Registration number:
Ebac Holdings Limited
for the Year Ended 31 December 2021
Ebac Holdings Limited
Contents
Company Information |
|
Strategic Report |
|
Directors' Report |
|
Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
|
Consolidated Income Statement |
|
Consolidated Statement of Comprehensive Income |
|
Consolidated Statement of Financial Position |
|
Statement of Financial Position |
|
Consolidated Statement of Changes in Equity |
|
Statement of Changes in Equity |
|
Consolidated Statement of Cash Flows |
|
Notes to the Financial Statements |
Ebac Holdings Limited
Company Information
Directors |
J M Elliott MBE J C Laverick |
Company secretary |
Ms A Hird |
Registered office |
|
Auditor |
|
Ebac Holdings Limited
Strategic Report for the Year Ended 31 December 2021
The directors present their strategic report for the year ended 31 December 2021.
Principal activity
The principal activity of the company is that of a group holding company. The primary group entities comprise of Ebac Limited, a company specialising in the design and manufacture of electrical products for the domestic dehumidifier, water cooler, and domestic laundry markets, Ebac Industrial Products Limited and Ebac Industrial Products Inc, companies specialising in the design and manufacture of electrical products for the industrial dehumidification market.
Fair review of the business
First, I would like to apologise for the delay in filling our accounts. This delay has been caused by a necessary restructuring of the business to tackle the poor results published in this financial report.
This report demonstrates a significant loss for the business. This was due to the long-term effect of the COVID period and supply chain issues that hit many manufacturers at this time. In practical terms it meant that some of the components for our products were difficult to source in global markets, a good example being motors for our washing machines. The medium term effect of this was to create a stock of machines which were incomplete at a time customers wanted to buy them.
The business also spent funds on the development of new products which are due to come to the market in the coming months. In addition, Ebac manufactures a range of office water coolers, which was hit by the work-from-home trend in workplaces, but is now recovering its momentum.
This combination of unsold machines and extra spending on research and development led to losses and necessary remedial action. The action involved cutting costs, both in people and production, restructuring our operation, and re-financing.
Although 2020, 2021 and the first six months of 2022 have been the worst conditions I have experienced in 50 years, I now believe our future is very good and in fact we have investors wanting to invest in the business.
Our own investment in new products is now paying off, leading to opportunities in new markets. These products are designed to support customers that need to heat homes in an efficient and environmentally friendly way. They include our British designed, and soon to be manufactured, heat pumps and a new home ventilation and dehumidifier system which will be of great interest to landlords with stock requiring a solution to damp and condensation issues.
Our new products will be competitively priced yet deliver excellent margins. They will complement the product range of dehumidifiers and building dryers, for which Ebac has created an effective UK market.
Ebac is now more than 50 years old, it has been flexible, innovative and determined to create products that can be made in North East England, providing employment and economic activity in the important manufacturing sector. I am confident that the difficulties of recent years can now be put behind us as we manufacture and sell some brilliant products that will secure our future in the years to come.
Ebac Holdings Limited
Strategic Report for the Year Ended 31 December 2021 (continued)
The group's key financial and other performance indicators during the year were as follows:
Unit |
2021 |
2020 |
|
Increase/(decrease) in turnover |
% |
19.59 |
(10.67) |
Gross profit margin |
% |
28.07 |
28.23 |
Turnover Growth
The group monitors the growth in sales across all markets.
Gross Profit Margin
The group seeks to maintain an average gross profit margin of 38% across product lines.
Principal risks and uncertainties
Ebac operates in established markets that are unlikely to change significantly.
To maintain the turnover within these markets, regular review of product ranges against the competition will be essential to maintain market share.
Some growth can be achieved in the core markets, but for significant growth the company seeks to move into new geographical markets with its existing ranges and continue to develop new markets with its new products, namely heat pumps and ventilation.
Approved and authorised for issue by the
......................................... |
Ebac Holdings Limited
Directors' Report for the Year Ended 31 December 2021
The directors present their report and the for the year ended 31 December 2021.
Directors
The directors who held office during the year were as follows:
Financial instruments
Objectives and policies
The group finances its activities with a combination of bank loans, cash and short term deposits. Overdrafts are used to satisfy short term cash flow requirements. Other financial assets and liabilities, such as trade debtors and trade creditors, arise directly from the group's operating activities.
Price, credit, liquidity, interest rate and foreign currency risk
Price risk
Price risk is the risk that changes in raw material prices have the potential to impact on the profitability of the group. The group does not consider that it is materially exposed to price risk.
Credit risk
Credit risk is the risk that one party of a financial instrument will cause a financial loss for the other party by failing to discharge its obligation. Group policies are aimed at minimising such losses and require customers to satisfy credit worthiness procedures prior to acceptance of contracts. The group does not consider that it is materially exposed to credit risk.
Liquidity risk
Cash flow and liquidity risk is the risk that the group's available cash will not be sufficient to meet its financial obligations. The group actively manages its cash flow position including collection of debts and timely payment of creditors. This, coupled with the strong cash position of the group is deemed sufficient to minimise the group's exposure to cash flow and liquidity risk.
Interest rate risk
Interest rate risk is managed through the group investing in a floating rate interest yielding bank deposit and during the year had access to a floating rate interest bearing overdraft facility. Term loans are entered into at floating interest rates. The group does not undertake any hedging activity.
Foreign Exchange risk
Foreign currency risk arises due to a significant proportion of revenues and costs being denoted in euros and dollars. The group holds a sterling bank account, a euro bank account and a dollar bank account and where possible income and expenses are matched depending on the currency. The group also enters into arrangements to buy and sell foreign currencies for fixed rate returns at fixed future dates.
Ebac Holdings Limited
Directors' Report for the Year Ended 31 December 2021 (continued)
Employment of disabled persons
The group gives full consideration to applications for employment from disabled persons where the requirements of the job can be fulfilled by a handicapped or disabled person. Where existing employees become disabled, it is the group's policy wherever practicable to provide continuing employment under normal terms and conditions and to provide training and career development and promotion to disabled employees wherever appropriate.
Employee involvement
During the year, the policy of providing employees with information, including information relating to the economic and financial factors affecting the performance of the group, has continued through the newsletter in which employees are encouraged to present their suggestions and views on the group's performance. Regular meetings are held between local management and employees to allow free flow of information and ideas.
Future developments
See disclosures within the Strategic Report regarding future developments of the group.
Research and development
The group continues to be committed to the research and development of new products. All such expenditure is written off against profit in the year in which it is incurred.
Going concern
The financial statements have been prepared on a going concern basis. As at 31 December 2021 the group reported net current assets of £7,643,319 and net assets of £2,859,962. The group meets its day to day working capital requirements through a combination of cash generated from operations, funding from connected parties and external bank and finance provider funding. Subsequent to the year end the group experienced pressure on cash flows which resulted in the group breaching covenants attached to some of its debt facilities. As a result the group has actively sought to refinance and, via a combination of the provision of short term working capital facilities from external parties, loans from directors and the successful acquirement of new invoice discounting facilities of £2.5M and bank debt of £1.5M the group has refinanced on a long term basis. In addition to the refinancing the group has addressed its cost base via a combination of a reduction in head count and also undertaking a significant efficiency drive which has resulted in a significant improvement in trading performance which the directors are forecasting will continue going forward. The order book for the group’s core dehumidifier products has continued to strengthen from a strong base and orders for water coolers remain at good levels. In addition to this the group has recently launched a new heat pump product line which the directors believe represents a significant opportunity for the group going forward and forecasts for this product line look promising. The group is currently in discussion with a number of parties regarding potential additional finance to aid the development and production of the heat pump line and believe that this opportunity will generate significant funds for the group in future years.
As noted above the group has refinanced a large element of its external financing. Post year end the group has also received loans from connected parties currently totalling c£1m which are owed to the individuals personally. The group has received assurances that these individuals remain supportive of the group and the forecasts assume that this will continue to be the case.
Ebac Holdings Limited
Directors' Report for the Year Ended 31 December 2021 (continued)
The directors have prepared forecasts for the next 12 months and beyond covering a range of scenarios. The group’s traditional product lines, including dehumidifiers and water coolers, are expected to continue to perform strongly and the directors have good visibility of future customer orders for these products. The forecasts include a significant growth in sales, profits and cash flows generated from the heat pump product line and whilst the directors are confident that the group’s heat pump product line will grow significantly, the forward visibility of significant order volume is currently very limited.
Accordingly, the directors have prepared alternative forecasts to show a scenario where there are no heat pump sales for the next 12 months – the directors consider this to be very much a worst case scenario and highly unlikely. However, under this worst case scenario forecast, the group is forecasting to be able to continue to operate under the facilities currently available to it. Although the forecasts were prepared taking into account the matters above and they support the ability of the group to remain a going concern and to be able to trade and meet its debts as they fall due the underlying trading assumptions used in forecasting are best estimates and could be subject to potential variation. However, the directors are confident that these uncertainties do not represent a material uncertainty regarding the group’s ability to continue as a going concern. Based on the factors set out above, the directors believe that it remains appropriate to prepare the financial statements on a going concern basis.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.
Reappointment of auditor
Azets Audit Services Limited were appointed auditor to the company following their acquisition of the trade of Tait Walker LLP, trading as MHA Tait Walker, on 1 May 2022.
The auditor Azets Audit Services will be deemed to be reappointed under section 487(2) of the Companies Act 2006.
Approved and authorised for issue by the
......................................... |
Ebac Holdings Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities for preparing the Annual 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 group and the company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
• |
select suitable accounting policies and 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; and |
• |
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent 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 group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Ebac Holdings Limited
Independent Auditor's Report to the Members of Ebac Holdings Limited
Opinion
We have audited the financial statements of Ebac Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021, which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Statement of Financial Position, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated 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 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 group's and of the parent company's affairs as at 31 December 2021 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 auditor responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 director's 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 group and parent 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 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 contained within the annual report. 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.
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 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.
Ebac Holdings Limited
Independent Auditor's Report to the Members of Ebac Holdings Limited (continued)
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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and 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 our knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
• | the parent company 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 7), 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 group’s and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• |
enquiries of management about any actual or potential litigation or claims or any known or suspected instances of non-compliance with laws and regulations and fraud; |
Ebac Holdings Limited
Independent Auditor's Report to the Members of Ebac Holdings Limited (continued)
• |
challenging assumptions and judgements made by management in their significant accounting estimates; and |
• |
auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness. |
Because of the field in which the client operates, we identified the following areas as those most likely to have a material impact on the financial statements: Health and Safety; employment law (including the Working Time Directive) and compliance with the UK Companies Act and tax legislation.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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 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.
......................................
For and on behalf of
Statutory Auditor
Chartered Accountants
Bulman House
Regent Centre
Newcastle upon Tyne
NE3 3LS
Azets Audit Services is a trading name of Azets Audit Services Limited.
Ebac Holdings Limited
Consolidated Income Statement for the Year Ended 31 December 2021
Note |
2021 |
2020 |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Distribution costs |
( |
( |
|
Administrative expenses |
( |
( |
|
Other operating income |
|
|
|
Operating loss |
( |
( |
|
Interest payable and similar expenses |
( |
( |
|
Loss before tax |
( |
( |
|
Taxation |
|
|
|
Loss for the financial year |
( |
( |
The above results were derived from continuing operations.
Ebac Holdings Limited
Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2021
2021 |
2020 |
|
Loss for the year |
( |
( |
Foreign currency translation (losses)/gains |
|
( |
Total comprehensive income for the year |
( |
( |
Ebac Holdings Limited
(Registration number: 07595879)
Consolidated Statement of Financial Position as at 31 December 2021
Note |
2021 |
2020 |
|
Fixed assets |
|||
Tangible assets |
|
|
|
Other financial assets |
139,588 |
- |
|
|
|
||
Current assets |
|||
Stocks |
|
|
|
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
Creditors: Amounts falling due after more than one year |
( |
( |
|
Provisions for liabilities |
( |
( |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Profit and loss account |
|
|
|
Total equity |
|
|
Approved and authorised for issue by the
......................................... |
Ebac Holdings Limited
(Registration number: 07595879)
Statement of Financial Position as at 31 December 2021
Note |
2021 |
2020 |
|
Fixed assets |
|||
Investments |
|
|
|
Current assets |
|||
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
Creditors: Amounts falling due after more than one year |
( |
( |
|
Provisions for liabilities |
( |
( |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Profit and loss account |
|
|
|
Total equity |
|
|
The company made a loss after tax for the financial year of £61,621 (2020 - loss of £96,530).
Approved and authorised for issue by the
......................................... |
Ebac Holdings Limited
Consolidated Statement of Changes in Equity for the Year Ended 31 December 2021
Share capital |
Profit and loss account |
Total equity |
|
At 1 January 2020 |
|
|
|
Loss for the year |
- |
( |
( |
Other comprehensive income |
- |
( |
( |
Total comprehensive income |
- |
( |
( |
At 31 December 2020 |
|
|
|
Share capital |
Profit and loss account |
Total equity |
|
At 1 January 2021 |
|
|
|
Loss for the year |
- |
( |
( |
Other comprehensive income |
- |
|
|
Total comprehensive income |
- |
( |
( |
At 31 December 2021 |
|
|
|
Ebac Holdings Limited
Statement of Changes in Equity for the Year Ended 31 December 2021
Share capital |
Profit and loss account |
Total |
|
At 1 January 2020 |
|
|
|
Loss for the year |
- |
( |
( |
Total comprehensive income |
- |
( |
( |
At 31 December 2020 |
|
|
|
Share capital |
Profit and loss account |
Total |
|
At 1 January 2021 |
|
|
|
Loss for the year |
- |
( |
( |
Total comprehensive income |
- |
( |
( |
At 31 December 2021 |
|
|
|
Ebac Holdings Limited
Consolidated Statement of Cash Flows for the Year Ended 31 December 2021
2021 |
2020 |
|
Cash flows from operating activities |
||
Loss for the year |
( |
( |
Adjustments to cash flows from non-cash items |
||
Depreciation and amortisation |
|
|
Profit on disposal of tangible assets |
- |
( |
Income recognised on CBILS loan |
- |
( |
Finance costs |
|
|
Income tax expense |
( |
( |
( |
( |
|
Working capital adjustments |
||
(Increase)/decrease in stocks |
( |
|
(Increase)/decrease in debtors |
( |
|
Increase/(decrease) in creditors |
|
( |
Increase in provisions |
|
|
Cash generated from operations |
( |
( |
Income taxes received |
|
|
Net cash flow from operating activities |
( |
( |
Cash flows from investing activities |
||
Acquisitions of tangible assets |
( |
( |
Proceeds from sale of tangible assets |
- |
|
Acquisition of other financial assets |
( |
- |
Net cash flows from investing activities |
( |
( |
Cash flows from financing activities |
||
Interest paid |
( |
( |
Proceeds from bank borrowing draw downs |
|
|
Repayment of bank borrowing |
( |
( |
Proceeds from loan agreements |
|
- |
Repayment of loan agreements |
( |
( |
Payments to finance lease creditors |
( |
( |
Interest on preference shares |
( |
( |
Net cash flows from financing activities |
|
|
Net decrease in cash and cash equivalents |
( |
( |
Cash and cash equivalents at 1 January |
|
|
Cash and cash equivalents at 31 December |
308,234 |
997,478 |
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
General information |
The company is a private company limited by share capital, incorporated in England.
The address of its registered office is
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.
Basis of preparation
These financial statements have been prepared using the historical cost convention.
These financial statements are prepared in sterling which is the functional currency of the entity.
Summary of disclosure exemptions
The company satisfies the criteria of being a qualifying entity as defined in FRS 102. As such, advantage has been taken of the following disclosure exemptions available under paragraph 1.12 of FRS 102:
(a) No cash flow statement has been presented for the company.
(b) Disclosures in respect of financial instruments have not been presented.
(c) No disclosure has been given for the aggregate remuneration of key management personnel.
The company has taken advantage of the exemption available under paragraph 33.1A of FRS 102 and does not disclose related party transactions with members of the same group that are wholly owned.
Basis of consolidation
The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2021.
No Income Statement is presented for the company as permitted by section 408 of the Companies Act 2006. The company made a loss after tax for the financial year of £61,621 (2020 - loss of £96,530).
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the Income Statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.
The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.
Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Going concern
The financial statements have been prepared on a going concern basis. As at 31 December 2021 the group reported net current assets of £7,643,319 and net assets of £2,859,962. The group meets its day to day working capital requirements through a combination of cash generated from operations, funding from connected parties and external bank and finance provider funding. Subsequent to the year end the group experienced pressure on cash flows which resulted in the group breaching covenants attached to some of its debt facilities. As a result the group has actively sought to refinance and, via a combination of the provision of short term working capital facilities from external parties, loans from directors and the successful acquirement of new invoice discounting facilities of £2.5M and bank debt of £1.5M the group has refinanced on a long term basis. In addition to the refinancing the group has addressed its cost base via a combination of a reduction in head count and also undertaking a significant efficiency drive which has resulted in a significant improvement in trading performance which the directors are forecasting will continue going forward. The order book for the group’s core dehumidifier products has continued to strengthen from a strong base and orders for water coolers remain at good levels. In addition to this the group has recently launched a new heat pump product line which the directors believe represents a significant opportunity for the group going forward and forecasts for this product line look promising. The group is currently in discussion with a number of parties regarding potential additional finance to aid the development and production of the heat pump line and believe that this opportunity will generate significant funds for the group in future years.
As noted above the group has refinanced a large element of its external financing. Post year end the group has also received loans from connected parties currently totalling c£1m which are owed to the individuals personally. The group has received assurances that these individuals remain supportive of the group and the forecasts assume that this will continue to be the case.
The directors have prepared forecasts for the next 12 months and beyond covering a range of scenarios. The group’s traditional product lines, including dehumidifiers and water coolers, are expected to continue to perform strongly and the directors have good visibility of future customer orders for these products. The forecasts include a significant growth in sales, profits and cash flows generated from the heat pump product line and whilst the directors are confident that the group’s heat pump product line will grow significantly, the forward visibility of significant order volume is currently very limited.
Accordingly, the directors have prepared alternative forecasts to show a scenario where there are no heat pump sales for the next 12 months – the directors consider this to be very much a worst case scenario and highly unlikely. However, under this worst case scenario forecast, the group is forecasting to be able to continue to operate under the facilities currently available to it. Although the forecasts were prepared taking into account the matters above and they support the ability of the group to remain a going concern and to be able to trade and meet its debts as they fall due the underlying trading assumptions used in forecasting are best estimates and could be subject to potential variation. However, the directors are confident that these uncertainties do not represent a material uncertainty regarding the group’s ability to continue as a going concern. Based on the factors set out above, the directors believe that it remains appropriate to prepare the financial statements on a going concern basis.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
The judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are as follows: |
Assessing indicators of impairment - In assessing whether there have been indicators of impairment of assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. |
Key sources of estimation uncertainty
Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
Useful economic lives of tangible assets - The annual depreciation charge is sensitive to changes in the estimated useful lives of the assets. The useful economic lives are re-assessed annually. They are amended when necessary to reflect current estimates, future investments and economic utilisation. The carrying amount is £5,285,223 (2020 - £6,463,625).
Stock provision - The group has made an assumption of writing down the value of stock on items in which they expect the cost to exceed the net realisable value before it is fully sold/utilised. Provision for obsolete stock is based on a review of past usage over a two year period on current stock levels. The carrying amount is £1,709,708 (2020 - £1,378,979).
Impairment of debtors - The company makes an estimate of the recoverable value of the trade and other debtors. When assessing impairment of trade and other debtor, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. The carrying amount is £850,313 (2020 - £885,947).
Warranty provision - The group has made an estimate of the cost to repair or replace a number of units that are under warranty period between one and five years. The provision requires the group to estimate the level of returns expected based on past level of faulty products as well as an additional general provision to cover other items. The carrying amount is £345,028 (2020 - £277,097).
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the group’s activities. Turnover is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the company.
The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the group's activities.
Certain products are sold under extended credit terms. At each balance sheet date any trade receivables in respect of such sales are included in the balance sheet at the lower of book value translated at closing rate where the debt is an export; or, book value less provision for doubtful debt or credit note provision.
Research and development expenditure
Research and development expenditure is written off in the year in which it is incurred.
Government grants
Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable.
Government grants are presented separately and disclosed in other operating income. Other operating income includes the UK Government assistance provided through Coronavirus Job Retention Scheme during the COVID-19 Pandemic.
Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset.
Foreign currency transactions and balances
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
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 group operates and generates taxable income.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the consolidated financial statements. Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.
Tangible assets
Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than freehold land and assets under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
|
Freehold property |
50 years straight line |
|
Leasehold property improvements |
Over the lease term |
|
Plant & machinery |
6-7 years straight line |
|
Fixtures & fittings |
5 years straight line |
|
Equipment |
3-7 years straight line |
Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting period date. Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.
For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:
Asset class |
Amortisation method and rate |
Negative goodwill |
7 years straight line |
Development costs |
5 years straight line |
Investments
Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.
Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Trade debtors
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables.
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.
The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are 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.
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the group does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Provisions
Provisions are recognised when the group has an obligation at the reporting date as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
Included within the standard sales value of domestic products supplied by the company is a warranty. Provision is made for the estimated costs expected to arise in respect of these warranty obligations. Included within this provision are estimates of further financial commitments to customers arising under product recall or other product performance commitments.
Revenue from the sale of extended warranties is deferred and released to profit over the period of the warranty. Costs incurred under extended warranty agreements are expensed as they arise.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.
Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance costs in the income statement and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Dividends
Dividend distribution to the group’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Financial instruments
Classification
Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.
Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
Derivative financial instruments
Derivatives
Turnover |
The analysis of the group's turnover for the year from continuing operations is as follows:
2021 |
2020 |
|
Sale of goods |
|
|
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
3 |
Turnover (continued) |
The analysis of the group's Turnover for the year by market is as follows:
2021 |
2020 |
|
UK |
|
|
Europe |
|
|
Rest of world |
|
|
|
|
Other operating income |
The analysis of the group's other operating income for the year is as follows:
2021 |
2020 |
|
Government grants |
|
|
Included within government grant income is £32,625 (2020 - £535,446) of furlough monies received from the government as part of the Coronavirus Job Retention Scheme, which was utilised by Ebac Limited and Ebac Industrial Products Limited. A further £nil (2020 - £78,131) relates to income recognised in respect of the interest free period of a government backed loan received in Ebac Holdings Limited under the Coronavirus Business Interruption Loan Scheme. The remaining £52,983 (2020 - £52,983) is the release of grant funding received by Ebac Limited in previous years.
Operating loss |
Arrived at after charging/(crediting)
2021 |
2020 |
|
Depreciation expense |
|
|
Write-down of stocks to net realisable value |
- |
|
Research and development cost |
- |
|
Foreign exchange losses/(gains) |
|
( |
Operating lease expense - plant and machinery |
|
|
Operating lease expense - other |
442,471 |
369,162 |
Profit on disposal of fixed assets |
- |
( |
The group enters into foreign currency contracts to mitigate the exchange rate risk for foreign currency transactions. The forward currency contracts are measured at fair value using quoted forward exchange rates. Included within other debtors is £49,341 (2020 - £nil) in relation to a financial asset. At 31 December 2021 a financial liability of £nil (2020 - £12,985) has been recognised in other creditors.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Interest payable and similar expenses |
2021 |
2020 |
|
Interest on bank overdrafts and borrowings |
|
|
Interest on preference shares |
|
|
Interest expense on other finance liabilities |
|
|
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2021 |
2020 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
|
|
The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:
2021 |
2020 |
|
Production |
|
|
Administration and support |
|
|
Management |
|
|
|
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
2021 |
2020 |
|
Remuneration |
|
|
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Auditor's remuneration |
2021 |
2020 |
|
Audit of these financial statements |
10,000 |
47,300 |
Audit of the financial statements of subsidiaries of the company pursuant to legislation |
47,300 |
- |
|
|
|
Other fees to auditor |
||
Taxation compliance services |
|
|
Taxation |
Tax charged/(credited) in the income statement
2021 |
2020 |
|
Current taxation |
||
UK corporation tax |
( |
( |
UK corporation tax adjustment to prior periods |
( |
|
(43,622) |
(109,554) |
|
Foreign tax |
( |
( |
Foreign tax adjustment to prior periods |
|
|
20,414 |
(24,842) |
|
Total current income tax |
( |
( |
Deferred taxation |
||
Arising from origination and reversal of timing differences |
|
( |
Arising from changes in tax rates and laws |
( |
|
Arising from previously unrecognised tax loss, tax credit or temporary difference of prior periods |
(297) |
- |
Total deferred taxation |
|
( |
Tax credit in the income statement |
( |
( |
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
10 |
Taxation (continued) |
The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2020 - higher than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
2021 |
2020 |
|
Loss before tax |
( |
( |
Corporation tax at standard rate |
( |
( |
Effect of revenues exempt from taxation |
( |
( |
Effect of expense not deductible in determining taxable profit (tax loss) |
|
|
Effect of foreign tax rates |
|
( |
UK deferred tax (credit)/expense relating to changes in tax rates or laws |
( |
|
Increase from tax losses for which no deferred tax asset was recognised |
|
|
Deferred tax credit from unrecognised temporary difference from a prior period |
( |
- |
(Decrease)/increase in UK and foreign current tax from adjustment for prior periods |
( |
|
Tax decrease from effect of adjustment in research and development tax credit |
( |
( |
Total tax credit |
( |
( |
In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate will increase from 19% to 25%. This new law was substantively enacted on 24 May 2021. The deferred tax balances at 31 December 2021 have been calculated based on these enacted rates.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
10 |
Taxation (continued) |
Deferred tax
Group
Deferred tax assets and liabilities
2021 |
Liability |
Accelerated capital allowances |
|
Other timing differences |
|
Unused tax losses |
( |
- |
2020 |
Liability |
Accelerated capital allowances |
|
Other timing differences |
( |
Unused tax losses |
( |
- |
There are £4,415,985 of unused tax losses (2020 - £1,389,942) for which no deferred tax asset is recognised in the statement of financial position.
Company
Deferred tax assets and liabilities
2021 |
Liability |
Accelerated capital allowances |
|
Unused tax losses |
( |
|
2020 |
Liability |
Accelerated capital allowances |
|
|
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Intangible assets |
Group
Negative Goodwill |
Development costs |
Total |
|
Cost or valuation |
|||
At 1 January 2021 |
( |
|
( |
Disposals |
- |
( |
( |
At 31 December 2021 |
( |
- |
( |
Amortisation |
|||
At 1 January 2021 |
( |
|
( |
Amortisation eliminated on disposals |
- |
( |
( |
At 31 December 2021 |
( |
- |
( |
Carrying amount |
|||
At 31 December 2021 |
- |
- |
- |
At 31 December 2020 |
- |
- |
- |
The company has no intangible assets.
Negative goodwill has arisen on the acquisition of the shares in Ebac Group Limited, as the fair value of the separable net assets exceeded the fair value of the consideration paid.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Tangible assets |
Group
Land and buildings |
Plant and machinery |
Office equipment |
Total |
|
Cost or valuation |
||||
At 1 January 2021 |
|
|
|
|
Additions |
- |
|
|
|
Foreign exchange movements |
- |
|
- |
|
At 31 December 2021 |
|
|
|
|
Depreciation |
||||
At 1 January 2021 |
|
|
|
|
Charge for the year |
|
|
|
|
Foreign exchange movements |
- |
|
- |
|
At 31 December 2021 |
|
|
|
|
Carrying amount |
||||
At 31 December 2021 |
|
|
|
|
At 31 December 2020 |
|
|
|
|
Included within the net book value of land and buildings above is £181,320 (2020 - £190,165) in respect of freehold land and buildings and £55,343 (2020 - £69,919) in respect of long leasehold land and buildings.
Revaluation
The fair value of the company's land and buildings was revalued by an independent valuer.
Had this class of asset been measured on a historical cost basis, the carrying amount would have been £
Assets held under finance leases and hire purchase contracts
The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:
2021 |
2020 |
|
Plant and machinery |
155,894 |
243,362 |
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
12 |
Tangible assets (continued) |
Company
The company has no tangible assets.
Investments |
Company
2021 |
2020 |
|
Investments in subsidiaries |
|
|
Subsidiaries |
£ |
Cost or valuation |
|
At 1 January 2021 |
|
At 31 December 2021 |
|
Provision |
|
At 1 January 2021 |
- |
At 31 December 2021 |
- |
Carrying amount |
|
At 31 December 2021 |
|
At 31 December 2020 |
|
Details of undertakings
Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:
Undertaking |
Registered office |
Holding |
Proportion of voting rights and shares held |
|
2021 |
2020 |
|||
Subsidiary undertakings |
||||
|
Ketton Way, Aycliffe Industrial Park, Newton Aycliffe, County Durham, DL5 6SQ England |
|
|
|
|
Ketton Way, Aycliffe Industrial Park, Newton Aycliffe, County Durham, DL5 6SR England |
|
|
|
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
13 |
Investments (continued) |
Undertaking |
Registered office |
Holding |
Proportion of voting rights and shares held |
|
|
St Helen, Trading Est, Bishop Auckland, County Durham, DL14 9AD England |
|
|
|
|
Newton Aycliffe, County Durham, DL5 6SQ England |
|
|
|
|
700 Thimble Shoals Blvd, Suite 109, Newport News, Virginia, 23606-2575 USA |
|
|
|
|
Newton Aycliffe, County Durham, DL5 6SR England |
|
|
|
|
Newton Aycliffe, County Durham, DL5 6SQ England |
|
|
|
|
Newton Aycliffe, County Durham, DL5 6SQ England |
|
|
|
|
Newton Aycliffe, County Durham, DL5 6SQ England |
|
|
|
|
Newton Aycliffe, County Durham, DL5 6SR England |
|
|
|
|
Valverde del Camino 10, Elche, Alicante, 03206 Spain |
|
|
|
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
13 |
Investments (continued) |
Subsidiary undertakings
The principal activity of Ebac Group Limited is that of a holding company.
The principal activity of Ebac Limited is the design and manufacture of electrical appliances for the domestic dehumidifier, water cooler and domestic laundry market.
The principal activity of Ebac Industrial Products Limited is the design and manufacture of specialised air conditioning and dehumidifying equipment.
The principal activity of Ebac Waterfall Limited was the rental of spa facilities. It ceased trading during the prior year.
Aquavest Limited, Ebac Zephyr Limited, BCM Machines Limited, SEG Fabrication Limited, Ebac Management Services Limited and Fuente Isabel SA are all dormant.
Other financial assets |
Group
Financial assets at fair value through profit and loss |
Total |
|
Non-current financial assets |
||
Cost or valuation |
||
Additions |
139,588 |
139,588 |
At 31 December 2021 |
139,588 |
139,588 |
Impairment |
||
Carrying amount |
||
At 31 December 2021 |
|
139,588 |
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Stocks |
Group |
Company |
|||
2021 |
2020 |
2021 |
2020 |
|
Raw materials and consumables |
|
|
- |
- |
Finished goods and goods for resale |
|
|
- |
- |
9,858,058 |
8,747,876 |
- |
- |
Debtors |
Group |
Company |
||||
Current |
Note |
2021 |
2020 |
2021 |
2020 |
Trade debtors |
|
|
- |
- |
|
Amounts owed by related parties |
- |
- |
|
|
|
Other debtors |
|
|
|
|
|
Prepayments |
|
|
- |
- |
|
Corporation tax asset |
|
|
- |
- |
|
|
|
|
|
The group enters into foreign currency contracts to mitigate the exchange rate risk for foreign currency transactions. The forward currency contracts are measured at fair value using quoted forward exchange rates. Included within other debtors is £49,341 (2020 - £nil) in relation to a financial asset. At 31 December 2021 a financial liability of £nil (2020 - £12,985) has been recognised in other creditors.
Details of non-current trade and other debtors
Group
£82,510 (2020 - £269,503) of trade debtors is classified as non current. The non-current trade debtors relate to customers on extended credit terms.
Company
£2,780,993 (2020 - £2,287,101) of amounts owed by related parties is classified as non current.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Cash and cash equivalents |
Group |
||
2021 |
2020 |
|
Cash at bank and in hand |
|
|
Bank overdrafts |
( |
( |
Cash and cash equivalents in statement of cash flows |
308,234 |
997,478 |
Creditors |
Group |
Company |
||||
Note |
2021 |
2020 |
2021 |
2020 |
|
Due within one year |
|||||
Loans and borrowings |
|
|
|
|
|
Trade creditors |
|
|
- |
- |
|
Social security and other taxes |
|
|
|
|
|
Other creditors |
|
|
|
|
|
Accruals and deferred income |
|
|
- |
- |
|
Directors loan accounts |
100,000 |
100,000 |
100,000 |
100,000 |
|
Government grants |
149,355 |
486,654 |
- |
- |
|
|
|
|
|
||
Due after one year |
|||||
Loans and borrowings |
|
|
|
|
|
Accruals and deferred income |
|
|
- |
- |
|
Other non-current financial liabilities |
|
|
|
|
|
9,863,140 |
10,812,142 |
6,246,720 |
6,717,866 |
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
18 |
Creditors (continued) |
Bank loans and overdrafts are secured by the company via an unlimited intercompany guarantee between the company and other members of the Ebac Holdings Limited group.
During 2018 the group entered into a loan agreement to borrow £970,000 from JM Elliott MBE and MR Elliott. The group pays interest at a rate of 2.25% above base rate per annum. The loan is repayable in five equal annual instalments and the balance outstanding at the year end is £590,026 (2020 - £592,352).
During 2018 the group also borrowed funds from Cabe Property Limited. The balance outstanding and included in other borrowings at the year end was £2,558,296 (2020 - £2,516,389). The group pays interest at a rate of 2% above base rate per annum. The balance is due for repayment before 31 December 2025.
During 2019 the group entered into a loan agreement to borrow £1,000,000 from The Trustees of Ebac Limited Retirement Benefits Scheme. The balance outstanding and included in other borrowings at the year end was £631,538 (2020 - £834,135). The group pays interest at a rate of 3.0% per annum on the principal amount. The balance is due for repayment in five equal annual instalments.
During the year, the group entered into a loan agreement to borrow £2m under the government's Coronavirus Business Interruption Loan Scheme (CBILS), which is guaranteed by the Secretary of State. This loan incurs interest at a rate of 3.96% above LIBOR, although none was payable in the first twelve months. The final instalment is due in May 2025. The carrying amount at year end is £1,708,333 (2020 - £1,971,040).
Included within other creditors is an amount of £1,935,426 (2020 - £149,991) in relation to invoice financing.
Included within other creditors is £nil (2020 - £12,985) in relation to a financial liability. The group enters into foreign currency contracts to mitigate the exchange rate risk for foreign currency transactions. The forward currency contracts are measured at fair value using quoted forward exchange rates.
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Loans and borrowings |
Group |
Company |
|||
2021 |
2020 |
2021 |
2020 |
|
Current loans and borrowings |
||||
Bank borrowings |
|
|
|
|
Bank overdrafts |
|
|
- |
- |
Hire purchase and finance lease liabilities |
60,369 |
80,369 |
- |
- |
Other borrowings |
|
|
- |
- |
|
|
|
|
Group |
Company |
|||
2021 |
2020 |
2021 |
2020 |
|
Non-current loans and borrowings |
||||
Bank borrowings |
|
|
|
|
Hire purchase and finance lease liabilities |
40,293 |
112,598 |
- |
- |
Other borrowings |
|
|
- |
- |
|
|
|
|
Deferred tax and other provisions |
Group
Warranties |
Total |
|
At 1 January 2021 |
|
|
Additional provisions |
|
|
Provisions used |
( |
( |
At 31 December 2021 |
|
|
|
The warranty provision represents an estimate of the cost of settling warranty claims during the warranty period.
Pension and other schemes |
Defined contribution pension scheme
The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £
Contributions totalling £
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Share capital |
Allotted, called up and fully paid shares
2021 |
2020 |
|||
No. |
£ |
No. |
£ |
|
|
|
1 |
|
1 |
|
|
2,556,415 |
|
2,556,415 |
|
|
500,000 |
|
500,000 |
|
|
1,982,078 |
|
1,982,078 |
|
|
|
|
Redeemable preference shares
The |
The |
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
22 |
Share capital (continued) |
The |
Rights, preferences and restrictions
The preference shares have the following rights, preferences and restrictions: |
The 'A' preference shares have the following rights, preferences and restrictions: |
The 'B' preference shares have the following rights, preferences and restrictions: |
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Reserves |
Company
Profit and loss account
This reserve records retained earnings and accumulated losses.
Obligations under leases and hire purchase contracts |
Group
Finance leases
The total of future minimum lease payments is as follows:
2021 |
2020 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
|
|
|
|
Liabilities relating to finance leases and hire purchase contracts are secured against the assets to which they relate.
Operating leases
The total of future minimum lease payments is as follows:
2021 |
2020 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Contingent liabilities |
Group
A cross guarantee exists, in respect of bank debt, between the company and members of the Ebac Holdings Limited group.
Company
The company has entered into a cross-guarantee with Ebac Limited, Ebac Group Limited, Ebac Waterfall Limited and Ebac Industrial Products Limited with respect to their banking facilities. At the year end there were contingent liabilities of £1,858,747 (2020 - £nil) in respect of these bank guarantees.
Analysis of changes in net debt |
At 1 January 2021 |
Cash flows |
Other non-cash changes |
At 31 December 2021 |
|
Cash and cash equivalents |
||||
Cash |
1,992,602 |
189,090 |
- |
2,181,692 |
Overdrafts |
(995,124) |
(878,334) |
- |
(1,873,458) |
997,478 |
(689,244) |
- |
308,234 |
|
Borrowings |
||||
Long term borrowings |
(5,209,914) |
- |
828,182 |
(4,381,732) |
Short term borrowings |
(854,022) |
(437,484) |
(828,182) |
(2,119,688) |
Lease liabilities |
(192,967) |
92,305 |
- |
(100,662) |
(6,256,903) |
(345,179) |
- |
(6,602,082) |
|
|
||||
( |
( |
- |
( |
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Related party transactions |
Group
Ebac Limited is related to the following individuals who own two properties from which the company operates. J C Laverick (Director of Ebac Group Limited - Parent Company), J M Elliott MBE (Director), Mrs M R Elliott (Director of Ebac Group Limited - Parent Company), Ms P Petty (close family member to key management personnel) and Ms A Hird (Director and Company Secretary). Ebac Limited is related to Cabe Property Limited due to J M Elliott MBE being a common director.
During the year rent on these properties of £470,856 (2020 - £471,056) was incurred by the group. As at the year end no balances were owed to or from the individuals other than as noted below.
At the year end the balance outstanding due to Cabe Property Limited and included within trade creditors amounted to £7,713 (2020 - £2,053). In 2018, the group also borrowed funds from Cabe Property Limited. The balance outstanding included within other borrowings at the year end amounted to £2,558,296 (2020 - £2,516,389).
Key management compensation
2021 |
2020 |
|
Salaries and other short term employee benefits |
|
|
Post-employment benefits |
|
|
|
|
Transactions with directors |
2021 |
Repayments to director |
Interest charged on loan |
At 31 December 2021 |
JM and Mrs MR Elliott Loan |
|
(9,940) |
( |
12,276 |
(9,940) |
(690,026) |
|
2020 |
Repayments by director |
Interest charged on loan |
At 31 December 2020 |
JM and Mrs MR Elliott Loan |
|
(20,009) |
( |
205,004 |
(20,009) |
(692,362) |
|
Ebac Holdings Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Financial instruments |
Derivatives
The group enters into foreign currency contracts to mitigate the exchange rate risk for foreign currency transactions. At 31 December 2021 the group had one open contract to sell €6,700,000 at fixed dates for fixed sterling amounts. The forward currency contracts are measured at fair value using quoted forward exchange rates.
Parent and ultimate parent undertaking |
The Ebac Foundation owns the entire ordinary share capital of the company. However, in the opinion of the directors, there is no ultimate controlling party.