The directors present the strategic report for the year ended 31 March 2023. The comparative period presented in these accounts is for the 11 month period ended 31 March 2022.
DIG Civil Engineering Limited is a holding company for DIG International Group Limited (together the group) which is an International Civil Engineering contractor with capability in infrastructure and surface mining.
Since establishing in 2019 the group has assembled a technically strong and experienced team in a wide range of disciplines and difficult operating environments. This allows the group to enjoy a competitive advantage in its ability to analyse, develop and execute innovative solutions to challenging projects.
During the year the group increased its turnover to £45.4m (2022: £10.3m), which is in line with the company’s business plan of sustained and controlled growth. This result is underpinned by the on-going successful delivery and scaling up of current mining infrastructure projects predominantly in Sierra Leonne. Gross margin achieved on the delivery of the projects remained strong in the year at 23.97%, though was reduced from the 2022 gross margin of 38.52%, reflecting the changing costs levels attached to the delivery of the larger scale contract elements undertaken in the year. Operating profit generated increased to £7.3m (2022: £2.4m).
The asset register maintained by the group is an important aspect of the business and the strategy is to proactively enhance and maintain its plant and machinery to facilitate the continued expansion of the group’s activities. Continued investment in the asset base saw capital expenditure of £9.5m being made in the period. With total assets less current liabilities increasing during the period to £10.36m (2022: £4.63m), the group is well placed to continue the undertaking of large contracts and fund further acquisitions should such opportunities arise.
Our vision is to deliver total solutions to our clients using innovation and our project development, engineering and management skills to add value to their business. Undoubtedly the commitment and enthusiasm displayed by all our staff has contributed significantly to our success.
| 12 months to 31 March 2023 | 11 months to 31 March 2022 | Variance |
Turnover | £45,436,315 | £10,326,423 | £35,109,892 |
Gross Profit | £10,891,583 | £3,977,265 | £6,914,318 |
Gross Profit % | 23.97% | 38.52% | -14.55% |
Operating Profit | £7,292,674 | £2,429,793 | £4,862,881 |
Operating Profit % | 16.05% | 23.53% | -7.48% |
The group is establishing itself as an International Civil Engineering contractor and further opportunities are becoming more and more available through the sound reputation that has been created and along with successful recruitment, we intend to expand upon what has been achieved to date with movement into new territories to ensure growth and support our strategic plan.
The group recognises the importance of its environmental responsibilities and accepts that concern for the environment and all employees is an integral and fundamental part of its corporate business strategy. The group monitors its impact on the environment and endeavours to design and implement policies and processes to reduce any damage that might be caused by the group's activities.
The nature of the business environment in which the group operates is inherently risky. Whilst it is not possible to eliminate all such risk and uncertainties, the group has an established a risk management and internal control system in place to manage them. The group is establishing itself as an International Civil Engineering contractor and further opportunities are becoming more and more available through the sound reputation that has been created and along with successful recruitment, we intend to expand upon what has been achieved to date with movement into new territories to ensure growth and support our strategic plan.
The group operates a number of risk management policies designed to minimise its exposure to financial risk including key financial controls and targets implemented on every project which are reviewed monthly by the board to ensure that risk is mitigated, and opportunities explored fully.
Liquidity and cash flow risk
The group produces detailed management accounts and forecasts, which enable the directors to monitor the cash position and to ensure that there is sufficient liquidity and cash flow to minimise the risk of the group being unable to pay its debts as they fall due.
Interest rate risk
The group utilises a number of financial instruments including hire purchase contracts and finance lease obligations in order to finance its operations. The primary risk faced by the group as a result of its use of the financial instruments is interest rate risk. These fixed rate borrowings arise on the acquisition of the group's larger plant, machinery and vehicle purchases. As before, the directors actively manage this risk through prudent use of the group's cash reserves, considering whether each acquisition should be financed or purchased outright along with the consideration of strengthening its balance sheet.
Credit risk
The group’s credit risk is primarily attributed to its debtors, the group operates a number of policies and controls to minimise credit risk. All customers are subject to a detailed credit review prior to any terms being agreed. Directors must authorise any larger value contracts and the group will only conduct business with customers deemed to be credit worthy.
Price risk
The group actively manages price risk by agreeing terms with suppliers prior to entering into any transactions with customers.
Foreign Exchange risk
The majority of the group’s trade is currently conducted in overseas territories, as a result, the group's profits and losses can be affected by movements in exchange rates. The group does not seek to hedge this exposure, however there is an element of natural mitigation as both costs and sales are incurred in foreign currencies.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2023. The comparative period presented in these accounts is for the 11 month period ended 31 March 2022.
The results for the year are set out on page 9.
Final dividends of £366,000 were paid during the period.
Going concern
These financial statements are prepared on the going concern basis
The period ended 31 March 2023 was the group's fourth period of trade following the incorporation of the main trading subsidiary, DIG International Group Limited on 22 March 2019 and the group generated a profit before tax for the financial period of £6,708,026 (2022: £2,391,960). As at 31 March 2023 the group had net assets of £8,900,837 (31 March 2022: £4,133,332) but net current liabilities of £147,132 (31 March 2022: net current assets: £652,177).
In determining the appropriate basis of preparation of these financial statements, the directors are required to consider whether the group can continue in operational existence for the foreseeable future.
The directors have prepared detailed cash flow projections underpinned by secured contracts which indicate that the group, as at the date of approval of these financial statements, and subject to its customers fulfilling their financial obligations in line with contractual terms, will be able to operate within its facilities for a period of at least 12 months from the date of the signing these financial statements.
Furthermore, the directors do not regard the projections as containing any material uncertainties as at the date of these financial statements. Even considering the nature of the international civil engineering business whereby the timing, quantum and funding under medium term contracts could alter unexpectedly, the directors have calculated various worst case scenario outcomes and are confident that there is adequate headroom in the group’s cash resources. As such the directors have a reasonable expectation that the group will be able to meet its liabilities, as they fall due, for the foreseeable future.
On this basis the directors consider it appropriate to prepare the group's financial statements on a going concern basis.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
The strategy and future developments in the business are set out in the Strategic Report.
In accordance with the company's articles, a resolution proposing that Azets Audit Services be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of DIG Civil Engineering Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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).
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 group and parent 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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
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 their 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 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 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 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 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.
Extent to which the audit was considered 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 and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £366,000 (2022 - £231,000 profit).
DIG Civil Engineering Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office Stradey Business Centre, South Mwrwg Road, Llangennech, Llanelli, Dyfed, United Kingdom, SA14 8YP.
The group consists of DIG Civil Engineering Limited and all of its subsidiaries.
During the comparative period DIG Civil Engineering Limited charged its reporting period end to 31 March, to align with that of its main trading subsidiary DIG International Group Limited. As a result these financial statements are for the 12 month period ended 31 March 2023, whilst the comparative period information presented is for an 11 month period ended 31 March 2022.
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, modified to include certain financial instruments at fair value. 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 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: Interest income/expense and net gains/losses for financial instruments not measured at fair value; 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 group financial statements consist of the financial statements of the parent company DIG Civil Engineering Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2023. 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
These financial statements are prepared on the going concern basis
The period ended 31 March 2023 was the group's fourth period of trade following the incorporation of the main trading subsidiary, DIG International Group Limited on 22 March 2019 and the group generated a profit before tax for the financial period of £6,708,026 (2022: £2,391,960). As at 31 March 2023 the group had net assets of £8,900,837 (31 March 2022: £4,133,332) but net current liabilities of £147,132 (31 March 2022: net current assets: £652,177).
In determining the appropriate basis of preparation of these financial statements, the directors are required to consider whether the group can continue in operational existence for the foreseeable future.
The directors have prepared detailed cash flow projections underpinned by secured contracts which indicate that the group, as at the date of approval of these financial statements, and subject to its customers fulfilling their financial obligations in line with contractual terms, will be able to operate within its facilities for a period of at least 12 months from the date of the signing these financial statements.
Furthermore, the directors do not regard the projections as containing any material uncertainties as at the date of these financial statements. Even considering the nature of the international civil engineering business whereby the timing, quantum and funding under medium term contracts could alter unexpectedly, the directors have calculated various worst case scenario outcomes and are confident that there is adequate headroom in the group’s cash resources. As such the directors have a reasonable expectation that the group will be able to meet its liabilities, as they fall due, for the foreseeable future.
On this basis the directors consider it appropriate to prepare the group's financial statements on a going concern basis.
Turnover, which represents the value of civil engineering works undertaken, is recognised to the extent that it is probable that the economic benefits will flow to the company and the turnover can be measured reliably. Turnover is measured at the fair value of the consideration received or receivable for 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.
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.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
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.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
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.
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.
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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
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 profit or loss 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 profit or loss 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 leased 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 in the period are included in profit or loss.
In the application of the group’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.
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.
During the year and at the balance sheet date the group task in house experienced quantity surveyors with quantifying the amounts recoverable on each contract in progress. Cost of work done to date including materials, subcontractors and staff is taken into consideration before arriving at a valuation by reference to the stage of completion. The group include provisions in their valuations for unforeseen costs based on their risk and likelihood of them occurring.
Stocks are valued at the lower cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires judgements to be made, which include forecast future use.
On acquisition of an asset, management consider the anticipated useful life based on prior experience, taking in to consideration the age and condition of the asset at acquisition.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year 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 31 March 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The amounts owed by group undertakings are due from the subsidiary company, DIG International Group Limited, are interest free, unsecured and have no fixed terms for repayment.
Included in group other creditors is a balance of £20,000 (2022: £60,000) in relation to amounts payable to employees. These loans are interest bearing and unsecured. The company has no such balances.
Obligations under finance leases are secured against the assets to which they relate.
The bank loan falling due after more than one year is unsecured and incurs interest at a rate of 2.5% per annum after an initial 12 month interest free period.
Obligations under finance leases are secured against the assets to which they relate.
Included in bank loans as at 31 March 2023 is a bank loan of £36,667 (2022: £46,667), of which £30,000 (2022: £40,035) was due after more than one year), which is unsecured and incurs interest at a rate of 2.5% per annum after an initial 12 month interest free period. Further bank loans as at 31 March 2023 relate to a loan of £412,955 (2022: £450,841) which incurs interest at a rate of 3.5% per month and which is secured by fixed and floating charges over the assets of the company and loans of £299,250 (2022: £nil) which incur interest at a rate of 1.9% per month and are unsecured.
Other loans relate to amounts due to directors of the company, see note 24 for further details.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. At the end of the lease term the assets will be owned by the company, and no restrictions are placed on the use of the assets.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period. The deferred tax liability set out above is expected to reverse in future periods and relates to accelerated capital allowances that are expected to mature within the same period as the estimated useful economic lives of the assets to which they relate.
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.
On 17th May 2022, there was a sub-division of the previously allotted 3 ordinary shares of £1.00 each into 300 Ordinary £0.01 Shares.
Amounts contracted for but not provided in the financial statements:
During the year dividends of £366,000 (2022: £231,000) were paid to the directors of the company.
As at 31 March 2023, loans due to the directors of the company amounted to £635,974 (2022: £nil), these are included in other loans falling due within one year. The loans are unsecured with £556,724 (2022: £nil) incurring interest at 0.69% per month and £79,250 (2022: £nil) being interest free. In addition, there are balances of £350,887 (2022: £357,090) due to the directors, of which £231,000 (2022: £231,000) was owed by the company, which have no fixed terms for repayment, are interest free and unsecured. These amounts are included within other creditors falling due within one year.
As at 31 March 2023, balances owed by the directors to the company amounted to £nil (2022: £3,000). These amounts are interest free, unsecured and have no fixed terms for repayment. The amounts are included within other debtors falling due within one year.