Cathay Industries (UK) Limited - Accounts to registrar (filleted) - small 18.2

REGISTERED NUMBER: 02414292 (England and Wales)

Financial Statements

for the Year Ended 31 December 2020

for

CATHAY INDUSTRIES (UK) LIMITED

Page

Company Information

1

Balance Sheet

2

Notes to the Financial Statements

3

DIRECTORS:

T M J Southgate

K P D Yu

K Y Yu

REGISTERED OFFICE:

Fairoaks Airport

Unit C1b-7

Chobham

Woking

Surrey

GU24 8HU

REGISTERED NUMBER:

02414292 (England and Wales)

AUDITORS:

Hamlyns LLP

Statutory Auditor

Chartered Accountants

Sundial House

High Street

Horsell

Woking

Surrey

GU21 4SU

FIXED ASSETS

Intangible assets

5

15,433

22,443

Tangible assets

6

2,954

3,966

Investments

7

-

-

18,387

26,409

CURRENT ASSETS

Stocks

2,844,242

3,045,758

Debtors

8

1,426,237

1,076,941

Cash at bank

135,335

7,796

4,405,814

4,130,495

CREDITORS

Amounts falling due within one year

9

3,643,334

3,389,747

NET CURRENT ASSETS

762,480

740,748

TOTAL ASSETS LESS CURRENT LIABILITIES

780,867

767,157

CAPITAL AND RESERVES

Called up share capital

212,577

212,577

Retained earnings

568,290

554,580

780,867

767,157

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

In accordance with Section 444 of the Companies Act 2006, the Income Statement has not been delivered.

The financial statements were approved by the Board of Directors and authorised for issue on 3 September 2021 and were signed on its behalf by:

T M J Southgate - Director

1.	STATUTORY INFORMATION

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

Going concern

The going concern basis adopted for preparing the financial statements is contingent upon the continued financial support of the company's ultimate parent undertaking, Cathay Pigments (Holdings) Limited.

The ultimate parent company has shown its commitment and provided assurances that it will provide continuous and sufficient financial resources to the company for the foreseeable future, being a period of at least 12 months from approval of these financial statements, if necessary. This will ensure liabilities are met as they fall due and will enable Cathay Industries (UK) limited to carry on its business.

Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.

PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

The financial statements contain information about Cathay Industries (UK) Limited as an individual and do not contain consolidated financial information as the parent undertaking of a small group. The company is exempt under Section 399(2A) of the Companies Act 2006 from the requirements to prepare consolidated financial statements.

REVENUE

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:

- the Company has transferred the significant risks and rewards of ownership to the buyer;

- the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

- the amount of revenue can be measured reliably;

- it is probable that the Company will receive the consideration due under the transaction; and

- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

INTANGIBLE ASSETS

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Computer software is being amortised evenly over its estimated useful life of five years.

TANGIBLE FIXED ASSETS

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit and loss during the period in which they are incurred.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Plant & machinery - 3 to 4 years

Motor vehicles - 3 years

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of Comprehensive Income.

INVESTMENTS IN SUBSIDIARIES

Investments in subsidiaries are measured at cost less accumulated impairment. Where merger relief is applicable, the cost of the investment in a subsidiary undertaking is measured at the nominal value of the shares issued together with the fair value of any additional consideration paid.

STOCKS

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

FINANCIAL INSTRUMENTS

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date.

Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an enforceable right to set off the recognised amount and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or income as appropriate. The Company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.

Finance costs

Finance costs are charged to the Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Borrowing costs

All borrowing costs are recognised in the Statement of Comprehensive Income in the year in which they are incurred.

CURRENT AND DEFERRED TAXATION

The tax expense for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that:

- the recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

- any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax/ Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The recognition of deferred tax assets is based on forecasts of future taxable profit. The measurement of future taxable profit for the purposes of determining whether or not to recognise deferred tax assets depends on many factors, including the Company's ability to generate such profits and the implementation of effective tax planning strategies. The occurrence or non-occurrence of such events in the future may lead to significant changes in the measurement of deferred tax assets.

FUNCTIONAL AND PRESENTATION CURRENCY

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Comprehensive Income within "finance income or costs". All other foreign exchange gains and losses are presented in the Statement of Comprehensive Income within "other operating income".

PENSIONS

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in the Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.

DEBTORS

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

CASH AND CASH EQUIVALENTS

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

CREDITORS

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

3.	EMPLOYEES AND DIRECTORS

The average number of employees during the year was 4 (2019 - 4 ) .

4.	AUDITORS' REMUNERATION

Fees payable to the Company's auditor for the audit of the Company's annual financial statements totalled £11,500 (2019: £11,000). Fees payable to the Company's auditor in respect of non-audit services totalled £500 (2019: £500).

5.	INTANGIBLE FIXED ASSETS

Other

intangible

assets

£

COST

At 1 January 2020

and 31 December 2020

33,925

AMORTISATION

At 1 January 2020

11,482

Charge for year

7,010

At 31 December 2020

18,492

NET BOOK VALUE

At 31 December 2020

15,433

At 31 December 2019

22,443

6.	TANGIBLE FIXED ASSETS

Plant and

Computer

machinery

equipment

Totals

£

£

£

COST

At 1 January 2020

3,200

3,153

6,353

Additions

-

175

175

At 31 December 2020

3,200

3,328

6,528

DEPRECIATION

At 1 January 2020

207

2,180

2,387

Charge for year

821

366

1,187

At 31 December 2020

1,028

2,546

3,574

NET BOOK VALUE

At 31 December 2020

2,172

782

2,954

At 31 December 2019

2,993

973

3,966

7.	FIXED ASSET INVESTMENTS

Shares in

group

undertakings

£

COST

At 1 January 2020

and 31 December 2020

75,300

PROVISIONS

At 1 January 2020

and 31 December 2020

75,300

NET BOOK VALUE

At 31 December 2020

-

At 31 December 2019

-

The company's investments at the Balance Sheet date in the share capital of companies include the following:

Compass Chemicals (UK) Limited

Registered office: Unit C1b-7 Chobham, Woking, GU24 8HU

Nature of business: Wholesale of chemical products

%

Class of shares:

holding

Ordinary Shares £1

100.00

2020

2019

£

£

Aggregate capital and reserves

(141,170

)

(141,170

)

Loss for the year

-

(316,590

)

8.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020

2019

£

£

Trade debtors

1,418,756

1,057,645

Other debtors

7,481

19,296

1,426,237

1,076,941

9.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020

2019

£

£

Bank loans and overdrafts

122,248

135,764

Trade creditors

431,022

824,157

Amounts owed to group undertakings

1,850,933

1,641,301

Taxation and social security

277,360

18,181

Other creditors

961,771

770,344

3,643,334

3,389,747

10.	LEASING AGREEMENTS

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

2020

2019

£

£

Within one year

9,000

-

Between one and five years

-

17,500

9,000

17,500

This relates to the total amount due over the remaining term of the lease.

11.	SECURED DEBTS

The following secured debts are included within creditors:

2020

2019

£

£

Bank overdraft

-

13,292

Bank loans

122,248

122,472

Other loans

940,102

687,462

1,062,350

823,226

The company's liabilities to HSBC UK are secured by a debenture giving a fixed and floating charge over all assets and undertakings of the company.

12.	DISCLOSURE UNDER SECTION 444(5B) OF THE COMPANIES ACT 2006

The Report of the Auditors was unqualified.

Nicola Keeble (Senior Statutory Auditor)

for and on behalf of Hamlyns LLP

13.	CONTINGENT LIABILITIES

At 31 December 2020 the company had given a guarantee to HM Revenue & Customs in respect of duty deferment to the sum of £100,000 (2019: £100,000).

14.	ULTIMATE CONTROLLING PARTY

The ultimate parent undertaking is Cathay Pigments Holdings Limited, a company incorporated in the British Virgin Islands. The registered business address is Suite 901A, 9/F, ChinaChem Golden Plaza, 77 Mody Road, Tsimshatsui East, Kowloon, Hong Kong.

The smallest and largest group preparing consolidated accounts including the results of Cathay Industries (UK) Limited is Cathay Pigments Holdings Limited.