Company Registration No. 05072227 (England and Wales)
SENNING (UK) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
SENNING (UK) LIMITED
COMPANY INFORMATION
Directors
Hao Wu
Defeng Chi
Ran Ji
Guang Zhu
Secretary
Dentons Secretaries Limited
Company number
05072227
Registered office
3rd Floor
Devonshire House
1 Mayfair Place
London
W1J 8AJ
Auditor
RSM UK Audit LLP
25 Farringdon Street
London
EC4A 4AB
Business address
3rd Floor
Devonshire House
1 Mayfair Place
London
W1J 8AJ
SENNING (UK) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Profit and loss account
9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 26
SENNING (UK) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 1 -
The directors present the strategic report for the year ended 31 December 2020.
Core purpose and strategy
The company’s principal activity during this financial period was the trading of crude oil. The company envisages expansion over the coming year, seeing diversified development and expanding trading opportunities.
The core business purpose of the Company is to secure profit margins by crude oil trading and rendering related services. In the longer term, we will continue to seek new counterparties and suppliers in Asia, Mid-East, Africa and South America.
Review of the business
In 2020, the Company has achieved a good result following the establishment of its customer relationships since 2017.The economic shock from the rapid spread of the Coronavirus has also impacted all markets, however the directors are confident that the pricing mechanism of the contracts and the pent up demand will ensure that the net profits will broadly be in line with our forecasts for the year.
KPI
2020
2019
$'000
$'000
Revenue
515,283
1,020,258
Operating profit
1,561
2,087
Profit before tax
1,675
2,087
Equity shareholders' funds
4,315
2,954
2020
2019
Quantity '000
Quantity '000
Barrels
11,945
16,058
Principal risks and uncertainties
The Company undertakes inherent risks of trading and business operations as with all trading companies. We list below the key risks as the Company enters into the next financial year.
The Board of Directors are responsible for applying risk management principles and policies and ensuring that the Company’s management maintains an effective system of internal controls.
Risk management
Traders are to abide strictly by delegated trading limits which are approved by the Board. Management and Heads of Trading are responsible for reviewing and approving pricing and quantity of all trades prior to entering into the contract. All counterparties are pre-approved by Credit and Management prior to the first trade.
Credit risk
The Company has established a customer management policy and operates a strict credit risk management policy by which only a few selected counterparties are approved to give open credit
and exposures which exceed authorized levels are minimized through the use of letters of credit or
standby letters of credit (
SBLC
).
R
eceivables may be discounted with financial institutions effectively selling down the risk to the financial institutions. In the financial period under review the Company did not suffer any credit losses
.
SENNING (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 2 -
Operational and other risks
The Company has established a funds management system according to which all funds transfer
s
should be authorized by t
hree
persons. Also, the Company has drafted a contract management policy which specifies the contract approval process. The Company assesses its operational risk level to prevent or qu
ickly
detect operational errors and to minimize the impact on the Company.
Legal and compliance risk
Our external and internal legal advisors are involved in every significant transaction. They provide essential advice and guidance to senior management on all business issues and ensure that our business is concluded in a manner that complies with all legal and statutory requirements.
Liquidity risk management
Liquidity management is in place to ensure that sufficient cash is available to meet all contractual obligations as they fall due and to ensure that sufficient funding lines are in place with banks to meet all financial requirements on a timely basis. This is closely monitored and tracked by finance team of the Company.
Oil Price Risk
The company undertakes to buy and sell crude oil at spot prices and as such this will mitigate the risks associated with any price fluctuations when carrying out transactions in a volatile crude oil market.
Going Concern Risk
The economic uncertainties surrounding the Coronavirus along with issues within OPEC resulting in lower crude oil prices and overall market volatility all have an impact on the overall operation of the markets.
The directors feel that in the short term, as most of the contracts are already signed and being delivered, that there will not be any significant effect on the company in the next 12 months.
In the medium term, demand is likely to pick up again and the underlying demand for crude oil along with the established supply chain will help to reduce the going concern risk
.
Directors' duty
The directors have acted in good faith to promote the success of the company for the benefit of the members taking into account the following: -
-
The consequences of decisions taken at board level in the long term
-
The interest of the company’s employees
-
The need to foster the company’s business relationships with customers, suppliers and others
-
The impact of the company’s operations on the community and the environment
-
The desirability of the company maintaining a reputation for high standards of business conduct and,
-
The need to act fairly between members of the company.
Mr. WU Hao
Director
17 August 2021
SENNING (UK) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2020.
Principal activities
The principal activity of the Company is the purchase and sale of crude oil. The Company also provides marketing services in connection with gas and oil exploration activities of group companies.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Lingyi Kong
(Resigned 30 June 2020)
Xiaodong Liu
(Resigned 14 October 2020)
Hao Wu
Defeng Chi
Ran Ji
(Appointed 30 June 2020)
Guang Zhu
(Appointed 14 October 2020)
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid
in 2020
.
Financial risk management
Please refer to the strategic report on page 1 for further details in relation to financial risk management.
Auditor
RSM UK Audit LLP have indicated their willingness to continue in office as auditor to the Company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the
C
ompany’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the
C
ompany’s auditor is aware of that information.
On behalf of the board
Mr. WU Hao
Director
17 August 2021
SENNING (UK) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 4 -
The directors are responsible for preparing the strategic report, directors' report 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). 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;
-
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.
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.
SENNING (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SENNING (UK) LIMITED
- 5 -
Opinion
We have audited the financial statements of Senning UK Limited (the ‘company’) for the year ended 31 December 2020 which comprise the profit and loss account, statement of comprehensive income, balance sheet, statement of changes in equity, statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 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.
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 Auditor’s 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.
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. 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.
O
ur 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
course of 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.
SENNING (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SENNING (UK) LIMITED
- 6 -
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' r
eport for the financial year 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.
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 directors’ report.
We have nothing to report in respect of the following matters in relation to which 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
on page 4
, 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.
Auditor's 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 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.
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.
SENNING (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SENNING (UK) LIMITED
- 7 -
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team:
-
obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the company operates in and how the company is complying with the legal and regulatory framework;
-
inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;
-
discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud.
As a result of these procedures we consider the most significant laws and regulations that have a direct impact on the financial statements are FRS 102, the Companies Act 2006 and tax compliance regulations. We performed audit procedures to detect non-compliances which may have a material impact on the financial statements which included reviewing financial statement disclosures and completing a disclosure checklist.
The most significant laws and regulations that have an indirect impact on the financial statements are those in relation to sanctions against countries with which the company may trade. We performed audit procedures to inquire of management whether the company is in compliance with these laws and regulations and, for a sample of trades, tested the controls in place within the business.
The audit engagement team identified the risk of management override of controls as the area where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures performed included but were not limited to testing manual journal entries and other adjustments and evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the normal course of business and challenging judgments and estimates applied within the 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: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
SENNING (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SENNING (UK) LIMITED
- 8 -
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.
Graham Ricketts (Senior Statutory Auditor)
for and on behalf of RSM UK Audit LLP , Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
20 August 2021
SENNING (UK) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 9 -
2020
2019
Notes
$
$
Turnover
3
515,283,383
1,020,258,141
Cost of sales
(509,303,596)
(1,013,691,146)
Gross profit
5,979,787
6,566,995
Administrative expenses
(4,418,891)
(4,480,453)
Operating profit
4
1,560,896
2,086,542
Interest receivable and similar income
7
114,474
Profit before taxation
1,675,370
2,086,542
Tax on profit
8
(314,028)
(394,461)
Profit for the financial year
1,361,342
1,692,081
The profit and loss account has been prepared on the basis that all operations are continuing operations.
SENNING (UK) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
- 10 -
2020
2019
$
$
Profit for the year
1,361,342
1,692,081
Other comprehensive income
-
-
Total comprehensive income for the year
1,361,342
1,692,081
SENNING (UK) LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2020
31 December 2020
- 11 -
2020
2019
Notes
$
$
$
$
Fixed assets
Tangible assets
9
198,657
204,665
Current assets
Debtors falling due after more than one year
10
542,935
524,495
Debtors falling due within one year
10
21,632,527
138,810,709
Cash at bank and in hand
4,778,213
10,094,118
26,953,675
149,429,322
Creditors: amounts falling due within one year
11
(22,631,451)
(146,470,422)
Net current assets
4,322,224
2,958,900
Total assets less current liabilities
4,520,881
3,163,565
Creditors: amounts falling due after more than one year
13
(175,314)
(175,314)
Provisions for liabilities
14
(30,361)
(34,388)
Net assets
4,315,206
2,953,863
Capital and reserves
Called up share capital
16
179,430
179,430
Profit and loss reserves
4,135,776
2,774,433
Total equity
4,315,206
2,953,863
The financial statements on pages 8 to 25 were approved by the Board and authorised for issue on 17 August 2021
Mr. WU Hao
Director
Company Registration No. 05072227
SENNING (UK) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
- 12 -
Share capital
Profit and loss reserves
Total
$
$
$
Balance at 1 January 2019
179,430
1,082,352
1,261,782
Year ended 31 December 2019:
Profit and total comprehensive income for the year
-
1,692,081
1,692,081
Balance at 31 December 2019
179,430
2,774,433
2,953,863
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
1,361,343
1,361,343
Balance at 31 December 2020
179,430
4,135,776
4,315,206
SENNING (UK) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 13 -
2020
2019
Notes
$
$
$
$
Cash flows from operating activities
Cash (absorbed by)/generated from operations
20
(4,697,365)
3,504,923
Income taxes paid
(695,121)
(237,083)
Net cash (outflow)/inflow from operating activities
(5,392,486)
3,267,840
Investing activities
Purchase of tangible fixed assets
(37,893)
(9,209)
Proceeds on disposal of tangible fixed assets
27,022
Interest received
114,474
Net cash generated from investing activities
76,581
17,813
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
(5,315,905)
3,285,653
Cash and cash equivalents at beginning of year
10,094,118
6,808,465
Cash and cash equivalents at end of year
4,778,213
10,094,118
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 14 -
1
Accounting policies
Company information
Senning (UK) Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
3rd Floor, Devonshire House, 1 Mayfair Place, London, W1J 8AJ.
The principal activity is disclosed in the Directors' Report on page 3.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
US dollars
, which is the functional currency of the company.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The economic uncertainties surrounding the Coronavirus along with issues within OPEC resulting in lower crude oil prices and overall market volatility all have an impact on the overall operation of the markets.
The directors feel that in the short term, the management are reassured by the management accounts to date and the positive forecasts prepared for the future as most of the contracts are already signed and being delivered, that there will not be any significant effect on the company in the next 12 months.
In the medium term, demand is likely to pick up again and the underlying demand for crude oil along with the established supply chain will help to reduce the going concern risk
.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of
oil is recognised when the significant risks and rewards of ownership of the oil has been transferred from the company to the buyer (usually on delivery to an agreed shipping point), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of
marketing
services is recognised
on a straight line basis over the period of the contract
.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 15 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
Equal annual instalments over lease term
Fixtures and fittings
25% per annum on cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
If an impairment loss subsequently reverses, the carry
ing
amount of the asset is increased
to the revised estimate of its recoverable amount, but not in excess of the amount that
would have been determined had no impairment loss been recognised for the asset in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.6
Cash at bank and in hand
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
.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
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.
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 16 -
Impairment of financial assets
Financial assets
are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
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.
Classification of financial liabilities
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
Basic financial liabilities, including
trade and other
creditors
and
loans from
fellow group companies, 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
paymen
ts 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. A
m
ounts 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.8
Equity instruments
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.
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 17 -
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.10
Employee benefits
The costs of short-term employee benefits are recognised as
an expense in the period they are incurred.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.13
Foreign exchange
Transactions in currencies other than
US dollars
are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 18 -
2
Judgements and key sources of estimation uncertainty
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.
3
Turnover and other revenue
2020
2019
$
$
Turnover analysed by class of business
Sale of oil
510,821,249
1,015,258,064
Provision of marketing services
4,462,134
5,000,077
515,283,383
1,020,258,141
2020
2019
$
$
Other significant revenue
Interest income
114,474
-
2020
2019
$
$
Turnover analysed by geographical market
Africa
80,737,699
1,000,077
America
1,078,334
-
Asia
433,467,350
709,803,032
Europe
-
309,455,032
515,283,383
1,020,258,141
4
Operating profit
2020
2019
Operating profit for the year is stated after charging/(crediting):
$
$
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
(361,279)
(276,690)
Fees payable to the company's auditor for the audit of the company's financial statements
34,753
37,891
Depreciation of owned tangible fixed assets
43,901
50,497
Profit on disposal of tangible fixed assets
(27,022)
Operating lease charges
355,961
490,729
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 19 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
12
10
Their aggregate remuneration comprised:
2020
2019
$
$
Salaries
2,758,779
2,673,545
Employment benefits
391,369
385,705
Social security costs
455,762
428,124
Pension costs
61,648
55,212
3,667,558
3,542,586
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
6
Directors' remuneration
2020
2019
$
$
Remuneration for qualifying services
842,162
862,655
Directors' benefits
268,648
222,527
Company pension contributions to defined contribution schemes
15,167
14,530
1,125,977
1,099,712
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2019:2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2020
2019
$
$
Remuneration for qualifying services
700,562
544,726
Company pension contributions to defined contribution schemes
10,576
9,179
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 20 -
7
Interest receivable and similar income
2020
2019
$
$
Interest income
Other interest income
114,474
8
Taxation
2020
2019
$
$
Current tax
UK corporation tax on profits for the current period
319,264
403,084
Deferred tax
Origination and reversal of timing differences
(4,027)
(7,268)
Foreign exchange differences
(1,209)
(1,355)
Total deferred tax
(5,236)
(8,623)
Total tax charge
314,028
394,461
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2020
2019
$
$
Profit before taxation
1,675,370
2,086,542
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
318,320
396,443
Tax effect of expenses that are not deductible in determining taxable profit
(4,292)
(3,337)
Deferred tax adjustments in respect of prior years
1,355
Taxation charge for the year
314,028
394,461
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 21 -
9
Tangible fixed assets
Leasehold land and buildings
Fixtures and fittings
Total
$
$
$
Cost
At 1 January 2020
359,254
94,638
453,892
Additions
37,893
37,893
At 31 December 2020
359,254
132,531
491,785
Depreciation and impairment
At 1 January 2020
170,211
79,016
249,227
Depreciation charged in the year
36,534
7,367
43,901
At 31 December 2020
206,745
86,383
293,128
Carrying amount
At 31 December 2020
152,509
46,148
198,657
At 31 December 2019
189,043
15,622
204,665
10
Debtors
2020
2019
Amounts falling due within one year:
$
$
Trade debtors
21,182,648
138,529,154
Amounts owed by group undertakings
66,759
26,459
Other debtors
143,564
72,706
Prepayments and accrued income
239,556
182,390
21,632,527
138,810,709
2020
2019
Amounts falling due after more than one year:
$
$
Other debtors
542,935
524,495
Total debtors
22,175,462
139,335,204
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 22 -
11
Creditors: amounts falling due within one year
2020
2019
$
$
Trade creditors
20,531,608
138,040,526
Amounts owed to group undertakings
1,202,126
7,198,147
Corporation tax
3,558
380,625
Other taxation and social security
816,281
752,111
Other creditors
17,382
15,089
Accruals and deferred income
60,496
83,924
22,631,451
146,470,422
12
Financial instruments
2020
2019
$
$
Financial assets
Debt instruments measured at amortised cost
21,935,906
139,152,814
Fiinancial liabilities
Measured at amortised cost
21,986,927
145,513,000
13
Creditors: amounts falling due after more than one year
2020
2019
$
$
Accruals and deferred income
175,314
175,314
14
Provisions for liabilities
2020
2019
Notes
$
$
Deferred tax liabilities
15
30,361
34,388
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 23 -
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2020
2019
Balances:
$
$
Accelerated capital allowances
30,361
34,388
2020
Movements in the year:
$
Liability at 1 January 2020
34,388
Credit to profit or loss
(4,027)
Liability at 31 December 2020
30,361
The deferred tax liability set out above is expected to reverse within 48 months and relates to accelerated capital allowances that are expected to mature within the same period.
16
Share capital
2020
2019
$
$
Ordinary share capital
Issued and fully paid
50,000 Ordinary shares of GBP £2 each
179,430
179,430
17
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2020
2019
$
$
Within one year
522,256
354,084
Between two and five years
1,668,319
1,983,288
In over five years
96,410
2,190,575
2,433,782
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 24 -
18
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2020
2019
$
$
Aggregate compensation
1,260,993
1,232,158
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Purchases
2020
2019
2020
2019
$
$
$
$
CNPC Companies
231,529,556
-
192,580,433
228,221,693
Hongkong Xinming Limited
79,334,892
-
Sales of services
2020
2019
$
$
CNPC Companies
3,369,214
3,000,076
China Volant Industry Co. Ltd
1,000,000
2,000,000
The following amounts were outstanding at the reporting end date:
2020
2019
Amounts due to related parties
$
$
CNPC Companies
20,531,608
12,654,600
Senning Company Inc.
1,202,126
7,198,146
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
18
Related party transactions
(Continued)
- 25 -
The following amounts were outstanding at the reporting end date:
2020
2019
Amounts due from related parties
$
$
CNPC Companies
21,219,490
311,808
Senning Company Inc. - immediate parent company.
Senning Company Inc. is 50% owned by CNPC International Limited and 50% owned by
Huaning Energy Company Limited.
China Volant Industry Co. Ltd is the parent company of the Huaning Energy Company
Limited.
HongKong Xinming is ultimate
ly
controlled by China Aerospace Science & Industry Corporation
which itself is owned by the People's Republic of China.
From 14/5/21, the shareholding ratio of shareholders changed: Senning Company Inc. is 51% owned by CNPC International Limited and 49% owned by Huaning Energy Company Limited.
19
Controlling party
The company is immediately wholly-owned by Senning Company Inc. a company incorporated in British Virgin Islands.
At the year-end Senning Company Inc. was owned 50% by CNPC International Limited, a company incorporated in Cayman Islands and 50% owned by Huaning Energy Company Limited, a company incorporated in Hong Kong. These entities are state owned by the People's Republic of China by virtue of the shares held by their ultimate parent companies China National Petroleum Corporation and China Aerospace Science & Industry Corporation Limited respectively.
From 14/5/21, the shareholding ratio of shareholders changed: Senning Company Inc. is 51% owned by CNPC International Limited and 49% owned by Huaning Energy Company Limited.
SENNING (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 26 -
20
Cash (absorbed by)/generated from operations
2020
2019
$
$
Profit for the year after tax
1,361,342
1,692,081
Adjustments for:
Taxation charged
314,028
394,461
Investment income
(114,474)
Gain on disposal of tangible fixed assets
(27,022)
Depreciation and impairment of tangible fixed assets
43,901
50,497
Movements in working capital:
Decrease/(increase) in debtors
117,159,742
(107,321,861)
(Decrease)/increase in creditors
(123,461,904)
108,716,767
Cash (absorbed by)/generated from operations
(4,697,365)
3,504,923
21
Analysis of changes in net debt
2020
$
Opening net funds
Cash at bank and in hand
10,094,118
Changes in net debt arising from:
Cash flows of the entity
(5,315,905)
Closing net funds as analysed below
4,778,213
Closing net funds
Cash at bank and in hand
4,778,213
2020-12-31
2020-01-01
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