A Lynn business which has nationwide coverage in service and maintenance of cooling systems was placed into administration last month.
Specialist business rescue and insolvency company McTear Williams and Wood has said it is assisting with the sale of part of J D Cooling Systems Limited, which is based on the North Lynn Industrial Estate, to a new company and has saved at least 40 jobs.
According to a report from the administrators on the Companies House website, J D Cooling Systems operated from various leasehold premises in Lynn, Manchester and Kelty in Scotland, as well as having a satellite office in Newark. The firm employed 113 members of staff, including its seven directors, it adds.
An analysis of the company accounts from the financial years ending May 2015 to 2021 showed that turnover rose steadily from 2015 when it reported a turnover of £9.6million through to £29.9million in 2021. It also disclosed profits of between £958,000 in 2015 and £1.5million in 2019 – only reporting a loss in 2020 of £236,000. “For the financial year ended 31 May 2022, the company’s turnover had almost halved to £16.5m and it reported a post tax loss of £940,000,” the report adds. “This was mainly as a result of extended lead times due to supply chain delays and delayed orders resulting from a lack of confidence in the UK market due to the unstable economy, Covid-19 and the ongoing impact of Brexit.
“The company’s management accounts to April 30, 2023 showed turnover for the 11-month period of £14.7m and a loss of £1.3m, which reduced shareholders’ funds of £1.1m. “Unfortunately, the position quickly worsened as recent contracts worth £2.6m were further delayed and in May 2023 few new sales were won. “This had a significant impact on the company’s profitability and its cashflows becoming unworkable.”
In June this year, the firm's board sought advice on the company’s financial position and the options available to it from McTear Williams and Wood, before they were appointed as administrators in August. The report further states that the company experienced a number of trading challenges over the past three to four years, including: a downturn in its contracting revenue due to wider economic issues; a downturn in margins achieved on service and maintenance due to external influences; increased overheads; and defending a significant legal dispute.
“The above challenges collectively created a significant trading challenge and JDCS suffered cashflow difficulties as a result,” it says. “Prior to the challenges over the past three to four years, JDCS was a profitable, sustainable business with solid margin generation. “JD Cooling Group has a good reputation and industry track record for installation, service and maintenance. It still has a solid customer base – with around 75% of its business coming from existing customers.” The report adds that changes will be made going forward which will “see a strong and stable business restored once again”.
Jo Watts, joint administrator and associate director at McTear Williams and Wood, said: “Every case is different but in this instance we were able to save over 40 jobs and see the servicing and maintenance part of the business continue with its many loyal customers, which in today’s economic climate is a very good outcome. “It is currently predicted that there will be a dividend to unsecured creditors and we are inviting creditors to submit claims in the administration. “Saving a business in this way is not unchartered territory for McTear Williams and Wood. “Within a very strict professional code of conduct we are pleased the business has been given the restart it needed.”
22 September 2023