ECOLUTION_GROUP_LIMITED - Accounts
ECOLUTION_GROUP_LIMITED - Accounts
The directors present the strategic report for the year ended 30 June 2018.
At Ecolution, our purpose is to deliver excellence in the maintenance, design and delivery of renewables energy and energy efficient technologies. We now predominately serve social landlords and local authorities.
During this trading period we have stripped out the less profitable parts of the business and re-focussed the business to become a specialist provider of operating and maintenance services (O&M) for renewable and energy efficient technologies.
The continued fall in the price of the dominant renewable technology Photovoltaic Panels has created both a challenge and opportunity. The lower prices mean it is difficult to maintain both revenue and margin in the deployment but also means more of the technology will be deployed.
Year on year there is more focus and awareness of climate change, air pollution and fuel poverty among many drivers in our sector. With the ever-increasing use of renewable and energy efficient technologies the requirement to keep these technologies operating grows exponentially every year and once installed is not subject to government policy changes.
During this trading period with have commenced the re-organisation of the business to predominantly focus on the opportunities in the O & M sector, we have broadened our range of technologies and expertise. Whilst we focus on this re-organisation during our next trading period we have stopped distributing products through Ecolution Products and made this company dormant.
With continued changes in government legislation and policies, specifically around subsidies in the sector, the changes we have made will significantly reduce the risk to the business and exposure to policy changes.
The group continues to be affected by the impact of volatile currency markets, however, this risk is mitigated through careful control and the groups treasury policies.
We have and continue to invest in the long-term value of the business, with significant investment in the construction and development of our own in-house training facilities, which will allow us to provide the specialist skills required to service and maintain the new technologies that are now incorporated in millions of UK properties.
We have opened a new regional office in Norwich, to provide a call centre facility and service our clients in the region.
We have also embarked on our largest internal investment project with the commissioning of a new fully integrated IT software system that will greatly enhance our O & M capabilities both internally and interacting with clients and suppliers alike.
We are delighted to welcome Ian Ransom, who joined the board on 16th May 2018.
Ian heads the sales function of the group and has been with the business for over 10 years. His expertise in the technologies we deal with and his understanding of the requirements of social landlords and local authorities will be a great asset to the Board.
We are one of the oldest and most established businesses in the Renewable Energy sector and will be celebrating our 20th anniversary in 2019. We continue to be a commercially successful business and are extremely proud that we have been helping our clients and other stakeholders reduce their carbon emissions, tackle both fuel poverty and air pollution and raise awareness of Climate Change for 20 years.
Whilst delivering strong progress and increased profits this year, the Board does not propose a final dividend due to the high levels of internal investment during the next trading period.
Whilst the business has been transitioning we have been able to maintain a strong underlying performance with the key financial highlights of:
Increase in group gross margin
Reduction in group overhead spend of 30%
Increased group operating profit of 39%
Increased revenue of 45% for Ecolution Energy Services
Increased operating profit of 118% for Ecolution Energy Services.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2018.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 5.
Ordinary dividends were paid amounting to £19,040. The directors do not recommend payment of a further dividend.
In accordance with the company's articles, a resolution proposing that Perrys Accountants Limited be reappointed as auditor of the group will be put at a General Meeting.
On 6 March 2019 the company changed its name from Cel-f Solar Systems Limited.
select suitable accounting policies and then 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; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £466,891 (2017 - £393,524 profit).
Ecolution Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 32-34 St John's Road, Tunbridge Wells, Kent, TN4 9NT.
The group consists of Ecolution Group Limited and all of its subsidiaries.
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 £1.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
- Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
- Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
- Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
- Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated financial statements incorporate those of Ecolution Group Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 30 June 2018. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements have been prepared on the basis that the group will be a going concern for a period of at least 12 months from the date of approval of the financial statements. The directors have reviewed cash flow forecasts supporting the view that sufficient financial resources will be available to the group as required to ensure that it is able to meet its liabilities as they fall due.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Sale of goods
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
the group has transferred the significant risks and rewards of ownership to the buyer;
the group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of turnover can be measured reliably;
it is probable that the group will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of turnover can be measured reliably
it is probable that the group will receive the consideration due under the contract
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.
The group has entered into contractual agreements to perform planned and reactive maintenance services to customers. Turnover arising from such services is recognised once the maintenance services have been provided to the customer and is measured at the fair value of the service provided.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
Amortisation 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:
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 recognised in the profit and loss account.
Investments in subsidiaries are measured at cost and less accumulated impairment. Investments are assessed at the end of each reporting period for objective evidence of impairment. If the objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account. The impairment loss is measured as the difference between the investment's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the company would receive for the asset if it were to be sold at the reporting date.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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 group after deducting all of its 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.
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 are included in the profit and loss account for the period.
The directors were required to make use of judgement and estimation in preparing certain aspects of the financial statements.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The group enters into fixed price contracts for the provision of goods and services, including the installation of solar energy equipment. Where work related to such fixed price contracts is ongoing at the balance sheet date, the directors assess the stage of completion of the contract work in order to ensure that the appropriate amount of turnover is recognised. The stage of completion is estimated based on the directors' view of the fair value of the services provided at the balance sheet date.
The whole of the turnover is attributable to the group's primary activity, being the design, supply, installation, maintenance, and distribution of renewable energy products and systems.
All turnover arose within the United Kingdom.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2017 - 3).
The actual charge for the year can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 30 June 2018 are as follows:
Registered Office addresses:
1 32-34 St Johns Road, Tunbridge Wells, Kent, TN4 9NT
2 32-34 St Johns Road, Tunbridge Wells, Kent, TN4 9NT
The group has given a fixed and floating charge over its assets both present and future in connection with the banking facilities of subsidiary undertakings within the group. As at the balance sheet date the outstanding loan amounted to £426,372.
In addition, the company has given fixed charges over its assets both present and future in connection with its own banking facilities.
Liabilities for obligations under finance leases totalling £317,775 (2017 - £192,329) are secured on the assets purchased under hire purchase agreements.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Except as expressly provided otherwise in the Articles of Association, every share irrespective of class shall rank pari passu in all respects but shall constitute separate classes of shares.
The directors may only issue B Shares to employees and may only issue C Shares to those who are neither a founder nor an employee.
Dividends may be declared on any class of A Shares, any class of B Shares or any class of C Shares at such times and in such amounts as shall be determined by the directors in their absolute discretion.
On a share sale, the sale proceeds shall be distributed in among the holders of the shares pro rata to the number of shares held, irrespective of the class.
If the holders of 50% by nominal value of the shares in issue wish to transfer all of their interest in shares to a bona fide purchaser on arm's-length terms ('proposed buyer'), the selling shareholders shall have the option to require all the other holders of shares on the date of the request to sell and transfer all their interest in shares with full title guarantee to the proposed buyer.
During the year, the company repurchased 24,000 B2 Ordinary 1p shares for consideration of £12,000.
During the year, the company repurchased 5,000 B4 Ordinary 1p shares for consideration of £15,000.
During the year, the company issued 3,000 B7 Ordinary 1p shares for consideration of £10,500.
During the year, the company issued 3,000 B8 Ordinary 1p shares for consideration of £10,500.
During the year, the company reclassified 31,500 C4 Ordinary 1p shares into 7,875 C5 Ordinary 1p shares, 7,875 C6 Ordinary 1p shares, 7,875 C7 Ordinary 1p shares and 7,875 C8 Ordinary 1p shares.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year, the group received services amounting to £246,307 (2017 - £155,978) from an LLP in which the directors K D Knapp and A J Knapp are members. As at the balance sheet date, the company was owed £109,787 (2017 - £44,977) by this LLP included within other debtors and £33,271 (2017 - £14,824) within trade creditors.
During the year, the group received services amounting to £18,980 (2017 - £17,397) from a company in which the director R M Jenkins is also a director. As at the balance sheet date, the group owed £5,561 (2017 - £6,102) to this company, this balance is included within trade creditors.
During the year, the group received services amounting to £9,863 (2017 - £nil) a company in which the directors are also directors, and supplied services amounting to £109,683 (2017 - £nil). As at the balance sheet date, the group was owed £258,647 (2017 - £nil) by this company included within other debtors and owed £8,533 (2017 - £nil) to this company within trade creditors.
Dividends totalling £11,240 (2017 - £164,060) were paid in the year in respect of shares held by the company's directors.
As at the balance sheet date, there was an overdrawn directors loan account balance of £30,710 (2017 - £1,962), this balance is included within other debtors.
In the opinion of the directors there is no identifiable individual controlling party.
Ecolution Group Limited is the smallest and largest group for which consolidated financial statements are prepared in which the company's results are included. The consolidated financial statements may be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ.
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 30 June 2018 and of the group's profit 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'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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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:
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 group and the parent company and its 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 where 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.
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 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.
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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://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.