all its rights, title, and interest in these receivables. The company earns a management fee from the purchaser for its services, which now represents the turnover of the company within these accounts.
Financial Results | 5 month period to 31 December 2021 | 18 month period to 31 July 2021 as restated |
| £ | £ |
Turnover | 18,631 | 57,081,166 |
Gross Profit | 18,631 | 1,479,152 |
Admin Expenses | 591 | 387,522 |
Operating Profit | 18,040 | 1,091,600 |
Listed below are the key business risks which the Board has identified and the actions it has currently taken to mitigate these to an acceptable level:
| Business risk | Mitigating management actions |
Credit Risk | The major risk in providing trade finance is the possibility of fraud perpetrated by a Client.
| The Board has laid down process and controls which ensure the integrity of its clients and of the transactions. |
Liquidity Risk | This risk arises if the Company is unable to meet its financial obligations as and when they fall due. | The Company has a level of finance from its parent company which provides it with a stable funding and working capital base. |
Market Risk | The Market Risk arises from changes in competitive pricing. | The Company's business model allows for margins that are competitive. |
Operational Risk | As the Company provides a bespoke trade finance product it relies on its experienced staff to provide this service to its Clients.
| The Company benefits from its high quality of staff with appropriate training coupled with a tried and tested management supervision process.
The Company also maintains appropriate disaster recovery processes to mitigate the risk associated with an IT failure. |
Competitor Risk | The Company faces competition in the markets it operates in. | Whilst the Company does not consider this to be a significant risk it mitigates that risk by maintaining good relationships with its Clients and business introducers. |
Management Risk | As a member of a group of this size which has a limited number of senior management people a risk arises when a member of that team is unable to perform their duties. | The Board has taken steps to ensure that all members of the senior management team are trained to be able to undertake the duties of the other members of the senior management team. |
The increased financial support of the new parent company enables the management to be more competitive in its marketplace and the board are very confident in substantial increase in both turnover and profitability for the coming period.
The Board of Directors of Regency Trade Finance Limited consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a)-(f) of the Act) in the decisions taken during the period ended 31 December 2021.
- our strategic plan was designed to have long-term beneficial impact on the company and to contribute to its success in delivering a high quality of service across all company operations
- our staff are fundamental to the delivery of our plan. We aim to be a responsible employer in our approach to the pay and benefits our staff receive. The health, safety and well-being of our staff is one of our primary considerations in the way we do business
- engagement with our funders and customers is key to our success. We met with our major funders and customers regularly throughout the year and take any appropriate action as necessary
- our strategic plan takes into account the impact of the company's operations on the community and environment and our wider social responsibilities
- as the Board of Directors, our interest is to behave responsibly and to ensure that management operate the business in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as ours, and in doing so will contribute to the delivery of our strategic plan
- as the Board of Directors, our intention is to behave responsibly towards our shareholders and treat them fairly and equally, so they too may benefit from the successful delivery of our strategic plan
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 December 2021.
The results for the period are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The auditor, Jackson Stephen LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
give a true and fair view of the state of the company's affairs as at 31 December 2021 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
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
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit.
As explained more fully in the Directors' Responsibilities Statement included within Directors' Report, 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 is 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.
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 an auditor's report 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 and 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.
Based on our understanding of the company and sector, we identified that the principal risks of non-compliance with laws and regulations related to, but were not limited to, the Companies Act 2006, UK tax, employment, pension and health and safety legislation and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to management bias in accounting estimates and judgements and the risk of fraud in revenue recognition.
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management about actual and potential litigation and claims, their policies and procedures to prevent and detect fraud as well as whether they have knowledge of any actual, suspected or alleged fraud;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
obtaining an understanding of provisions and holding discussions with management to understand the basis of recognition or non-recognition of tax provisions; and
in addressing the risk of fraud through management override of controls: testing the appropriateness of journal entries; assessing whether the accounting estimates, judgements and decisions made by management are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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 an auditor's report 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.
The Statement of Income and Retained Earnings has been prepared on the basis that all operations are continuing operations.
Regency Trade Finance Limited is a private company limited by shares incorporated in England and Wales. The registered office is 2 Regency Chambers, Jubilee Way, Bury, Lancashire, BL9 0JW.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
These financial statements represent the accounting period from 1 August 2021 to 31 December 2021, in order to align the company's year end with that of fellow group companies. This, therefore, results in comparative amounts presented in these financial statements (including the related notes) not being entirely comparable.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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 of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Prior period adjustment
The comparative financial statements have been restated to correctly reflect the nature of the company's transactions post the company's acquisition in March 2021. At that point the the company entered into a receivables purchase agreement ("RPA") with Cubitt Trade Capital LLC (the "purchaser") and other parties (see note 1.4 for further details). The impact of the restatement on the comparative figures has been to reduce turnover by £28,339,240, to reduce cost of sales by £27,788,400, to reduce administrative expenses by £198,617 and to reduce interest charges by £524,457. Overall, the prior year reported profit and brought forward reserves as at 1 August 2021 have increased by £172,234.
The comparative balance sheet has also been restated, primarily to remove the trade debtors figure of £43,031,225 and the trade creditors figure of £21,578,612, with a compensating decrease in the amounts due to the parent company of £20,911,001, a decrease in accruals of £719,360 and a decrease in cash at bank of £5,514.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods. There were no critical estimates and judgements made by the directors in preparing these financial statements.
An analysis of the company's turnover is as follows:
Exchange differences recognised in profit or loss during the period, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £8,645 (2021 - £15,652).
The company has no employees. Employee services were provided by a fellow subsidiary undertaking.
The directors received no remuneration during the period.
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
A UK corporation tax rate of 25% was announced in the Chancellor's Budget of 3 March 2021. The 25% rate will apply from 1 April 2023.
Profit and loss account - includes all current and prior period retained profits and losses net of distributions to shareholders.
The company's immediate parent undertaking is Cubitt Trade Holdings (Europe) LLC, a company incorporated in the United States of America. The ultimate parent company is Petra Group Holdings Limited, a company incorporated in the Cayman Islands.