Ebac Holdings Limited 07595879 false 2021-01-01 2021-12-31 2021-12-31 2021-12-31 The principal activity of the company is that of a group holding company. 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Registration number: 07595879

Ebac Holdings Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2021

 

Ebac Holdings Limited

Contents

Company Information

1

Strategic Report

2 to 3

Directors' Report

4 to 6

Statement of Directors' Responsibilities

7

Independent Auditor's Report

8 to 10

Consolidated Income Statement

11

Consolidated Statement of Comprehensive Income

12

Consolidated Statement of Financial Position

13

Statement of Financial Position

14

Consolidated Statement of Changes in Equity

15

Statement of Changes in Equity

16

Consolidated Statement of Cash Flows

17

Notes to the Financial Statements

18 to 46

 

Ebac Holdings Limited

Company Information

Directors

J M Elliott MBE

J C Laverick

Company secretary

Ms A Hird

Registered office

Ketton Way
Aycliffe Industrial Park
Newton Aycliffe
County Durham
DL5 6SR

Auditor

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

 

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 Board on 12 October 2023 and signed on its behalf by:
 

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

 

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:

J M Elliott MBE

J C Laverick

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 Board on 12 October 2023 and signed on its behalf by:
 

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

 

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.

......................................
Christopher Potter BA (Hons) ACA (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
Statutory Auditor
Chartered Accountants
Bulman House
Regent Centre
Gosforth
Newcastle upon Tyne
NE3 3LS

12 October 2023

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

3

23,239,548

19,432,758

Cost of sales

 

(16,715,703)

(13,946,263)

Gross profit

 

6,523,845

5,486,495

Distribution costs

 

(48,537)

(242,949)

Administrative expenses

 

(8,990,850)

(7,733,814)

Other operating income

4

85,608

666,560

Operating loss

5

(2,429,934)

(1,823,708)

Interest payable and similar expenses

6

(307,875)

(295,195)

Loss before tax

 

(2,737,809)

(2,118,903)

Taxation

10

23,063

247,077

Loss for the financial year

 

(2,714,746)

(1,871,826)

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

(2,714,746)

(1,871,826)

Foreign currency translation (losses)/gains

42,240

(80,699)

Total comprehensive income for the year

(2,672,506)

(1,952,525)

 

Ebac Holdings Limited

(Registration number: 07595879)
Consolidated Statement of Financial Position as at 31 December 2021

Note

2021
£

2020
£

Fixed assets

 

Tangible assets

12

5,285,223

6,463,625

Other financial assets

14

139,588

-

 

5,424,811

6,463,625

Current assets

 

Stocks

15

9,858,058

8,747,876

Debtors

16

6,663,497

6,448,385

Cash at bank and in hand

 

2,181,692

1,992,602

 

18,703,247

17,188,863

Creditors: Amounts falling due within one year

18

(11,059,928)

(7,030,781)

Net current assets

 

7,643,319

10,158,082

Total assets less current liabilities

 

13,068,130

16,621,707

Creditors: Amounts falling due after more than one year

18

(9,863,140)

(10,812,142)

Provisions for liabilities

20

(345,028)

(277,097)

Net assets

 

2,859,962

5,532,468

Capital and reserves

 

Called up share capital

22

1

1

Profit and loss account

23

2,859,961

5,532,467

Total equity

 

2,859,962

5,532,468

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

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

 

Ebac Holdings Limited

(Registration number: 07595879)
Statement of Financial Position as at 31 December 2021

Note

2021
£

2020
£

Fixed assets

 

Investments

13

6,176,601

6,176,601

Current assets

 

Debtors

16

2,987,052

2,469,683

Cash at bank and in hand

 

60,023

24,618

 

3,047,075

2,494,301

Creditors: Amounts falling due within one year

18

(2,538,735)

(1,506,035)

Net current assets

 

508,340

988,266

Total assets less current liabilities

 

6,684,941

7,164,867

Creditors: Amounts falling due after more than one year

18

(6,246,720)

(6,717,866)

Provisions for liabilities

20

(235,019)

(182,178)

Net assets

 

203,202

264,823

Capital and reserves

 

Called up share capital

1

1

Profit and loss account

203,201

264,822

Total equity

 

203,202

264,823

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 Board on 12 October 2023 and signed on its behalf by:
 

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

 

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

1

7,484,992

7,484,993

Loss for the year

-

(1,871,826)

(1,871,826)

Other comprehensive income

-

(80,699)

(80,699)

Total comprehensive income

-

(1,952,525)

(1,952,525)

At 31 December 2020

1

5,532,467

5,532,468

Share capital
£

Profit and loss account
£

Total equity
£

At 1 January 2021

1

5,532,467

5,532,468

Loss for the year

-

(2,714,746)

(2,714,746)

Other comprehensive income

-

42,240

42,240

Total comprehensive income

-

(2,672,506)

(2,672,506)

At 31 December 2021

1

2,859,961

2,859,962

 

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

1

361,352

361,353

Loss for the year

-

(96,530)

(96,530)

Total comprehensive income

-

(96,530)

(96,530)

At 31 December 2020

1

264,822

264,823

Share capital
£

Profit and loss account
£

Total
£

At 1 January 2021

1

264,822

264,823

Loss for the year

-

(61,621)

(61,621)

Total comprehensive income

-

(61,621)

(61,621)

At 31 December 2021

1

203,201

203,202

 

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

(2,714,746)

(1,871,826)

Adjustments to cash flows from non-cash items

Depreciation and amortisation

1,346,775

1,337,174

Profit on disposal of tangible assets

-

(1,400)

Income recognised on CBILS loan

-

(78,131)

Finance costs

307,875

295,195

Income tax expense

(23,063)

(247,077)

(1,083,159)

(566,065)

Working capital adjustments

(Increase)/decrease in stocks

(1,110,182)

143,790

(Increase)/decrease in debtors

(234,069)

1,364,637

Increase/(decrease) in creditors

1,878,817

(1,032,092)

Increase in provisions

67,931

9,197

Cash generated from operations

(480,662)

(80,533)

Income taxes received

61,652

27,906

Net cash flow from operating activities

(419,010)

(52,627)

Cash flows from investing activities

Acquisitions of tangible assets

(168,311)

(311,072)

Proceeds from sale of tangible assets

-

1,400

Acquisition of other financial assets

(139,588)

-

Net cash flows from investing activities

(307,899)

(309,672)

Cash flows from financing activities

Interest paid

(144,149)

(220,793)

Proceeds from bank borrowing draw downs

1,000,000

2,000,000

Repayment of bank borrowing

(463,090)

(1,300,000)

Proceeds from loan agreements

50,000

-

Repayment of loan agreements

(290,631)

(392,449)

Payments to finance lease creditors

(92,305)

(39,486)

Interest on preference shares

(22,160)

(25,231)

Net cash flows from financing activities

37,665

22,041

Net decrease in cash and cash equivalents

(689,244)

(340,258)

Cash and cash equivalents at 1 January

997,478

1,337,736

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

1

General information

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

The address of its registered office is Ketton Way, Aycliffe Industrial Park, Newton Aycliffe, County Durham, DL5 6SR.

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 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

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit.

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
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities.

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
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately within the profit and loss account.
 

3

Turnover

The analysis of the group's turnover for the year from continuing operations is as follows:

2021
£

2020
£

Sale of goods

23,239,548

19,432,758

 

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

9,971,135

7,766,303

Europe

9,192,647

8,217,628

Rest of world

4,075,766

3,448,827

23,239,548

19,432,758

4

Other operating income

The analysis of the group's other operating income for the year is as follows:

2021
£

2020
£

Government grants

85,608

666,560

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.

5

Operating loss

Arrived at after charging/(crediting)

2021
£

2020
£

Depreciation expense

1,346,731

1,337,174

Write-down of stocks to net realisable value

-

115,877

Research and development cost

-

589

Foreign exchange losses/(gains)

42,798

(7,639)

Operating lease expense - plant and machinery

17,244

46,720

Operating lease expense - other

442,471

369,162

Profit on disposal of fixed assets

-

(1,400)

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)

6

Interest payable and similar expenses

2021
£

2020
£

Interest on bank overdrafts and borrowings

256,854

220,793

Interest on preference shares

22,160

25,231

Interest expense on other finance liabilities

28,861

49,171

307,875

295,195

7

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2021
£

2020
£

Wages and salaries

6,436,555

5,813,262

Social security costs

533,463

501,129

Pension costs, defined contribution scheme

196,972

191,755

7,166,990

6,506,146

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

2021
No.

2020
No.

Production

185

192

Administration and support

68

64

Management

13

13

266

269

8

Directors' remuneration

The directors' remuneration for the year was as follows:

2021
£

2020
£

Remuneration

54,181

53,498

 

Ebac Holdings Limited

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

9

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

-

57,300

47,300

Other fees to auditor

Taxation compliance services

7,200

7,200

10

Taxation

Tax charged/(credited) in the income statement

2021
£

2020
£

Current taxation

UK corporation tax

(43,184)

(110,282)

UK corporation tax adjustment to prior periods

(438)

728

(43,622)

(109,554)

Foreign tax

(74,454)

(63,508)

Foreign tax adjustment to prior periods

94,868

38,666

20,414

(24,842)

Total current income tax

(23,208)

(134,396)

Deferred taxation

Arising from origination and reversal of timing differences

2,019

(125,357)

Arising from changes in tax rates and laws

(1,577)

12,676

Arising from previously unrecognised tax loss, tax credit or temporary difference of prior periods

(297)

-

Total deferred taxation

145

(112,681)

Tax credit in the income statement

(23,063)

(247,077)

 

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 19% (2020 - 19%).

The differences are reconciled below:

2021
£

2020
£

Loss before tax

(2,737,809)

(2,118,903)

Corporation tax at standard rate

(520,184)

(402,592)

Effect of revenues exempt from taxation

(132,171)

(114,742)

Effect of expense not deductible in determining taxable profit (tax loss)

67,240

104,268

Effect of foreign tax rates

17,508

(24,641)

UK deferred tax (credit)/expense relating to changes in tax rates or laws

(1,577)

12,676

Increase from tax losses for which no deferred tax asset was recognised

599,655

264,090

Deferred tax credit from unrecognised temporary difference from a prior period

(297)

-

(Decrease)/increase in UK and foreign current tax from adjustment for prior periods

(438)

728

Tax decrease from effect of adjustment in research and development tax credit

(52,799)

(86,864)

Total tax credit

(23,063)

(247,077)

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

814,849

Other timing differences

12,576

Unused tax losses

(827,425)

-

2020

Liability
£

Accelerated capital allowances

745,345

Other timing differences

(3,076)

Unused tax losses

(742,269)

-

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

239,709

Unused tax losses

(4,690)

235,019

2020

Liability
£

Accelerated capital allowances

182,178

182,178

 

Ebac Holdings Limited

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

11

Intangible assets

Group

Negative Goodwill
 £

Development costs
 £

Total
£

Cost or valuation

At 1 January 2021

(1,753,238)

25,001

(1,728,237)

Disposals

-

(25,001)

(25,001)

At 31 December 2021

(1,753,238)

-

(1,753,238)

Amortisation

At 1 January 2021

(1,753,238)

25,001

(1,728,237)

Amortisation eliminated on disposals

-

(25,001)

(25,001)

At 31 December 2021

(1,753,238)

-

(1,753,238)

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)

12

Tangible assets

Group

Land and buildings
£

Plant and machinery
£

Office equipment
£

Total
£

Cost or valuation

At 1 January 2021

676,599

16,099,754

195,220

16,971,573

Additions

-

152,417

15,894

168,311

Foreign exchange movements

-

387

-

387

At 31 December 2021

676,599

16,252,558

211,114

17,140,271

Depreciation

At 1 January 2021

439,936

9,931,129

136,924

10,507,989

Charge for the year

20,157

1,314,727

11,891

1,346,775

Foreign exchange movements

-

284

-

284

At 31 December 2021

460,093

11,246,140

148,815

11,855,048

Carrying amount

At 31 December 2021

216,506

5,006,418

62,299

5,285,223

At 31 December 2020

236,663

6,168,666

58,296

6,463,625

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 £55,097 (2020 - £57,922).
 

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.

13

Investments

Company

2021
£

2020
£

Investments in subsidiaries

6,176,601

6,176,601

Subsidiaries

£

Cost or valuation

At 1 January 2021

6,176,601

At 31 December 2021

6,176,601

Provision

At 1 January 2021

-

At 31 December 2021

-

Carrying amount

At 31 December 2021

6,176,601

At 31 December 2020

6,176,601

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

Ebac Group Limited

Ketton Way, Aycliffe Industrial Park, Newton Aycliffe, County Durham, DL5 6SQ

England

Ordinary

100%

100%

Ebac Limited

Ketton Way, Aycliffe Industrial Park, Newton Aycliffe, County Durham, DL5 6SR

England

Ordinary

100%

100%

 

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

Ebac Industrial Products Limited

St Helen, Trading Est, Bishop Auckland, County Durham, DL14 9AD

England

Ordinary

100%

100%

Ebac Waterfall Limited

Newton Aycliffe, County Durham, DL5 6SQ

England

Ordinary

100%

100%

Ebac Industrial Products Inc

700 Thimble Shoals Blvd, Suite 109, Newport News, Virginia, 23606-2575

USA

Ordinary

100%

100%

Aquavest Limited

Newton Aycliffe, County Durham, DL5 6SR

England

Ordinary

100%

100%

Ebac Zephyr Limited

Newton Aycliffe, County Durham, DL5 6SQ

England

Ordinary

100%

100%

BCM Machines Limited

Newton Aycliffe, County Durham, DL5 6SQ

England

Ordinary

100%

100%

SEG Fabrication Limited

Newton Aycliffe, County Durham, DL5 6SQ

England

Ordinary

100%

100%

Ebac Management Services Limited

Newton Aycliffe, County Durham, DL5 6SR

England

Ordinary

100%

100%

Fuente Isabel SA

Valverde del Camino 10, Elche, Alicante, 03206

Spain

Ordinary

100%

100%

 

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.

14

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

139,588

 

Ebac Holdings Limited

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

15

Stocks

 

Group

Company

2021
£

2020
£

2021
£

2020
£

Raw materials and consumables

6,621,734

5,775,396

-

-

Finished goods and goods for resale

3,236,324

2,972,480

-

-

9,858,058

8,747,876

-

-

16

Debtors

   

Group

Company

Current

Note

2021
£

2020
£

2021
£

2020
£

Trade debtors

 

4,406,972

4,594,516

-

-

Amounts owed by related parties

27

-

-

2,780,993

2,287,101

Other debtors

 

301,439

171,644

206,059

182,582

Prepayments

 

1,664,023

1,352,718

-

-

Corporation tax asset

10

291,063

329,507

-

-

   

6,663,497

6,448,385

2,987,052

2,469,683

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)

17

Cash and cash equivalents

 

Group

2021
£

2020
£

Cash at bank and in hand

2,181,692

1,992,602

Bank overdrafts

(1,873,458)

(995,124)

Cash and cash equivalents in statement of cash flows

308,234

997,478

18

Creditors

   

Group

Company

Note

2021
£

2020
£

2021
£

2020
£

Due within one year

 

Loans and borrowings

19

4,053,515

1,929,515

1,500,000

441,667

Trade creditors

 

2,015,239

1,559,252

-

-

Social security and other taxes

 

148,111

128,059

709

786

Other creditors

 

3,334,246

1,564,758

938,026

963,582

Accruals and deferred income

 

1,259,462

1,262,543

-

-

Directors loan accounts

 

100,000

100,000

100,000

100,000

Government grants

 

149,355

486,654

-

-

 

11,059,928

7,030,781

2,538,735

1,506,035

Due after one year

 

Loans and borrowings

19

4,422,025

5,322,512

1,208,227

1,679,373

Accruals and deferred income

 

402,622

451,137

-

-

Other non-current financial liabilities

 

5,038,493

5,038,493

5,038,493

5,038,493

 

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)

19

Loans and borrowings

 

Group

Company

2021
£

2020
£

2021
£

2020
£

Current loans and borrowings

Bank borrowings

1,513,333

441,667

1,500,000

441,667

Bank overdrafts

1,873,458

995,124

-

-

Hire purchase and finance lease liabilities

60,369

80,369

-

-

Other borrowings

606,355

412,355

-

-

4,053,515

1,929,515

1,500,000

441,667

 

Group

Company

2021
£

2020
£

2021
£

2020
£

Non-current loans and borrowings

Bank borrowings

1,208,227

1,679,373

1,208,227

1,679,373

Hire purchase and finance lease liabilities

40,293

112,598

-

-

Other borrowings

3,173,505

3,530,541

-

-

4,422,025

5,322,512

1,208,227

1,679,373

20

Deferred tax and other provisions

Group

Warranties
£

Total
£

At 1 January 2021

277,097

277,097

Additional provisions

76,172

76,172

Provisions used

(8,241)

(8,241)

At 31 December 2021

345,028

345,028

The warranty provision represents an estimate of the cost of settling warranty claims during the warranty period.

21

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 £196,972 (2020 - £191,755).

Contributions totalling £27,908 (2020 - £4) were payable to the scheme at the end of the year and are included in creditors.

 

Ebac Holdings Limited

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

22

Share capital

Allotted, called up and fully paid shares

 

2021

2020

 

No.

£

No.

£

Ordinary shares of £1 each

1

1

1

1

Preference shares of £1 each

2,556,415

2,556,415

2,556,415

2,556,415

'A' preference shares of £1 each

500,000

500,000

500,000

500,000

'B' preference shares of £1 each

1,982,078

1,982,078

1,982,078

1,982,078

 

5,038,494

5,038,494

5,038,494

5,038,494

Redeemable preference shares

The Preference shares are redeemable at the option of the company provided they are redeemed by 31 December 2025. They are redeemable at £1 per share and carry one vote per share in the following circumstances:
- 30 days or more have elapsed since the due date for payment of the preference dividend without payment having been made in full;
- the preference shares have not been redeemed on the due date for redemption;
- the meeting is considering a voluntary arrangement with creditors or winding up of any member of the company's group; or
- there has been a breach of article 15 (7) of the company's articles of association which the holders of preference shares have not consented to. On a return of capital, in priority to the holders of 'A' preference shares and ordinary shares, the holders of preference shares shall receive pari passu to the holders of 'B' preference shares the amounts credited as paid up thereon together with all accruals and arrears of the preference dividend. The preference shares shall have no further right to participate in the profits or assets of the company.

The 'A' preference shares are redeemable at the option of the company provided they are redeemed by 31 December 2025. They are redeemable at £1 per share and carry one vote per share in the following circumstances:
- 30 days or more have elapsed since the due date for payment of any instalment of the 'A' preference dividend without payment having been made in full;
- the 'A' preference shares have not been redeemed on the due date for redemption;
- the meeting is considering a voluntary arrangement with creditors or winding up of any member of the company's group; or
- there has been a breach of article 15 (9) of the company's articles of association which the holders of 'A' preference shares have not consented to. On a return of capital, in priority to the holders of ordinary shares, but following payment to the holders of preference shares and 'B' preference shares the amounts credited as paid up thereon together with all accruals and arrears of the preference dividend and the 'B' preference dividend, the amounts credited as paid up thereon together with all accruals and arrears of the 'A' preference dividend.

 

Ebac Holdings Limited

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

22

Share capital (continued)

The 'B' preference shares are redeemable at the option of the company provided they are redeemed by 31 December 2025. They are redeemable at £1 per share and carry one vote per share in the following circumstances:
- 30 days or more have elapsed since the due date for payment of the 'B' preference dividend without payment having been made in full;
- the 'B' preference shares have not been redeemed on the due date for redemption;
- the meeting is considering a voluntary arrangement with creditors or winding up of any member of the company's group; or
- there has been a breach of article 15 (7) of the company's articles of association which the holders of 'B' preference shares have not consented to. On a return of capital, in priority to the holders of 'A' preference shares and ordinary shares, the holders of 'B' preference shares shall receive pari passu to the holders of preference shares the amounts credited as paid up thereon together with all accruals and arrears of the 'B' preference dividend and the 'B' preference shares shall have no further right to participate in the profits or assets of the company.

Rights, preferences and restrictions

The preference shares have the following rights, preferences and restrictions:
Rights to dividends: fixed cumulative preferential cash dividends are payable twice yearly at the rate of the base rate of HSBC Bank less 2.5% per annum on the amounts paid on the preference shares, commencing on 31 December 2002.

The 'A' preference shares have the following rights, preferences and restrictions:
Rights to dividends: Fixed cumulative preferential cash dividends are payable twice yearly at the rate of LIBOR on the amounts paid on the preference shares, commencing on 30 June 1999.

The 'B' preference shares have the following rights, preferences and restrictions:
Rights to dividends: Fixed cumulative preferential cash dividends are payable twice yearly at the rate of the base rate of the Bank of England plus 1% per annum on the amounts paid on the preference shares.

 

Ebac Holdings Limited

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

23

Reserves

Company

Profit and loss account

This reserve records retained earnings and accumulated losses.

24

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

73,702

80,369

Later than one year and not later than five years

37,992

112,598

111,694

192,967

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

458,308

436,308

Later than one year and not later than five years

1,014,430

1,390,180

1,472,738

1,826,488

The amount of non-cancellable operating lease payments recognised as an expense during the year was £459,715 (2020 - £415,882).

 

Ebac Holdings Limited

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

25

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.

26

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)

 

(5,259,425)

(1,034,423)

-

(6,293,848)

 

Ebac Holdings Limited

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

27

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

578,334

666,297

Post-employment benefits

44,976

42,935

623,310

709,232

Transactions with directors

2021

Repayments to director
£

Interest charged on loan
£

At 31 December 2021
£

JM and Mrs MR Elliott Loan

12,276

(9,940)

(590,026)

 

12,276

(9,940)

(690,026)

     

 

2020

Repayments by director
£

Interest charged on loan
£

At 31 December 2020
£

JM and Mrs MR Elliott Loan

205,004

(20,009)

(592,362)

 

205,004

(20,009)

(692,362)

     

 

 

Ebac Holdings Limited

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

28

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.

29

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.