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Registration number: 04961265

Ebac Industrial Products Limited

Filleted Annual Report and Financial Statements

for the Year Ended 31 December 2021

 

Ebac Industrial Products Limited

Contents

Company Information

1

Statement of Financial Position

2

Notes to the Financial Statements

3 to 11

 

Ebac Industrial Products Limited

Company Information

Directors

J M Elliott MBE

S R Lilly

Company secretary

Ms A Hird

Registered office

St Helen Trading Estate
Bishop Auckland
County Durham
DL14 9AD

Auditor

Azets Audit Services
Chartered Accountants & Statutory Auditor
Bulman House
Regent Centre
Gosforth
Newcastle upon Tyne
NE3 3LS

 

Ebac Industrial Products Limited

(Registration number: 04961265)
Statement of Financial Position as at 31 December 2021

Note

2021
£

2020
£

Fixed assets

 

Intangible assets

5

372,487

558,732

Tangible assets

6

185,413

270,273

 

557,900

829,005

Current assets

 

Stocks

7

1,503,530

1,431,222

Debtors

8

6,669,021

5,825,838

Cash at bank and in hand

 

1,786,398

1,418,494

 

9,958,949

8,675,554

Creditors: Amounts falling due within one year

9

(6,600,043)

(5,590,348)

Net current assets

 

3,358,906

3,085,206

Total assets less current liabilities

 

3,916,806

3,914,211

Creditors: Amounts falling due after more than one year

9

-

(13,333)

Provisions for liabilities

(49,898)

(55,511)

Net assets

 

3,866,908

3,845,367

Capital and reserves

 

Called up share capital

2

2

Profit and loss account

3,866,906

3,845,365

Total equity

 

3,866,908

3,845,367

These financial statements have been prepared in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006.

These financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime. As permitted by section 444 (5A) of the Companies Act 2006, the directors have not delivered to the registrar a copy of the Income Statement.

Approved and authorised for issue by the Board on 12 October 2023 and signed on its behalf by:
 

.........................................
J M Elliott MBE
Director

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is St Helen Trading Estate, Bishop Auckland, County Durham, DL14 9AD.

2

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 have been prepared in accordance with Financial Reporting Standard 102 Section 1A smaller entities - 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' and the Companies Act 2006 (as applicable to companies subject to the small companies' regime).

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

These financial statements are prepared in sterling which is the functional currency of the entity.

Going concern

The financial statements have been prepared on a going concern basis. As at 31 December 2021 the company reported net current liabilities of £2,770,150 (excluding non-current debtors) including amounts due to group undertakings of £6,254,849 and net assets of £3,866,908. The company meets its day to day working capital requirements through its cash balances, external financing and intercompany funding and the company has received a letter of support indicating that group undertakings will not seek repayment of the amounts due to them until such time as the company has the funds available to make such repayments.

A cross guarantee exists, in respect of bank debt, between the company and members of the Ebac Holdings Limited Group. As a result the directors assess going concern on a combined group basis.

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)

2

Accounting policies (continued)

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.

Revenue recognition

Turnover represents the value of sales made during the year net of discounts, returns and Value Added Tax. Turnover is recognised when the goods are physically dispatched to the customer.

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)

2

Accounting policies (continued)

Government grants

Grants are recognised under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to the profit and loss account at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.

Government grants relating to the costs incurred by the company are recognised in the income statement over the period necessary to match them with costs that they are intended to compensate. Government grants are presented separately and disclosed in Other operating income in the income statement.

Other operating income comprises the UK Government assistance provided through Coronavirus Job Retention Scheme during the Covid-19 pandemic.

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 company operates and generates taxable income.

Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the 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.

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 land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Plant and machinery

4 - 7 years straight line

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)

2

Accounting policies (continued)


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 largely independent of the cash inflows from other assets or groups of assets.

Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the company’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.

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

Goodwill

10 years straight line

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 company 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.

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)

2

Accounting policies (continued)

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 company 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.

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 company 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 company has an obligation at the reporting date as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

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.

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)

2

Accounting policies (continued)

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company 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.

3

Staff numbers

The average number of persons employed by the company (including directors) during the year, was 24 (2020 - 28).

4

Auditor's remuneration

2021
£

2020
£

Audit of the financial statements

5,150

5,150

5

Intangible assets

Goodwill
 £

Cost or valuation

At 1 January 2021

3,663,834

At 31 December 2021

3,663,834

Amortisation

At 1 January 2021

3,105,102

Amortisation charge

186,245

At 31 December 2021

3,291,347

Carrying amount

At 31 December 2021

372,487

At 31 December 2020

558,732

Intangible assets represents the goodwill created upon the purchase of the trade of the commercial division which existed within Ebac Limited on incorporation of the company.

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)

6

Tangible assets

Plant and machinery
£

Cost or valuation

At 1 January 2021

554,716

At 31 December 2021

554,716

Depreciation

At 1 January 2021

284,443

Charge for the year

84,860

At 31 December 2021

369,303

Carrying amount

At 31 December 2021

185,413

At 31 December 2020

270,273

7

Stocks

2021
£

2020
£

Raw materials and consumables

1,145,714

1,044,124

Finished goods and goods for resale

357,816

387,098

1,503,530

1,431,222

8

Debtors

2021
£

2020
£

Trade debtors

299,032

167,846

Amounts owed by group undertakings

6,129,056

5,497,551

Prepayments

121,700

90,982

Other debtors

54,668

9,136

Corporation tax asset

64,565

60,323

 

6,669,021

5,825,838

Less non-current portion

(6,129,056)

(5,497,551)

539,965

328,287

Details of non-current trade and other debtors

£6,129,056 (2020 - £5,497,551) of amounts owed by group undertakings is classified as non current.

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)

9

Creditors

Creditors: amounts falling due within one year

2021
£

2020
£

Due within one year

Loans and borrowings

13,333

20,000

Trade creditors

79,969

56,218

Amounts owed to group undertakings

6,254,849

5,395,060

Taxation and social security

15,986

17,049

Accruals and deferred income

57,807

102,021

Other creditors

178,099

-

6,600,043

5,590,348

Other creditors include amounts owed to RBS Invoice Finance Ltd which are secured by way of a fixed charge and a floating charge over all of the property of the company.

Creditors: amounts falling due after more than one year

2021
£

2020
£

Due after one year

Loans and borrowings

-

13,333


The loans and borrowings comprise hire purchase obligations which are secured on the assets to which they relate.

10

Financial commitments, guarantees and contingencies

Amounts not provided for in the statement of financial position

The company has entered into a cross-guarantee with Ebac Holdings Limited, Ebac Group Limited, Ebac Waterfall Limited and Ebac Limited with respect to their banking facilities. The total amount of guarantees not included in the balance sheet is £3,442,469 (2020 - £848,426).

There is a fixed and floating charge over the undertaking and all property in the form of a debenture dated April 2006.

Amounts disclosed in the statement of financial position

Included in the statement of financial position are unpaid pension contributions of £3,165 (2020 - £Nil).

 

Ebac Industrial Products Limited

Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)

11

Parent and ultimate parent undertaking

The company's immediate parent is Ebac Group Limited, incorporated in England and Wales.

 The ultimate parent is Ebac Holdings Limited, incorporated in England and Wales.

  These financial statements are available upon request from Ketton Way, Aycliffe Business Park, Newton Aycliffe, County Durham, DL5 6SR, which is also the address of the ultimate parent.

12

Audit report

The Independent Auditor's Report was unqualified. The name of the Senior Statutory Auditor who signed the audit report on 12 October 2023 was Christopher Potter BA (Hons) ACA, who signed for and on behalf of Azets Audit Services. Azets Audit Services is a trading name of Azets Audit Services Limited.