Don Valley Engineering Group Limited - Limited company accounts 22.3

REGISTERED NUMBER: 06389130 (England and Wales)

Don Valley Engineering Group Limited

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements For The Year Ended 31 July 2022

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Consolidated Income Statement

6

Consolidated Other Comprehensive Income

7

Consolidated Balance Sheet

8

Company Balance Sheet

9

Consolidated Statement of Changes in Equity

10

Company Statement of Changes in Equity

11

Consolidated Cash Flow Statement

12

Notes to the Consolidated Cash Flow Statement

13

Notes to the Consolidated Financial Statements

14

DIRECTORS:

A Priestley

I Trotter

L Ashurst

S Doleman

R Baker

REGISTERED OFFICE:

Sandall Stones Road

Kirk Sandall

Doncaster

DN3 1QR

REGISTERED NUMBER:

06389130 (England and Wales)

AUDITORS:

Kingswood Allotts Limited, Statutory Auditor

Chartered Accountants

Sidings Court

Lakeside

Doncaster

South Yorkshire

DN4 5NU

The directors present their strategic report of the company and the group for the year ended 31 July 2022.

The principal activities of the group in the year under review were those of mechanical engineering, particularly that of bulk material handling & processing and malting process plant. Within these sectors the group provide design consultancy, turnkey projects, supply of spares and asset management.The group also provide site mechanical installation for their projects and to third parties

REVIEW OF BUSINESS

In the financial year under review the company experienced the dramatic effects of the world emerging from the global pandemic with unprecedented price rises and inflation not seen in a generation. The war between Russia and the Ukraine has been a second most profound, adverse event during calendar year 2022.

August 2021 through to July 2022 has been our most challenging year since the management buyout. Steel supply shortages have increased prices dramatically from raw materials through to a range of manufactured components in our typical supply chain. Increased demand post lockdown has led to reduced capacity, extended deliveries & increased prices across the whole supply chain

These significant supply chain issues came at a time of rapid expansion with the fixed price contracts in our order book, mainly priced pre pandemic. A perfect storm. Working on fixed price contracts with rising prices has led to challenging operating conditions which have impaired contract performance. Management and staff have worked hard to mitigate these factors however the sheer scale of the problems have resulted in a modest £350K profit for the financial year.

A structured review of the business from our Senior management team allows us to better understand market trends and how we assess risk at the enquiry stage of contracts. We are moving forward as a group with a full order book, more than £15m, with current supply chain conditions factored into pricing of this work. This should ensure we trade through the forecast recession without the need to chase marginal business, so the future looks bright and consequently the directors expect another year of profitable operation ahead.

KEY PERFORMANCE INDICATORS

The directors consider the following key performance indicators relevant to the group:

2022

2021

Gross Profit %

18.6%

32.0%

Overheads / turnover ratio

16.1%

26.9%

Stock /cost of sales ratio

3.8%

10.3%

Staff costs /turnover ratio

29.6%

38.0%

Operating Profit / turnover ratio

2.5%

5.4%

Liquidity ratio

120.5%

112.3%

The directors consider the KPI's reflect the group performance for the year.

ON BEHALF OF THE BOARD:

A Priestley - Director

28 November 2022

The directors present their report with the financial statements of the company and the group for the year ended 31 July 2022.

DIVIDENDS

The directors do not recommend a final dividend. Dividends totalling £374,278 have been paid during the year in respect of the current year.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 August 2021 to the date of this report.

A Priestley

I Trotter

L Ashurst

S Doleman

R Baker

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Kingswood Allotts Limited, Statutory Auditor, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

A Priestley - Director

28 November 2022

Opinion

We have audited the financial statements of Don Valley Engineering Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 July 2022 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 July 2022 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 the 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 directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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 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 the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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 Group Strategic Report or the Report of the Directors.

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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 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.

Auditors' responsibilities for the audit of the financial statements

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

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

- Enquiry of management, those charged with governance around actual and potential litigation and claims;

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

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

- Performing audit work over the risk of management 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 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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Steven Pepper FCA (Senior Statutory Auditor)

for and on behalf of Kingswood Allotts Limited, Statutory Auditor

Chartered Accountants

Sidings Court

Lakeside

Doncaster

South Yorkshire

DN4 5NU

28 November 2022

TURNOVER

3

16,760,811

9,292,912

Cost of sales

13,645,661

6,314,779

GROSS PROFIT

3,115,150

2,978,133

Administrative expenses

2,701,583

2,498,767

413,567

479,366

Other operating income

-

22,549

OPERATING PROFIT

6

413,567

501,915

Interest receivable and similar income

172

980

413,739

502,895

Interest payable and similar expenses

7

71,848

36,187

PROFIT BEFORE TAXATION

341,891

466,708

Tax on profit

8

(8,128

)

17,874

PROFIT FOR THE FINANCIAL YEAR

350,019

448,834

Profit attributable to:

Owners of the parent

298,030

461,473

Non-controlling interests

51,989

(12,639

)

350,019

448,834

PROFIT FOR THE YEAR

350,019

448,834

OTHER COMPREHENSIVE INCOME

Surplus on revaluation of property

719,474

-

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

719,474

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,069,493

448,834

Total comprehensive income attributable to:

Owners of the parent

1,017,504

466,754

Non-controlling interests

51,989

(17,920

)

1,069,493

448,834

FIXED ASSETS

Intangible assets

11

(44,058

)

(95,946

)

Tangible assets

12

2,694,311

1,948,058

Investments

13

1

1

2,650,254

1,852,113

CURRENT ASSETS

Stocks

14

511,842

652,609

Debtors

15

5,061,253

5,331,715

Cash at bank and in hand

4,071,998

2,104,037

9,645,093

8,088,361

CREDITORS

Amounts falling due within one year

16

8,007,310

7,204,862

NET CURRENT ASSETS

1,637,783

883,499

TOTAL ASSETS LESS CURRENT LIABILITIES

4,288,037

2,735,612

CREDITORS

Amounts falling due after more than one year

17

(1,591,068

)

(714,768

)

PROVISIONS FOR LIABILITIES

21

-

(19,090

)

NET ASSETS

2,696,969

2,001,754

CAPITAL AND RESERVES

Called up share capital

22

80,000

80,000

Revaluation reserve

23

712,279

-

Capital redemption reserve

23

20,000

20,000

Retained earnings

23

1,850,621

1,919,674

SHAREHOLDERS' FUNDS

2,662,900

2,019,674

NON-CONTROLLING INTERESTS

24

34,069

(17,920

)

TOTAL EQUITY

2,696,969

2,001,754

The financial statements were approved by the Board of Directors and authorised for issue on 28 November 2022 and were signed on its behalf by:

A Priestley - Director

L Ashurst - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

2,488,971

1,777,790

Investments

13

2,569,082

2,524,053

5,058,053

4,301,843

CURRENT ASSETS

Debtors

15

1,157,906

548,847

Cash at bank

15,241

173,007

1,173,147

721,854

CREDITORS

Amounts falling due within one year

16

2,105,379

2,549,015

NET CURRENT LIABILITIES

(932,232

)

(1,827,161

)

TOTAL ASSETS LESS CURRENT LIABILITIES

4,125,821

2,474,682

CREDITORS

Amounts falling due after more than one year

17

1,221,591

235,104

NET ASSETS

2,904,230

2,239,578

CAPITAL AND RESERVES

Called up share capital

22

80,000

80,000

Revaluation reserve

23

712,279

-

Capital redemption reserve

23

20,000

20,000

Retained earnings

23

2,091,951

2,139,578

SHAREHOLDERS' FUNDS

2,904,230

2,239,578

Company's profit/(loss) for the financial year

319,456

(103,395

)

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the Board of Directors and authorised for issue on 28 November 2022 and were signed on its behalf by:

A Priestley - Director

L Ashurst - Director

Called up

share

Retained

Revaluation

capital

earnings

reserve

£

£

£

Balance at 1 August 2020

100,000

1,574,931

-

Changes in equity

Issue of share capital

(20,000

)

-

-

Dividends

-

(96,730

)

-

Total comprehensive income

-

441,473

-

Balance at 31 July 2021

80,000

1,919,674

-

Changes in equity

Dividends

-

(374,278

)

-

Total comprehensive income

-

305,225

712,279

Balance at 31 July 2022

80,000

1,850,621

712,279

Capital

redemption

Non-controlling

Total

reserve

Total

interests

equity

£

£

£

£

Balance at 1 August 2020

-

1,674,931

-

1,674,931

Changes in equity

Issue of share capital

-

(20,000

)

-

(20,000

)

Dividends

-

(96,730

)

-

(96,730

)

Total comprehensive income

20,000

461,473

(17,920

)

443,553

Balance at 31 July 2021

20,000

2,019,674

(17,920

)

2,001,754

Changes in equity

Dividends

-

(374,278

)

-

(374,278

)

Total comprehensive income

-

1,017,504

51,989

1,069,493

Balance at 31 July 2022

20,000

2,662,900

34,069

2,696,969

Called up

Capital

share

Retained

Revaluation

redemption

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 August 2020

100,000

2,359,703

-

-

2,459,703

Changes in equity

Issue of share capital

(20,000

)

-

-

-

(20,000

)

Dividends

-

(96,730

)

-

-

(96,730

)

Total comprehensive income

-

(123,395

)

-

20,000

(103,395

)

Balance at 31 July 2021

80,000

2,139,578

-

20,000

2,239,578

Changes in equity

Dividends

-

(374,278

)

-

-

(374,278

)

Total comprehensive income

-

326,651

712,279

-

1,038,930

Balance at 31 July 2022

80,000

2,091,951

712,279

20,000

2,904,230

Cash flows from operating activities

Cash generated from operations

1

2,787,799

338,908

Interest paid

(70,426

)

(32,257

)

Interest element of hire purchase payments paid

(1,422

)

(2,313

)

Factoring charges

-

(1,617

)

Tax paid

1

-

Net cash from operating activities

2,715,952

302,721

Cash flows from investing activities

Purchase of intangible fixed assets

(45,029

)

115,596

Purchase of tangible fixed assets

(157,802

)

(246,727

)

Sale of tangible fixed assets

626

31,349

Acquisition consideration paid

-

(309,416

)

Interest received

172

980

Net cash from investing activities

(202,033

)

(408,218

)

Cash flows from financing activities

New loans in year

-

805,000

Loan capital repayments

(159,631

)

(26,309

)

Hire purchase capital repayments

(21,896

)

(2,658

)

Amount introduced by directors

9,847

4,181

Shares issued to minority interest

-

4,900

Equity dividends paid

(374,278

)

(96,730

)

Net cash from financing activities

(545,958

)

688,384

Increase in cash and cash equivalents

1,967,961

582,887

Cash and cash equivalents at beginning of year

2

2,104,037

1,521,150

Cash and cash equivalents at end of year

2

4,071,998

2,104,037

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2022

2021

£

£

Profit before taxation

341,891

466,708

Depreciation charges

123,333

83,874

Loss/(profit) on disposal of fixed assets

206

(10,218

)

Finance costs

71,848

36,187

Finance income

(172

)

(980

)

537,106

575,571

Decrease in stocks

140,767

33,373

Decrease/(increase) in trade and other debtors

260,615

(2,724,061

)

Increase in trade and other creditors

1,849,311

2,454,025

Cash generated from operations

2,787,799

338,908

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 July 2022

31.7.22

1.8.21

£

£

Cash and cash equivalents

4,071,998

2,104,037

Year ended 31 July 2021

31.7.21

1.8.20

£

£

Cash and cash equivalents

2,104,037

1,521,150

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.8.21

Cash flow

At 31.7.22

£

£

£

Net cash

Cash at bank and in hand

2,104,037

1,967,961

4,071,998

2,104,037

1,967,961

4,071,998

Debt

Finance leases

(36,790

)

21,896

(14,894

)

Debts falling due within 1 year

(1,299,292

)

1,043,684

(255,608

)

Debts falling due after 1 year

(699,873

)

(884,054

)

(1,583,927

)

(2,035,955

)

181,526

(1,854,429

)

Total

68,082

2,149,487

2,217,569