The directors present the strategic report for the year ended 31 March 2024.
Trading result for the year shows turnover of £21,750,301, a 5% decrease on the previous year.
Results of key performance indicators:
| 2024 | 2023 |
Sales | £21,750,301 | £22,892,119 |
Gross profit margin | 11.4% | 10.6% |
Operating loss Trade debtor days | £2,220,039 65 | £1,982,137 45 |
Trade creditor days | 33 | 43 |
Stock days | 138 | 123 |
The company envisages reducing the operating losses in the year ended 31 March 2025 under the ownership of the Daikin Group; with a move to trading profitably in the year ended 31 March 2026. Exploiting the investments of the past, and the relocation of the business to a purpose-built factory in the summer of 2021 within Ipswich, increased capacity, improved efficiency and ability for growth will be a factor in this.
In the year ended 31 March 2024 a 5% drop in sales revenue is reported due to lower demand with one of the major accounts. This drop is expected to be reversed in the year ended 31 March 2025 as Hubbard Products has launched a strong business development plan with focus on customer portfolio diversification, stronger presence in the semi-industrial sector, expansion in the wholesaler channel and increase of export activity.
To this end, Hubbard Products has reinforced product development capability, prioritizing cold storage and process applications for UK market, and retail applications for export to the Middle East where Daikin Group has a strong presence.
Among the Blue Chip Food Retail Chains in UK, Hubbard Products’ management is busy with developing new sales channels. Wholesaler channel will be a strong focus utilizing differentiating product portfolio launched by other Group entities and promoted in UK through Hubbard Products.
Management is busy with restructuring plan, that includes, reinforced business development activity from sales, enhanced design and procurement capabilities for cost down, strict control of the production labour costs and an overall stream line of the organization.
As a result, Management is forecasting return into positive operating profitability for the year ended 31 March 2026. This will be achieved by reduction of the administration costs, improvement of GM% to healthier level while keeping market competitiveness and increase of revenue. In the same time company will aim to improve Trade Debtors Days, by approaching a more diverse customer portfolio and increasing share of intercompany activity. Trade Creditors will remain at low levels reinforcing partnerships with key suppliers.
Within the year, there was a focused approach to reducing stock levels from post-Covid period strategically held stock levels, with view to improve in turn cashflow.
Due to increases in the variable interest rate applicable on the intercompany credit facility (being the Sonia ON (Sterling Overnight Index Average variable rate) plus an intergroup margin), the interest expense has increased to £1,522,498 (2023 – £663,114).
Tax on loss included an income amount being a credit of £594,000 (2023 as restated – credit of £882,000) in relation to a deferred tax asset arising from receipts expected for the surrender of tax losses to other group companies.
Review of the business (continued)
The company has assessed its position in light of the recent imposition of tariffs announced by the United States of America. The company has not observed an impact on the UK and European market from the tariffs yet. The company and the intermediate parent company, Daikin Europe N.V. (registered in Belgium) are closely monitoring the global developments, though the scope, amount, or duration of the tariffs remain ambiguous at this stage. Daikin, as a global group, including the company, will act globally to minimise or absorb the impact of tariffs. The company's focus remains on maintaining the quality and competitiveness of our products while ensuring minimal disruption to our supply chain and customer service. Additionally, Daikin has always operated with a proximity strategy: we produce our products close to the markets we serve. Therefore, those products are not subject to any new tariffs.
Future developments
The company has a wide range of products under development targeting the HoReCa, Food Retail Chains and Semi-Industrial application. Focus is to be providing to the market competitive sustainable solutions for storage and process cooling aiming to improved efficiency and lower Global Warming impact. Improved functionality for reliability and serviceability and remote monitoring options are key features.
Going concern
Daikin Europe Coordination Center N.V., a company registered in Belgium, is a subsidiary within the Daikin Europe N.V. group, of which Hubbard Products Ltd is also a subsidiary. Daikin Europe Coordination Center N.V. has provided the company with a credit facility. As at 31 March 2024, £27,733,760 (2023: £26,113,176) had been drawn down under the facility. The credit facility was last renewed on 24 April 2025 with a ceiling on the facility of £34million. The credit facility stood at £28.31million at 30 April 2025. The credit facility agreement expires on 31 May 2026. Prior to the credit facility terminating, the directors will enter into negotiations with Daikin Europe Coordination Center N.V. to extend the facility, the directors expect that facility to be renewed. The credit facility can be terminated at any point by one months written notice.
The directors have prepared detailed trading and cash flow forecasts through to 31 March 2029, as explained within note 1.2. These forecasts indicate the company will remain liquid within its current facilities throughout that period.
Daikin Europe Coordination Center N.V. has provided written confirmation to the company of their intention to continue to provide financial support to the company, as explained within note 1.2. As the company is reliant on the financial support of a related party, Daikin Europe Coordination Center N.V. which is not contractually binding, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include the adjustments which would result if the company was unable to continue as a going concern.
Following the going concern assessment made by the directors as explained within note 1.2 and with the offer of financial support in place from Daikin Europe Coordination Center N.V., the directors consider it appropriate that the financial statements are prepared on a going concern basis.
Principal risks and uncertainties
The going concern position of the company has been explained above. That is a principal risk.
The company, although currently has limited export activity, is undertaking measures to counter negative impacts from UK withdrawal from the EU, where such measures are in its control with intention to reinforce its presence in EU countries in the coming years. Also refer to the market risk section below for more details in relation to market demand, geopolitical risk and cost and inflationary pressures.
The Company dependence on small number of big accounts. Company has reinforced sales department and has launched intensified business development activity to start new collaborations.
Principal risks and uncertainties (continued)
Refrigeration Market in UK, EU and USA is regulated by legislation around refrigerants and energy efficiency. Hubbard Products has been following up closely and has consistently invested in research and development capabilities to modernise product range and be ahead of the legislation transition periods. Through a structured analysis of the market trends, the Company has taken the decisive steps towards natural refrigerants and other low GWP alternatives adopting according to the application. In addition to that, Daikin Group has launched a wide range of differentiated product range for the retail and horeca sectors that in the UK are being promoted through Hubbard Products.
The Company has invested in new Test Labs to be ready in 2025. These new labs will provide the necessary infrastructure to drive the future product developments. To this end, company has drafted a detailed product development plan on 3 year horizon with dedicated range for UK, EU and USA.
Product defect risk and warranty - the company is exposed to the risk of defective products. The company manages the risk of product defects by holding warranty provisions against sale revenue within the warranty period. Refer to note 16.
Financial instruments
The company uses various financial instruments which include cash and various items, such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company's operations. The company also uses a credit facility as its main funding source, which is provided by a sister subsidiary company. See note 1.2 and 14.
The main risks arising from the company's financial instruments are market risk, cash flow, interest rate risk, credit risk and liquidity risk. The directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from the previous year.
Market risk
Market Demand and Geopolitical Risk. Geopolitical risk remains high and this will have an impact on investments. As a result demand is expected to be influenced on short term. However Hubbard Products operates in various different sectors in refrigeration, from small commercial and transport up to semi industrial applications for food process and pharmaceutical. This diversity, will allow for new opportunities. Under the geopolitical pressure, energy cost, material cost and labour cost may face further inflationary trends. However management has launched countermeasures supported by design and procurement initiatives and adopted strategy that is already delivering results.
Currency risk
The company has an exposure to translation and transaction foreign exchange risk. The business trades mainly in the UK and purchases some materials from continental Europe. Previous shocks in the Pound Euro exchange rate have forced Hubbard to look for alternative sourcing strategies with local distributors to limit its exposure to the risk.
Liquidity risk
The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash in assets safely and profitably. The company uses financing via a credit facility provided by Daikin Europe Coordination Center N.V. Refer to the going concern section above for additional information along with note 1.2 and 14.
Interest rate risk
The company is subject to variable rate interest rate risk. The company finances its operation via a group loan (a group credit facility). The interest rate applicable is based on a variable rate equal to Sonia ON (Sterling Overnight Index Average variable rate) plus an intergroup margin which is also a variable rate as calculated by Daikin Europe Coordination Center N.V. based upon their average margin for depositing to or funding from banks including any additional costs which they might incur for the lending activities. Accordingly Hubbard Products is confronted with variable interest rate and these have increased significantly given the increase in the Sonia interest rates since approximately April 2022. The interest which arises is added quarterly to the intercompany credit facility balance owing to Daikin Europe Coordination Center N.V. which helps the business to maintain its cash flows as the interest expense doesn't result in a cash outflow (and is reported as a non-cash transaction).
Credit risk
The company's principal financial assets are cash and trade debtors. The principal credit risk arises therefore from its trade debtors. In order to manage credit risk the directors set limits for customers based on a combination of payment history and third party credit references. Credit limits are reviewed by the Financial Controller on a regular basis in conjunction with debt ageing and collection history.
Cash flow risk
The company needs to manage cash-flow in the company in order to meet it's debts as they fall due. Management therefore consistently monitor this and produce cash-flow forecasts to ensure there are sufficient cash reserves available in the company.
Post balance sheet events
Daikin Europe Coordination Center N.V., a company registered in Belgium, is a subsidiary within the Daikin Europe N.V. group, of which Hubbard Products Ltd is also a subsidiary. Daikin Europe Coordination Center N.V. had provided the company with a credit facility of £32 million. As at 31 March 2024, £27,733,760 (2023: £26,113,176) had been drawn down under the facility (refer to note 14 and 15). That facility was due to terminate on 31 May 2024. After the year-end the facility was renewed with a facility limit of £32 million from 1 June 2024 with a termination date of 30 September 2024. A further renewal took place with a facility limit of £34 million on 1 October 2024 with a termination date of 31 May 2025. A further renewal took place with a facility limit of £34 million on 24 April 2025 with a termination date of 31 May 2026. The credit facility can be terminated at any point by one months written notice by either the company or Daikin Europe Coordination Center N.V.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 11.
Information regarding principal risks of the company are set out in the Strategic Report on page 1.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In our opinion the financial statements:
give a true and fair view of the state of the Company's affairs as at 31 March 2024 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
Material uncertainty related to going concern
We draw attention to note 1.2 to the financial statements, which indicates that if the performance of the company is significantly below the levels currently forecast, or if other events arise which create pressures on working capital levels or funding resources, then the company may require additional funding from a related party, Daikin Europe Coordination Center N.V. in order to meet its liabilities as they fall due. The company is reliant on the financial support of Daikin Europe Coordination Center N.V. which is not contractually binding. As stated in note 1.2, these events or conditions, along with other matters as set out in note 1.2, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
Other Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Extent to which the audit was capable of detecting irregularities, including fraud
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:
Non-compliance with laws and regulations
Based on:
Our understanding of the Company and the industry in which it operates;
Discussion with management and those charged with governance;
Obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and regulations;
we considered the significant laws and regulations to be the applicable accounting framework including Financial Reporting Standard 102, UK tax legislation and the Companies Act 2006.
The Company is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be health and safety legislation, Environment regulations, primarily Electrical and electronic equipment (EEE) regulations and registration and fluorinated gas (F gas) regulations.
Our procedures in respect of the above included:
Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations;
Review of correspondence with tax authorities for any instances of non-compliance with laws and regulations;
Review of financial statement disclosures and agreeing to supporting documentation;
Review of legal expenditure accounts to understand the nature of expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
Obtaining an understanding of the Company’s policies and procedures relating to:
- Detecting and responding to the risks of fraud; and
- Internal controls established to mitigate risks related to fraud.
Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud;
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls, management bias in accounting estimates, revenue recognition and revenue cut-off.
Our procedures in respect of the above included:
Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;
Assessing significant estimates made by management for bias including, but not limited to, stock valuation, estimation of trade debtor recoverability, warranty provision, impairment of tangible and intangible assets; and
Assessing the revenue recognition policy applied by management and testing a sample of transactions to ensure that revenue has been recorded in the correct period.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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.
The income statement has been prepared on the basis that all operations are continuing operations.
The notes on pages 16 to 34 form part of these financial statements.
The notes on pages 16 to 34 form part of these financial statements.
Hubbard Products Limited is a private company limited by shares incorporated in England and Wales. The registered office is 4 Crane Boulevard, Ipswich, IP3 9SQ. The company registration number is 06217134.
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 £.
Daikin Europe Coordination Center N.V. has provided written confirmation to the directors of the company of their intention to continue to provide financial support to the company for a period of 12 months from the date the directors sign the financial statements of the company for the 31 March 2024 year end. This offer is to provide sufficient financial support to enable the company to continue to pay normal operating expenses as they fall due, to allow it to continue to trade for a period of 12 months from the date these financial statements are approved by the directors.
If the performance of the company is significantly below the levels currently forecast, or if other events arise which create pressures on working capital levels or funding resources, then the company may require additional funding from Daikin Europe Coordination Center N.V. in order to meet its liabilities as they fall due. As the company is reliant on the financial support of a related party, Daikin Europe Coordination Center N.V. which is not contractually binding as the credit facility can be terminated at any point by one months written notice, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include the adjustments which would result if the company was unable to continue as a going concern.
Following the going concern assessment made by the directors as explained above, and with the offer of financial support in place from Daikin Europe Coordination Center N.V., the directors consider it appropriate that the financial statements are prepared on a going concern basis.
The company has chosen a five-year amortisation period for the software based on its expected useful economic life, reflecting the anticipated period over which the software will provide economic benefits and remain technologically relevant.
At 31 March 2024 the remaining amortisation period of the software was 2.83 years.
Assets under construction are not depreciated until they are brought into use. Assets under construction relate to research and development bays at the company's premises where construction was not complete at the year end.
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.
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. Financial assets classified as receivable within one year are not amortised.
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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors and loans from fellow group companies, 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 creditors: amounts falling due within one year if payment is due within one year or less. If not, they are presented as creditors: amounts falling due after more than one year. Trade and other creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
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 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.
In preparing these financial statements, the directors have made the following judgements: Determine when the significant risks and rewards have transferred to the customer and accordingly when a sale is recognised. Refer to note 1.3; Determine whether there are indicators of impairment of the Company’s tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Warranty provision
The provision for warranty costs represents the director's estimate of the likely future payments on the company's products. Refer to note 16 for details of the warranty provision.
Stock provision
The company sells manufactured refrigeration equipment which is subject to changing consumer demands and technological advancements. As a result it is necessary to consider the recoverability of the cost of the stock and the associated provisioning required. When calculating the provision, management considers the nature and age of the stock as well as applying assumptions around anticipated saleability of stock. Refer to note 12 for the carrying value of stocks at year end.
Bad debt provision
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors, whether covered by insurance and historical experience.
Impairment of Tangible and Intangible Assets
The key assumptions applied within the discounted cash flow included: determining the underlying future cash flow forecasts, based upon the Directors' best estimates; the application of a suitable discount rate, the Directors applied a discount rate of 11.6% to a five year cash flow and including a terminal value (with a terminal valve growth rate of 2% being applied).
An analysis of the company's turnover is as follows:
There were 2 directors in the Company's defined contribution pension scheme during the year (2023 : one)
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
A deferred tax asset has been recognised at 31 March 2024 of £594,000 (2023: as restated – £882,000) in relation to the surrender of losses for group relief which the company expects to be paid for.
At 31 March 2024, the company has tax losses available to carry forward of £8,310,520 (2023: £7,461,032), fixed asset timing differences of £1,655,270 (2023: £1,167,114) and short-term timing differences of (£21,101) (2023: (£31,598)). When measured at 25%, the company has a potential net deferred tax asset of £1,669,088 (2023: £1,581,379 at 25%) in respect of trading losses, accelerated capital allowances and short term timing difference. This potential deferred tax asset has not been recognised as it is not considered probable that it will be recovered against the reversal of deferred tax liabilities or other future taxable profits. In relation to the unrecognised deferred tax asset, in respect of potential future surrender of losses for group relief for which the company may be paid for (beyond the deferred tax asset of £594,000 which has already been recognised as explained above), no further group relief surrenders had been made at year-end, and there was not sufficient certainty regarding future group relief surrender and any related amounts receivable to support recognition of an asset. Accordingly no further deferred tax asset has been recognised.
Amortisation of intangible fixed assets is included in administrative expenses.
Raw materials, consumables and work in progress includes an amount of £451,205 (2023 – £535,904) in relation to subassemblies which is the directors best estimate of the work in progress element of stock at year end.
An impairment loss of £21,182 (2023 - loss of £238,710) was recognised in cost of sales against stock during the period due to slow-moving and obsolete stock. There are no stock pledged as security for liabilities.
Included within loans owed to group undertakings is a credit facility agreement with a sister subsidiary, Daikin Europe Coordination Center NV, amounting to £27,733,760 (2023: £26,113,176). This credit facility accrues interest based on a variable rate equal to Sonia ON (Sterling Overnight Index Average variable rate) plus an intergroup margin which is also a variable rate. Refer to the strategic report for more information. Zanotti S.p.A, a company registered in Italy, which is the immediate parent company, has provided a corporate guarantee to Daikin Europe Coordination Center N.V. in respect of the credit facility as security. The credit facility can be terminated at any point by one months written notice by either the company or Daikin Europe Coordination Center N.V.
The provision for warranty represents the directors' estimate of the likely future payments on the company's products sold which are within the warranty period which is mostly one year with certain products being under a three-year warranty. The provision is expected to be utilised within this period or released unused as it expires.
The company has a dilapidation provision for short leasehold premises of £89,981 (2023 – £330,722) which is included within accruals and deferred income. The provision at 31 March 2024 relates to a property with a lease expiring in 2041, which is when the provision is expected to be utilised.
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The deferred tax asset recognised of £594,000 (2023 as restated – asset £882,000) is expected to reverse in the next year with a receipt in relation to group relief surrender of losses. The deferred tax liability of nil (being ACAs and timing differences shown above offset by tax losses) will unwind/reverse in line with the depreciation of fixed assets and related capital allowances that would mature within the same period.
In relation to tax losses there are additional tax losses of £6,687,380, equating to a potential deferred tax asset at 25% of £1,671,845. No deferred tax asset has been recognised as it is not probable that they will be recovered against the reversal of deferred tax liabilities or future taxable profits. There were no agreements in place at year-end in respect of any group relief loss surrenders beyond those already recognised as an asset, and accordingly no additional assets have been recognised for potential future group relief surrenders.
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. Pension contributions totalling £38,435 (2023 – £36,996) were payable to the pension fund at the reporting date and are included in creditors (accruals and deferred income).
All shares have full voting rights and full rights to participate in any distribution (including on a dividend and on winding up). The ordinary shares are not redeemable.
The company enters into a number of operating lease agreements for use of buildings and other equipment. These are all standard operating lease arrangements which will not result in the company owning the asset.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Amounts contracted for but not provided in the financial statements:
The remuneration of key management personnel is as follows.
The company has taken advantage of the exemption available in section 33.1A Financial Reporting Standard 102 whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertaking within the group.
At 31 March 2024 £3,900 was owed to the company by a director in respect of employee expenses recoverable (31 March 2023: £3,900).
Non-cash movements: (£1,522,498) relates to the interest expense arising on the intercompany credit facility which is not paid in cash and is credited directly to the intercompany credit facility loan account. It also includes £882,000 receivable in relation to the surrender of tax losses for group relief. The proceeds receivable were debited directly to the intercompany account. It also includes £2,145,530 in relation to intercompany debtors being settled and (£4,082,452) in relation to intercompany creditors being settled as these proceeds and payments were settled directly through the intercompany account rather than in cash.
The following prior period adjustments have been made to correct errors in the previous year.
Taxation
A deferred tax asset has been recognised as at 31 March 2023 of £882,000 in respect of losses which were group relieved in that year to other group companies, for which company expects to receive payment of that amount for the losses surrendered. This had not previously been recognised as an asset in error. The effect of the adjustment in 2023 and 31 March 2023 is: a credit to the tax on loss in respect of deferred tax in the income statement of £882,000; a deferred tax asset recognised of £882,000 within Debtors amounts falling due within one year.
The statement of changes in equity has been restated with a reduction in the reported loss and total comprehensive expense for the year of £882,000. Total equity at 31 March 2023 and the profit and loss reserves at 31 March 2023 have increased by £882,000.
The following notes have been restated: Note 9 (taxation); Note 13 (Debtors Amounts falling due within one year); Note 17 (deferred taxation); Note 24 (cash absorbed by operations).
Statement of cash flows
The statement of cash flows was incorrectly presented and has been restated as follows: Interest paid was incorrectly shown: As a cash outflow of £663,114 in arriving at cash outflow from operating activities; As a cash inflow as interest on borrowings within financing activities of £663,114. These two amounts have been amended to nil within the statement of cash flows. This is because the interest expense relates to interest on the intercompany credit facility, which is not paid in cash, rather it is credited to the intercompany loan balance/credit facility which is shown as/credit facility which is shown within creditors: amounts falling due within one year as other borrowings owed to group undertakings, and accordingly is a non-cash transaction. Net cash outflow from operating activities reduced by £663,114 and net cash generated from financing activities reduced by £663,114.
Turnover disclosure (note 3)
Note 3 has been restated to show a more detailed analysis of the company’s turnover by class of business as follows: Sale of goods of £21,978,455; Service and maintenance £913,664. Total turnover reported has not changed.
Directors’ remuneration (note 6)
Directors’ remuneration within note 6 has been restated as it did not provide a breakdown of directors remuneration and amounts paid to the highest director. This is restated to show: qualifying services of £323,087 and company pension contributions to defined contribution schemes of £8,250 separately; and to show the amounts payable to the highest paid director separately of remuneration for qualifying services of £323,087 and company pension contributions to defined contribution schemes of £8,250. The total of the directors remuneration and highest-paid director disclosures reported did not change.
Amounts owed (to) / from group undertakings falling due within one year
At 31 March 2023 amounts owed to group undertakings which were previously stated at £243,661 were presented on a net basis in error. As there was no legally enforceable right to set of the intercompany debtor and creditor balances with the group companies, the balances have been restated to present them on a gross basis at 31 March 2023.
The effect of these adjustments at 31 March 2023 was: Amounts owed to group undertakings falling due within one year increased by £203,138. Amounts owed by group undertakings falling due within one year increased by £203,138. Debtors and creditors: amounts falling due within one year on the statement of financial position have been restated. Notes 13 and 14 have been restated. There was no overall change to net current liabilities or net liabilities or to the income statement or the statement of comprehensive income.
The effect of these adjustments at 1 April 2022 (which has been explained as that impacts on working capital movements reported within note 24) was: Amounts owed to group undertakings falling due within one year increased by £275,783. Amounts owed by group undertakings falling due within one year increased by £275,783. There was no overall change to the profit and loss reserve brought forward at 1 April 2022.
Intercompany debtor and creditor balances falling due within one year – non-cash transactions, statement of cash flows and Cash generated from / (absorbed by) operations
Further to the adjustment above in respect of intercompany debtor and creditor balances falling due within one year, which were incorrectly presented on a net basis, these balances relate to trading receivables and payables. From a cash flow perspective some of these balances are settled as non-cash transactions through the credit facility agreement with a sister subsidiary, Daikin Europe Coordination Center NV, and the liability under that facility is shown within creditors: amounts falling due within one year as Other borrowings owed to group undertakings. In error in the prior year note 24 and the statement of cash flows did not reflect these non-cash transactions.
The non-cash transactions which were not properly reflected were £2,791,608 in relation to intercompany debtors and (£6,396,058) in relation to intercompany creditors, as these proceeds and payments were settled directly through the intercompany account as a non-cash transaction, rather than in cash.
Note 24 movements in working capital has been restated as follows: (1) decrease in creditors which was previously included at (£1,581,112) has been reduced by £663,579 to show a (decrease) in creditors of (£917,533) (2) Amounts owed by group undertakings (increase) of (£2,718,962) which was not previously presented and (3) Amounts owed to group undertakings decrease of £4,996,719 which was not previously presented. Cash (absorbed by) operations decreased by £2,941,336 and is now restated at (£1,957,753).
The statement of cash flows has been restated as follows: Cash (absorbed by) operations decreased by £2,941,336 and is now restated at (£1,957,753). Net cash outflow from operating activities decreased by £2,941,336 and is now restated at (£1,939,366). Proceeds from the loan owed to group undertakings and net cash generated from financing activities decreased by £2,941,336 and is now restated at £2,240,894. There was no overall change to the net movement in cash and cash equivalents.
Daikin Europe Coordination Center N.V., a company registered in Belgium, is a subsidiary within the Daikin Europe N.V. group, of which Hubbard Products Ltd is also a subsidiary. Daikin Europe Coordination Center N.V. had provided the company with a credit facility of £32 million. As at 31 March 2024, £27,733,760 (2023: £26,113,176) had been drawn down under the facility (refer to note 14 and 15). That facility was due to terminate on 31 May 2024. After the year-end the facility was renewed with a facility limit of £32 million from 1 June 2024 with a termination date of 30 September 2024. A further renewal took place with a facility limit of £34 million on 1 October 2024 with a termination date of 31 May 2025. A further renewal took place with a facility limit of £34 million on 24 April 2025 with a termination date of 31 May 2026. The credit facility can be terminated at any point by one months written notice by either the company or Daikin Europe Coordination Center N.V.
Called up share capital -Called up share capital reserve represents the nominal value of the shares issued.
Profit and loss account - Profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.