Company registration number 04008853 (England and Wales)
ELECTROIMPACT UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
ELECTROIMPACT UK LIMITED
COMPANY INFORMATION
Directors
Mr P Zieve
Mr M Zieve
Secretary
Mr P Zieve
Company number
04008853
Registered office
Electroimpact Technology Park
Manor Lane
Hawarden
Flintshire
Nth Wales
CH5 3ST
Auditor
Mitchell Charlesworth (Audit) Limited
24 Nicholas Street
Chester
CH1 2AU
ELECTROIMPACT UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 24
ELECTROIMPACT UK LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the period ended 31 December 2023.

 

The company is extensively involved in all aspects of factory automation in both civil and defence settings ranging from preliminary research through to highly evolved production capable systems.

 

Our strategy is to increase our focus on emerging areas for automation such as flexible manufacturing, collaborative robotics, and additive technologies, whilst continuing to offer our more mainstream products centred around the assembly of large aircraft components. We also hope to generate new markets in low-cost automation directly targeted at lower tier suppliers.

Review of the business

2023 at Electroimpact has largely focused on the continuing delivery of large projects for Airbus and BAE Systems. These projects will continue into 2024 and beyond as our customers continue to prepare for an expected increase in aircraft production. Electroimpact is happy to continue to be a supplier of equipment to both the Airbus A320 and A220 programs in the civilian sector and the Global Combat Air Program (GCAP) in the defense sector. We have also been successful in developing a new, first of class, collaborative robotic system which has already generated a great deal of interest.

 

The effects of inflation have significantly impacted our margins on programs where firm fixed pricing has been offered over 12 months ago. All pricing going forward will seek to increase margins to allow us to better absorb volatile costs that are largely beyond our control. Whilst our customers are sympathetic, there is a limit as to how much increase in pricing can be deferred up. So far, increased offered costs have been well received suggesting an acceptance from the market that things are more expensive that 2-3 years ago.

 

We have brought additional capacity online with a new High-bay assembly facility nearing completion. This will double the amount of high-performance build space serviced by high capacity cranage and allow us to segregate work more effectively. We continue to hire and train new staff as our workload increases.

 

The SA program has had the largest impact on business in 2023, developing a first of class machine requires a large research effort with the potential for overruns. The development for this system was largely carried out by our parent company in the US. The cost of this development has been large, and we have made the decision to proportionally share the cost overruns between the two companies. One repeat of this machine is currently in production should be more profitable as the development costs have already been accounted for. The Third machine incorporates substantial modifications of which the cost has been covered by our customer. The positive impact of this is that 2 new machine types have been developed with a high likelihood of repeat orders.

 

While our work with BAE Systems, a defence customer, remains undisclosed due to security considerations, they continue to place orders for assembly equipment, showcasing their ongoing trust in our expertise.

 

ELECTROIMPACT UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators

 

2023

2022

 

£

£

 

 

 

Turnover

44,105,261

18,185,204

Gross Profit

Gross Profit %

6,557,827

14.9%

(2,407,096)

(13.2%)

Earnings before interest, tax, depreciation and amortisation

Earnings before interest, tax, depreciation and amortisation %

 

567,076

 

1.3%

 

6,199,935

 

34.1%

 

Interest in automation continues to grow from 2022, however it is more challenging to protect margins on bespoke first of class equipment. To support R&D activities, attention is being given to the correct estimation of job costs, particularly around the number of engineering hours quoted. Recent quotations have been well received by customers.

We are working on promising leads and a return to our work in CFRP Lamination activities which require less R&D and are generally more understood. We will continue to hire new staff and integrate them in our workforce.

We remain a key supplier to several global Airframe manufacturers, all of which have expressed interest in new equipment acquisition.

A new ERP system “Dynamics 365” will be deployed allowing for more detailed analysis of business performance and full alignment with our US counterparts.

 

Conclusion

The key challenge for Electroimpact remain as they did in 2022 although inflationary pressures are now better understood and have eased overall.

 

The outlook appears positive, and if awarded significant programs, our ability to scale up swiftly will be critical.

Customers often require very short mobilisation times. Our physical infrastructure improvements are largely complete meaning our ramp up capability is improved so the effort will need to be focussed on human resources in both acquisition and retention.

 

We look forward to continuing growth in 2024/2025.

On behalf of the board

Mr P Zieve
Director
12 September 2024
ELECTROIMPACT UK LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 3 -

The directors present their annual report and financial statements for the period ended 31 December 2023.

Results and dividends

The results for the period are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the period and up to the date of signature of the financial statements were as follows:

Mr P Zieve
Mr M Zieve
Auditor

Mitchell Charlesworth (Audit) Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
Mr P Zieve
Director
12 September 2024
ELECTROIMPACT UK LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 4 -

The directors are responsible 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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

ELECTROIMPACT UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ELECTROIMPACT UK LIMITED
- 5 -
Opinion

We have audited the financial statements of Electroimpact UK Limited (the 'company') for the period ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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:

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's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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.

 

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 our audit:

ELECTROIMPACT UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ELECTROIMPACT UK LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the 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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

The auditor’s assessment of the susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur.

Which laws and regulations the auditor identified as being of significance in the context of the entity.

The auditor’s explanation of its audit response will depend on the risks identified but may include:

- Enquiry of management, those charged with governance and the entity’s solicitors (or in-house legal team) around actual and potential litigation and claims.

- Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations.

- Reviewing minutes of meetings of those charged with governance.

- Reviewing internal audit reports.

- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.

- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.

ELECTROIMPACT UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ELECTROIMPACT UK LIMITED
- 7 -

The auditor’s explanation of its audit response will depend on the risks identified but may include:

- Enquiry of management, those charged with governance and the entity’s solicitors (or in-house legal team) around actual and potential litigation and claims.

- Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations.

- Reviewing minutes of meetings of those charged with governance.

- Reviewing internal audit reports.

- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.

- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.]

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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.

Robert Hall
Senior Statutory Auditor
For and on behalf of Mitchell Charlesworth (Audit) Limited
13 September 2024
Accountants
Statutory Auditor
24 Nicholas Street
Chester
CH1 2AU
ELECTROIMPACT UK LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 8 -
period
Year
ended
ended
31 December
30 September
2023
2022
Notes
£
£
Turnover
3
44,105,261
18,185,204
Cost of sales
(37,547,434)
(20,592,300)
Gross profit/(loss)
6,557,827
(2,407,096)
Administrative expenses
(2,186,503)
(1,453,006)
Other operating (expenses)/income
(4,112,614)
9,829,723
Operating profit
4
258,710
5,969,621
Interest receivable and similar income
6
2,787,463
402,162
Interest payable and similar expenses
7
-
0
(14,126)
Profit before taxation
3,046,173
6,357,657
Tax on profit
8
663,347
(1,246,965)
Profit for the financial period
3,709,520
5,110,692

The profit and loss account has been prepared on the basis that all operations are continuing operations.

ELECTROIMPACT UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 9 -
period
Year
ended
ended
31 December
30 September
2023
2022
£
£
Profit for the period
3,709,520
5,110,692
Other comprehensive income
-
-
Total comprehensive income for the period
3,709,520
5,110,692
ELECTROIMPACT UK LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
31 December 2023
30 September 2022
Notes
£
£
£
£
Fixed assets
Tangible assets
9
5,307,691
2,394,569
Current assets
Stocks
11
3,500
3,500
Debtors
12
21,173,520
13,816,769
Cash at bank and in hand
69,913,074
72,308,385
91,090,094
86,128,654
Creditors: amounts falling due within one year
13
(49,891,150)
(45,769,375)
Net current assets
41,198,944
40,359,279
Total assets less current liabilities
46,506,635
42,753,848
Provisions for liabilities
Deferred tax liability
15
93,194
49,927
(93,194)
(49,927)
Net assets
46,413,441
42,703,921
Capital and reserves
Called up share capital
17
2
2
Profit and loss reserves
46,413,439
42,703,919
Total equity
46,413,441
42,703,921
The financial statements were approved by the board of directors and authorised for issue on 12 September 2024 and are signed on its behalf by:
Mr P Zieve
Director
Company registration number 04008853 (England and Wales)
ELECTROIMPACT UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 October 2021
2
37,593,227
37,593,229
Year ended 30 September 2022:
Profit and total comprehensive income
-
5,110,692
5,110,692
Balance at 30 September 2022
2
42,703,919
42,703,921
Period ended 31 December 2023:
Profit and total comprehensive income
-
3,709,520
3,709,520
Balance at 31 December 2023
2
46,413,439
46,413,441
ELECTROIMPACT UK LIMITED
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
20
(2,039,135)
6,080,368
Interest paid
-
0
(14,126)
Income taxes (paid)/refunded
(1,289,705)
836,475
Net cash (outflow)/inflow from operating activities
(3,328,840)
6,902,717
Investing activities
Purchase of tangible fixed assets
(3,221,488)
(62,727)
Interest received
2,787,463
402,162
Net cash (used in)/generated from investing activities
(434,025)
339,435
Net (decrease)/increase in cash and cash equivalents
(3,762,865)
7,242,152
Cash and cash equivalents at beginning of period
72,308,385
65,066,233
Cash and cash equivalents at end of period
68,545,520
72,308,385
Relating to:
Cash at bank and in hand
69,913,074
72,308,385
Bank overdrafts included in creditors payable within one year
(1,367,554)
-
0
ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information

Electroimpact UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Electroimpact Technology Park, Manor Lane, Hawarden, Flintshire, Nth Wales, CH5 3ST.

1.1
Reporting period

These accounts are being prepared for the period 1 October 2022 to 31 December 2023. The year end was changed to agree to the year end of the parent company, meaning the previous year and the following year will not be entirely comparable.

1.2
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention The principal accounting policies adopted are set out below.

1.3
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.4
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

Where the value of work done exceeds the amounts invoiced, the excess is accounted for as amounts recoverable on contracts and is included in debtors.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings
5% straight line
Plant and machinery
15% reducing balance
Fixtures and fittings
15% reducing balance
Computer equipment
25% reducing balance
Motor vehicles
20% reducing balance

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.6
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.7
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

At each reporting date, an assessment is made for impairment.

1.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.9
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

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

ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.10
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.11
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.12
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.14
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss. HMRC approved exchange rates at the year end is used when translating foreign currency bank accounts.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The key sources of estimation uncertainty in the accounts are the warranty provision and the amounts recoverable on long term contracts.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

 

A warranty provision of £618,214 (2022: £523,412) has been recognised based upon job costing reports post year end contracts that have been completed and handed over to the customer in the 2023 financial statements.

An amount of £4,905,333 (2022: £3,207,030) has been included in amounts recoverable on long term contracts. Estimation used is based on expected costs and time frame until the handover of the project.

ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 18 -
3
2023
2022
£
£
Turnover analysed by class of business
Sales
44,105,261
18,185,204
2023
2022
£
£
Other revenue
Interest income
2,787,463
402,162
4
Operating profit
2023
2022
Operating profit for the period is stated after charging/(crediting):
£
£
Exchange losses/(gains)
4,417,906
(9,809,723)
Fees payable to the company's auditor for the audit of the company's financial statements
-
0
-
0
Depreciation of owned tangible fixed assets
308,367
230,314
5
Employees

The average monthly number of persons (including directors) employed by the company during the period was:

2023
2022
Number
Number
Production
94
83
Administration
10
10
Total
104
93

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
7,110,831
5,988,474
Social security costs
856,651
742,884
Pension costs
640,744
500,997
8,608,226
7,232,355
ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 19 -
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
2,787,463
395,646
Other interest income
-
0
6,516
Total income
2,787,463
402,162
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
2,787,463
395,646
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
-
14,005
Other finance costs:
Other interest
-
0
121
-
0
14,126
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
703,953
1,244,915
Adjustments in respect of prior periods
(1,410,567)
-
0
Total current tax
(706,614)
1,244,915
Deferred tax
Origination and reversal of timing differences
43,267
2,050
Total tax (credit)/charge
(663,347)
1,246,965
ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
8
Taxation
(Continued)
- 20 -

The actual (credit)/charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
3,046,173
6,357,657
Expected tax charge based on the standard rate of corporation tax in the UK of 22.61% (2022: 19.00%)
688,740
1,207,955
Tax effect of expenses that are not deductible in determining taxable profit
812
7,476
Change in unrecognised deferred tax assets
5,930
-
0
Effect of change in corporation tax rate
3,568
-
0
Permanent capital allowances in excess of depreciation
46,810
(14,276)
Depreciation on assets not qualifying for tax allowances
-
0
43,760
Research and development tax credit
(1,410,567)
-
0
Deferred tax adjustments in respect of prior years
-
0
2,050
Tax credits
1,360
-
0
Taxation (credit)/charge for the period
(663,347)
1,246,965
ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 21 -
9
Tangible fixed assets
Freehold land and buildings
Assets under construction
Plant and machinery
Fixtures and fittings
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 October 2022
3,503,704
-
0
866,253
71,627
348,095
15,011
4,804,690
Additions
-
0
2,979,591
119,523
17,028
72,847
32,500
3,221,489
At 31 December 2023
3,503,704
2,979,591
985,776
88,655
420,942
47,511
8,026,179
Depreciation and impairment
At 1 October 2022
1,416,273
-
0
644,251
59,012
278,424
12,161
2,410,121
Depreciation charged in the period
218,982
-
0
41,972
3,938
35,001
8,474
308,367
At 31 December 2023
1,635,255
-
0
686,223
62,950
313,425
20,635
2,718,488
Carrying amount
At 31 December 2023
1,868,449
2,979,591
299,553
25,705
107,517
26,876
5,307,691
At 30 September 2022
2,087,431
-
0
222,002
12,615
69,671
2,850
2,394,569
11
Stocks
2023
2022
£
£
Raw materials and consumables
3,500
3,500
ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 22 -
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
7,824,204
5,159,908
Gross amounts owed by contract customers
4,905,333
3,207,030
Corporation tax recoverable
751,404
-
0
Amounts owed by group undertakings
7,202,829
5,364,364
Other debtors
3,260
-
0
Prepayments and accrued income
486,490
85,467
21,173,520
13,816,769
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
1,367,554
-
0
Trade creditors
1,839,097
1,276,340
Gross amounts owed to contract customers
618,214
523,412
Amounts owed to group undertakings
42,329,472
41,976,908
Corporation tax
-
0
1,244,915
Other taxation and social security
848,873
606,116
Other creditors
-
0
39,352
Accruals and deferred income
2,887,940
102,332
49,891,150
45,769,375

Comparative balance for corporation tax has been reallocated between debtors and creditors.

14
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
1,367,554
-
0
Payable within one year
1,367,554
-
0

HSBC Bank PLC holds a debenture including fixed charge over all present freehold and leasehold property; First Fixed Charge over book and other debts, chattels, goodwill and uncalled capital, both present and future; and First Floating Charge over all assets and undertaking both present and future dated 25 May, 2011.

ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 23 -
15
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
93,194
49,927
2023
Movements in the period:
£
Liability at 1 October 2022
49,927
Charge to profit or loss
43,267
Liability at 31 December 2023
93,194

The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.

16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
640,744
500,997

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
2
2
2
2
18
Related party transactions

Electroimpact UK Limited is a subsidiary of Electroimpact Inc, a company incorporated in the United States of America. During the year the company recharged costs to Electroimpact Inc of £12,371,162 (2022: £2,032,862). The transactions were made on an arms lengths basis. The amount owed to Electroimpact Inc included in other creditors at 31 December 2023 was £42,297,192(2022: £41,976,908). There is also an intercompany balance with a connected company Electroimpact France. The amount due from Electroimpact France which is included within other debtors was £7,170,549 (2022:£5,364,364). There were no formal terms for repayment.

ELECTROIMPACT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 24 -
19
Ultimate controlling party

Electroimpact UK Limited is a wholly owned subsidiary of Electroimpact Incorporation, a company incorporated in the United States of America. Electroimpact Incorporation is controlled by Mr P Zieve.

The ultimate controlling party is Mr P Zieve, a director of the company and president of the ultimate parent company, Electroimpact Incorporated.

20
Cash (absorbed by)/generated from operations
2023
2022
£
£
Profit for the period after tax
3,709,520
5,110,692
Adjustments for:
Taxation (credited)/charged
(663,347)
1,246,965
Finance costs
-
0
14,126
Investment income
(2,787,463)
(402,162)
Depreciation and impairment of tangible fixed assets
308,367
230,314
Movements in working capital:
Increase in debtors
(6,605,348)
(5,952,865)
Increase in creditors
3,999,136
5,833,298
Cash (absorbed by)/generated from operations
(2,039,135)
6,080,368
21
Analysis of changes in net funds
1 October 2022
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
72,308,385
(2,395,311)
69,913,074
Bank overdrafts
-
0
(1,367,554)
(1,367,554)
72,308,385
(3,762,865)
68,545,520
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