REGISTERED NUMBER: |
Strategic Report, Report of the Directors and |
Financial Statements for the Year Ended 31 December 2024 |
for |
ZTE (UK) Limited |
REGISTERED NUMBER: |
Strategic Report, Report of the Directors and |
Financial Statements for the Year Ended 31 December 2024 |
for |
ZTE (UK) Limited |
ZTE (UK) Limited (Registered number: 04269408) |
Contents of the Financial Statements |
for the Year Ended 31 December 2024 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 4 |
Statement of Directors' Responsibilities | 6 |
Report of the Independent Auditors | 7 |
Statement of Comprehensive Income | 11 |
Statement of Financial Position | 12 |
Statement of Changes in Equity | 13 |
Notes to the Financial Statements | 14 |
ZTE (UK) Limited |
Company Information |
for the Year Ended 31 December 2024 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Certified Accountants |
and Statutory Auditors |
9 St Clare Street |
London |
EC3N 1LQ |
ZTE (UK) Limited (Registered number: 04269408) |
Strategic Report |
for the Year Ended 31 December 2024 |
The directors present their strategic report for the year ended 31 December 2024. |
REVIEW OF BUSINESS |
ZTE (UK) Limited ("the Company" or "ZTE UK") is dedicated to the provision of telecommunication equipment and services to UK market clients, including telecom system products and terminal products. Due to the impact of the restrictions on the telecommunication products in the UK market, the performance of the Company was poor especially during FY 2019 and FY 2020. Starting from FY2021, the Company has shifted its focus on the terminal products especially for mobile broadband ("MBB") products in the UK market due to a strong market demand. For year 2023 and 2024, the sales of terminal products accounted for over 70% of the overall turnover of the Company. |
The Company reported £23.7m in operating revenue representing decline of 21.6% compared with the same period last year, the decrease is mainly attributed by the price reduction caused by market competition incentives. Operating profit excluding exceptional item arrived at £0.81m which decreased by 6% compared to prior year mainly due to revenue decrease. |
PRINCIPAL RISKS AND UNCERTAINTIES |
The UK telecommunication market is undergoing significant changes, driven by several factors such as the complex nature of international economic and political conditions, strong market competition in the field of technological innovation etc. ZTE is well positioned to offer innovative and affordable products and solutions to market, while it is expected a slow growth in our telecom system products` revenues as a result of the restrictions on the telecommunication products in the UK market. |
Despite the changes in the market, the sales of the terminal products have significantly increased over the years due to a strong market demand. The Company looks forward to a sustained growth in the terminal products market. |
FINANCIAL RISKS |
Credit Risk |
Trade debtors are managed by regular monitoring of amounts outstanding for both time and credit limits. |
Liquidity Risk |
Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. |
Cash Flow Risk |
Cash flow risk is reviewed monthly, the company manages intra-group and related party loans to ensure the company's cash flow as a whole operates effectively and efficiently. |
ZTE (UK) Limited (Registered number: 04269408) |
Strategic Report |
for the Year Ended 31 December 2024 |
KEY PERFORMANCE INDICATORS |
The directors consider the key KPI of the Company as follows: |
2024 (£) | 2023 (£) | % change |
Turnover | 23,708,044 | 30,117,904 | -21% |
EBITDA excluding exceptional item | 784,838 | 759,530 | 3% |
Gross assets | 6,080,862 | 7,946,615 | -23% |
Net assets | 390,725 | 1,240,950 | -69% |
During the year, turnover decreased by 21%, primarily due to a reduction in selling prices. However, EBITDA (excluding exceptional items) increased by 4%, driven by lower staff costs, particularly a reduction in the average number of employees from 26 to 18. Net assets significantly declined due to the settlement of historical PAYE and NIC liabilities arising from the tax investigation. |
ON BEHALF OF THE BOARD: |
21 March 2025 |
ZTE (UK) Limited (Registered number: 04269408) |
Report of the Directors |
for the Year Ended 31 December 2024 |
The directors present their report with the financial statements of the company for the year ended 31 December 2024. |
PRINCIPAL ACTIVITY |
The principal activity of the company in the year under review was that of supplying telecommunication system and telecoms equipment, setting up telecommunication network to operators and providing terminal productions to the UK market. |
DIVIDENDS |
No dividends will be distributed for the year ended 31 December 2024 (2023: nil). |
FUTURE DEVELOPMENTS |
Communications Technology is rapidly undergoing a process of change, with many new innovations being shaped and driven by what was seen as third world markets. At ZTE we believe that we are entering a golden era of technology, with new solutions being developed to help countries to deal with the demands of climate change, geo-political market changes and in leading and developing the technology for tomorrow. |
ZTE believes that there is huge potential for growth, innovation and trade between China and the United Kingdom. ZTE is committed to the UK market and will ensure that the Company evolves as required by the market, to ensure that our UK customers are able to access the market leading technology and solutions as enjoyed by other global customers. |
The main terminal products sold by ZTE UK were MBB products for which ZTE ranked first globally in 2024. Compared to other competitors, ZTE's MBB products are known for competitive pricing, high level of functionality and stable supply. |
From FY2021, the sales of the terminal products have significantly increased over the years. The Company has kept to promoting the products to the UK clients. Given the fast expansion of the terminal product sales, there are more people (both technical and commercial) joining ZTE UK to support the development of the business. In the future, the Company will keep to developing new channel vendors and operator customers. |
As a result, with the development of new jobs and qualified apprentices, the Company establishes itself as a valuable UK based corporation. |
DIRECTORS |
Other changes in directors holding office are as follows: |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
ZTE (UK) Limited (Registered number: 04269408) |
Report of the Directors |
for the Year Ended 31 December 2024 |
AUDITORS |
The auditors, Shinewing Wilson Accountancy Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
ZTE (UK) Limited (Registered number: 04269408) |
Statement of Directors' Responsibilities |
for the Year Ended 31 December 2024 |
The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
Report of the Independent Auditors to the Members of |
ZTE (UK) Limited |
Opinion |
We have audited the financial statements of ZTE (UK) Limited (the 'company') for the year ended 31 December 2024 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its loss 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. |
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. |
Conclusion relating to going concern |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report, the Report of the Directors and the Statement of Directors' Responsibilities, 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. |
Report of the Independent Auditors to the Members of |
ZTE (UK) Limited |
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 Statement of Directors' Responsibilities set out on page six, 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. |
Report of the Independent Auditors to the Members of |
ZTE (UK) Limited |
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. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity. |
The following laws and regulations were identified as being of significance to the entity: |
- Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, distributable profits legislation. |
- There are no laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements. |
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud. |
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK). |
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. |
Report of the Independent Auditors to the Members of |
ZTE (UK) Limited |
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. |
for and on behalf of |
Chartered Certified Accountants |
and Statutory Auditors |
9 St Clare Street |
London |
EC3N 1LQ |
ZTE (UK) Limited (Registered number: 04269408) |
Statement of Comprehensive Income |
for the Year Ended 31 December 2024 |
31.12.24 | 31.12.23 |
Notes | £ | £ |
TURNOVER | 4 |
Cost of sales |
GROSS PROFIT |
Administrative expenses |
OPERATING (LOSS)/PROFIT | 6 | ( |
) |
Interest receivable and similar income |
(579,728 | ) | 563,189 |
Interest payable and similar expenses | 8 |
(LOSS)/PROFIT BEFORE TAXATION | ( |
) |
Tax on (loss)/profit | 9 |
(LOSS)/PROFIT FOR THE FINANCIAL YEAR |
( |
) |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
ZTE (UK) Limited (Registered number: 04269408) |
Statement of Financial Position |
31 December 2024 |
31.12.24 | 31.12.23 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Tangible assets | 10 |
CURRENT ASSETS |
Debtors | 11 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 12 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
PROVISIONS FOR LIABILITIES | 14 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 15 |
Retained earnings | ( |
) | ( |
) |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
ZTE (UK) Limited (Registered number: 04269408) |
Statement of Changes in Equity |
for the Year Ended 31 December 2024 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 January 2023 | ( |
) |
Prior year adjustment | - | ( |
) | ( |
) |
As restated | ( |
) |
Changes in equity |
Profit for the year | - | 276,092 | 276,092 |
Total comprehensive income | - |
Balance at 31 December 2023 | ( |
) |
Changes in equity |
Deficit for the year | - | (850,225 | ) | (850,225 | ) |
Total comprehensive income | - | ( |
) | ( |
) |
Balance at 31 December 2024 | ( |
) |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements |
for the Year Ended 31 December 2024 |
1. | STATUTORY INFORMATION |
ZTE (UK) Limited is a |
The presentation currency of the financial statements is the Pound Sterling (£). |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Going Concern |
The company meets its day-to-day working capital requirements through cash generated from operations, cash resource and, if required, intercompany financing. The directors, after making enquiries and having regard to the company's financial position, trading prospects and financing available to the company, have a reasonable expectation that the company had adequate resources to continue operating for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements. |
Financial Reporting Standard 102 - reduced disclosure exemptions |
The company has taken advantage of the following disclosure exemptions 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; |
• | the requirement of paragraph 33.7. |
Exemption from preparing cash flow statements |
The company is qualified for exemption from preparing cash flow statements as a member of a group, where the ultimate parent ZTE Corporation prepares consolidated financial statements, which are intended to give a true and fair view and the company is included in the consolidation. The consolidated statements are publicly available from website www.zte.com.cn. |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
2. | ACCOUNTING POLICIES - continued |
Turnover |
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover 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 turnover is recognised: |
Sale of goods |
Turnover 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 turnover 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. |
The company typically recognises its revenue at the time of delivery and acceptance upon inspection taking into account the following factors: the acquisition of the current right to receive payments for the products, the transfer of major risks and rewards of ownership, the transfer of the legal title of the products, the transfer of the physical assets of the products, and customers’ acceptance of the products. |
Rendering of services |
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied: |
-the amount of turnover can be measured reliably; |
-it is probable that the Company will receive the consideration due under the contract; |
-the stage of completion of the contract at the end of the reporting period can be measured reliably; and the costs incurred and the costs to complete the contract can be measured reliably. |
Turnover on the service provided to group companies is based on transfer pricing policy, total amount of £1.55 million (2023: £1.92 million) was recognised in revenue for these services. |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' of FRS 102 to all of its financial instruments. |
Financial instruments are recognised 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 trade and other receivables 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 financial asset is measured at the present value of the future receipts discounted at a market rate of interest. |
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 payables, and loans from group undertakings, 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. |
Debt instruments are subsequently carried at amortised cost, using the effective interest method. |
Share capital |
Financial instruments issued by the company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. |
The company's ordinary shares are classified as equity instruments. |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
2. | ACCOUNTING POLICIES - continued |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
Operating leases-company as lessee |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
Borrowing costs |
All borrowing costs are recognised in profit or loss in the period in which they are incurred. |
Exceptional items |
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the company. They are items that are material either because of their size or their nature, and are considered non-recurring. These items are presented within the line items to which they best relate and reported separately as exceptional items. |
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. |
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: |
Fixture and fitting - 25% on cost |
Computer equipment- 25% on cost |
Improvement to the leasehold - over the period of lease |
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. |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
3. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
In order to prepare these financial statements in accordance with the accounting policies set out in Note 2, management has used estimates and judgements to establish the amounts at which certain items are recorded. Critical accounting estimates and judgements are those that have the greatest impact on the financial statements and require the most difficult, subjective and complex judgements about matters that are inherently uncertain. Estimates are based on factors including historical experience and expectations of future events that management believe to be reasonable. However, given the judgemental nature of such estimates, actual results could be different from the assumptions used. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected. |
HMRC investigation |
The Company is currently subject to an ongoing HMRC investigation regarding additional PAYE and NIC obligations that should have been withheld from UK-based employees at the time their salaries were originally paid. The Company's professional advisors have calculated the outstanding amounts for the ten years ended 31 March 2023, and this information has been submitted to HMRC. During the year ended 31 December 2024, the Company settled the additional PAYE and NIC liabilities. The estimated late payment interest and penalties have been determined based on an analysis conducted by the Company's professional advisors. |
Exceptional costs |
For the year ended 31 December 2024, the amounts charged relate to late payment interest and penalties arising from the tax investigation. In the prior year, these amounts were classified as exceptional costs, as they would ordinarily have been borne by the employees concerned, as detailed in Note 7. |
Contingent liability |
As at 31 December 2024, the Company has no contingent liabilities, as all historical PAYE and NIC obligations for overseas staff have been settled during the year. The remaining amounts, consisting of late payment interest and penalties, have been fully provided for. Management considers that all liabilities have been reliably measured and appropriately accounted for. |
4. | TURNOVER |
The turnover and loss (2023 - profit) before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by class of business is given below: |
31.12.24 | 31.12.23 |
£ | £ |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
4. | TURNOVER - continued |
An analysis of turnover by geographical market is given below: |
31.12.24 | 31.12.23 |
£ | £ |
United Kingdom |
Europe |
Asia |
Others | 879,907 | 840,593 |
5. | EMPLOYEES AND DIRECTORS |
31.12.24 | 31.12.23 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
31.12.24 | 31.12.23 |
Administration |
31.12.24 | 31.12.23 |
£ | £ |
Directors' remuneration |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes |
6. | OPERATING (LOSS)/PROFIT |
The operating loss (2023 - operating profit) is stated after charging: |
31.12.24 | 31.12.23 |
£ | £ |
Other operating leases |
Depreciation - owned assets |
Auditors' remuneration |
Foreign exchange differences |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
7. | EXCEPTIONAL ITEMS |
31.12.24 | 31.12.23 |
£ | £ |
Exceptional items | (1,333,418 | ) | (174,065 | ) |
The exceptional item represents late payment interest and penalties related to the ongoing tax investigation during the year, whereas in the prior year, it related to PAYE liability. |
8. | INTEREST PAYABLE AND SIMILAR EXPENSES |
31.12.24 | 31.12.23 |
£ | £ |
Factoring interest |
9. | TAXATION |
Analysis of the tax charge |
The tax charge on the loss for the year was as follows: |
31.12.24 | 31.12.23 |
£ | £ |
Current tax: |
UK corporation tax |
Deferred tax | ( |
) | ( |
) |
Tax on (loss)/profit |
UK corporation tax has been charged at 25% (2023 - 23.50%). |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
31.12.24 | 31.12.23 |
£ | £ |
(Loss)/profit before tax | ( |
) |
(Loss)/profit multiplied by the standard rate of corporation tax in the UK of |
( |
) |
Effects of: |
Expenses not deductible for tax purposes |
Capital allowances in excess of depreciation | - | ( |
) |
temporary differences |
Tax effect of changes in tax rate | - | 160 |
Overprovision in prior year | (17,607 | ) | - |
Total tax charge | 148,141 | 171,722 |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
9. | TAXATION - continued |
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively enacted on 24 May 2021. For the financial year ended 31 December 2024, the current weighted averaged tax rate was 25%. |
OECD Pillar Two model rules |
The company is within the scope of the OECD Pillar Two model rules. Pillar Two legislation has been enacted in the UK, the jurisdiction in which the entity is incorporated, and is effective in 2024. As part of a global group, the company's effective tax rate in the UK will be assessed to determined whether additional tax under the UK Multinational Top-up Tax applies. |
The entity applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to Section 29 issued in July 2023. |
10. | TANGIBLE FIXED ASSETS |
Improvements | Fixtures |
to | and | Computer |
property | fittings | equipment | Totals |
£ | £ | £ | £ |
COST |
At 1 January 2024 |
Additions |
Disposals | ( |
) | ( |
) |
At 31 December 2024 |
DEPRECIATION |
At 1 January 2024 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) |
At 31 December 2024 |
NET BOOK VALUE |
At 31 December 2024 |
At 31 December 2023 |
11. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.12.24 | 31.12.23 |
£ | £ |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
Accrued income |
Prepayments |
Amount owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand. |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
12. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.12.24 | 31.12.23 |
£ | £ |
Amounts owed to group undertakings |
Tax |
Social security and other taxes |
VAT | 790,781 | 935,658 |
Other creditors |
Deferred income |
Accrued expenses |
Amount owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand. |
13. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
31.12.24 | 31.12.23 |
£ | £ |
Within one year |
Between one and five years |
14. | PROVISIONS FOR LIABILITIES |
31.12.24 | 31.12.23 |
£ | £ |
Deferred tax |
Accelerated capital allowances |
Other provisions | 900,141 | 1,470,591 |
Deferred | Other |
tax | provisions |
£ | £ |
Balance at 1 January 2024 |
Provided during year |
Credit to Statement of Comprehensive Income during year | ( |
) |
Repayment during year | - | (1,470,591 | ) |
Balance at 31 December 2024 |
Other provisions represent a penalty arising from the ongoing investigation this year, whereas last year's provisions were related to PAYE and NIC liabilities. |
ZTE (UK) Limited (Registered number: 04269408) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
15. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31.12.24 | 31.12.23 |
value: | £ | £ |
Ordinary | £1 | 23,768,444 | 23,768,444 |
There is a single class of ordinary shares. There are no restrictions on the distribution of dividends and the repayment of capital. |
16. | CONTINGENT LIABILITIES |
A claim has been made against the company in relation to patent license dispute in December 2024, The case is still ongoing and under current situation the obligation can not be reliably estimated, accordingly no provision has been made. |
17. | RELATED PARTY DISCLOSURES |
The company has taken advantage of exemption available in Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' para 33.1A whereby it has not disclosed related party transactions with wholly owned subsidiaries within the group. |
18. | ULTIMATE CONTROLLING PARTY |
The immediate parent company is ZTE Cooperatief U.A., a company registered in Netherlands. |
The intermediate parent company is ZTE HK Limited, a company registered in Hong Kong and the ultimate parent company is ZTE Corporation, a company registered in China. |
The smallest undertaking for which the company is a member and for which group financial statements are prepared is ZTE Corporation, copies of the group financial statements can be obtained from its website www.zte.com.cn. |
There is no one ultimate controlling party. |