The Directors present the Strategic Report for the year ended 30 June 2023.
Principal activity
NG Investments Limited acts as a holding company for its wholly owned subsidiary Kilnbridge Group Limited. It does not trade in its own right. Kilnbridge Group Limited is a parent company to its trading subsidiary, Kilnbridge Construction Services Limited, and also invests in plant, vehicles, property and provides finance and management services used by this company (together the 'Group').
The trading subsidiary, Kilnbridge Construction Services Limited, is an award-winning engineering and construction business with advanced capabilities. Operating as a Tier 2 turnkey specialist structures contractor Kilnbridge specialises in reinforced concrete construction, along with enabling and civil engineering works, temporary works design and installation, structural steelwork and complex structural alterations. Its specialist businesses provide concrete cutting and controlled demolition, hydro demolition, waste management and passive fire protection services.
The business is supported by in-house capabilities that underpin the delivery of its works: including Engineering and Design service which assists projects with design, detailing, buildability, methodology, preconstruction support and multi-disciplinary advice and expertise; K PLANT, which supplies, manages and maintains a comprehensive range of plant, equipment and capabilities and K FAB, its specialist structural steelwork fabricator.
The Group invests in its subsidiary and provides resources to generate profits either as dividends or as charges for resources provided.
Capital expenditure is required each year in information technology systems, plant, equipment and vehicles to ensure that its subsidiary can work more efficiently and increase turnover and profits.
Our sectors
We work on national infrastructure projects such as major transport hubs, nuclear energy and defence facilities along with heritage buildings, public buildings and commercial offices.
Major Infrastructure and Rail Programmes
Kilnbridge has been involved in the delivery of many structures and civil engineering packages on major infrastructure and rail schemes. Recent and current projects include Crossrail, High Speed 2 (HS2) and the Gatwick Station Upgrade Project.
We have also successfully delivered a wide range of projects and construction services for customers including Network Rail, and TFL on London Underground and Overground stations and their infrastructure networks.
We have worked on major infrastructure and rail projects nationally for many years and continue to support the ongoing investment in infrastructure expansion and improvements that are of significant importance to the nation's economic growth and environmental sustainability.
The key to our success continues to be our ability to develop solutions to deliver complex and challenging projects safely. As such, we continually invest in performance improvement to meet the demands of this safety critical and highly regulated environment.
Major Commercial and Mixed-Use Projects
Our knowledge and expertise in these sectors have created long-standing relationships with many of the UK’s leading commercial and residential property developers and their professional teams and delivery partners who value Kilnbridge as a trusted contractor.
Over the past 30 years, we have successfully delivered our services on some of the largest and most prestigious developments across London and the South-east. These include the major Wood Wharf Development scheme for the Canary Wharf Group and the Stratford Waterfront Development for the London Legacy Development Corporation.
Aviation
Kilnbridge has a diverse portfolio of projects successfully delivered on many of the UK’s major airports, most notably Heathrow, Gatwick and London City. We understand the unique issues that our clients and all stakeholders face in these highly regulated environments. We therefore work closely at all stages of the project to deliver it safely and to the highest standards with minimal disruption and environmental impact.
Energy
Our diverse and innovative approach has complemented the needs of this highly challenging and regulated sector. Kilnbridge completed projects in the past at Sizewell B Nuclear Power Plant and more recently the construction of the intake and outfall head structures for the new Hinkley Point C Nuclear Power Plant.
Trading and operating review
Turnover increased 24% year on year to £120.1m (2022: £97.3m). This performance translated into a pre-tax profit of £6.4m, a 61% increase from £4.0m in the previous year. We are pleased with these results, especially considering the notable impact of escalated commodity, energy, and labour costs.
The pre-tax profit margin grew to 5.4% from 4.1% in 2022. This impressive margin underscores our ability to navigate challenges and effectively integrate inflation recovery mechanisms within contracts. Furthermore, it reflects the successful culmination of various final account agreements, all of which were concluded by year-end.
Order book
Our three-year order book at FY2023 stood at £60m, providing us with a strong foundation to build on. This order book excludes turnover generated by our specialist business units, which consistently generate around £25m in turnover each year through concrete cutting, hydro demolition, fire protection, and waste management services.
Major projects
Most notable amongst our projects during the year and ongoing are:
Stratford Waterfront Development - East Bank is at the heart of the Queen Elizabeth Olympic Park and is the UK’s largest cultural project in generations. Kilnbridge is constructing the structural frames which will house new recording and rehearsal music studios and a home for the BBC Symphony and Concert Orchestras, and the new Sadler’s Wells Theatre - a 500-seat facility which will enable UK audiences to experience the most innovative choreography made today.
HS2 projects:
Copthall Tunnel – The project comprises the construction of a one kilometre long cut and cover tunnel. The scope includes the construction of the reinforced concrete tunnel structure and waterproofing works, as well as the construction of a number of overbridges, underbridges, ventilation shafts and maintenance structures. The management and supply of cranage and lifting equipment is also part of the contract.
Colne Valley Viaduct - Currently under construction, this is the longest railway viaduct in the UK and will carry the High Speed 2 railway over the Colne Valley Regional Park and the Grand Union Canal. With a length of 3.4 km and a weight of 116,000 tonnes, this will be one of the largest single civil engineering works on HS2. Kilnbridge are constructing the foundations and 58 reinforced concrete piers for this iconic viaduct producing high quality architectural concrete in a challenging location amongst highly sensitive natural habitats.
Gatwick Airport Station - Kilnbridge are demolishing existing Network Rail bridges and structures, manufacturing and installing a new concourse structure and constructing new additional access structures including step-free facilities. These Works will create a safer and more convenient interchange between the station platforms and Gatwick International Airport and will improve passenger flow and overall experience.
Riverlinx, Greenwich Peninsula South East London – Kilnbridge was commissioned to fabricate and erect the structural steel framework and construct the RC topping slab of a decked car park structure on a site bounded on three sides by a loop of the Thames, making it a challenging build.
Major new contracts awarded during the year included:
Manbre Wharf redevelopment – The project entails the transformation of an existing four-storey structure, including a single-level basement, into a six-storey life science building with extensions on both the east and west sides. The scope of works encompasses various aspects of pre-cast concrete and RC construction, steel fabrication and deconstruction of various existing elements.
HS2, Bromford Tunnel Intermediate Ventilation Shaft – Construction of reinforced concrete structures within the intermediate ventilation shaft.
The Directors use the following financial KPIs as a measure of the Group's performance against its defined strategic priorities.
| Year to | Year to | Variance |
| 30/06/2023 | 30/06/2022 |
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Turnover | £120.1m | £97.3m | 24% |
PBT | £6.4m | £4.0m | 61% |
Pre-tax profit margin | 5.4% | 4.1% |
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EBITDA | £9.9m | £6.5m | 52% |
Cash at Bank | £17.7m | £19.3m | -8% |
Employee-Owned Trust "EOT" bonus scheme
100% of the ordinary share capital of the group is held in an Employee Ownership Trust (EOT) for the benefit of the Group's employees who are the sole beneficiaries of the Trust, on terms that the requirements of the EOT legislation in sections 236H to 236U TCGA 1992 are met.
The EOT is designed to support the sustainability of the organisation and to secure the legacy of the founding family. Being an employee-owned business recognises all who dedicate their time and energy to support the business, contributing to its success. The advantages of being employee owned – sharing responsibility, opportunities and reward – sits well with the inclusive, values-driven culture of the business.
The former shareholders continue to receive their consideration relating to the transfer of the ordinary share capital into the EOT, as and when funds are made available to the EOT via ad hoc contributions received from the Group by way of gifts out of post-tax distributable reserves. There is no debt to be recognised in the books of the group as a consequence of the transaction.
Under the EOT bonus scheme all staff members who have served for six months or more are entitled to join the scheme, whereby all profits are divided equally amongst staff regardless of seniority or length of service. This profit-related bonus is a key recruitment tool for the Group in a highly competitive labour market. It is designed to attract and retain the best talent in a highly competitive labour market and is based on profit distribution after debt repayments.
We were very pleased to distribute our second EOT bonus shortly after the year end, through which every qualifying member of staff received £862 (FY2022: £545), distributing a total of £310,000 (FY2022: £160,000) under the scheme to qualifying staff members. The pay-out is in addition to other incentive and bonus schemes in place.
For more information on employee involvement, please see page 9.
The Board has overall responsibility for identifying, managing and mitigating the Group's risks. The Board assesses the Group's exposure to its principal risks on a continuous basis, with day-to-day risk managed under delegated authorities by the operation leaders of the specialist business units.
The Group has robust risk controls and policies that are integrated at all levels of the business.
The principal risks that the Board believe are the most likely to affect the business operations, impact strategy, financial performance, and influence the Group's reputation are set out below.
Risk | Mitigating controls |
Significant health, safety or environmental incident Due to the nature of our work, there is the potential to cause significant harm to our employees, our business partners or members of the public, or to damage the environment. We are committed to safeguarding our people and protecting the environment wherever we operate.
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Irrecoverable cost over-runs on individual contracts. Delivering on our contractual obligations on time and on budget, and meeting and reporting against agreed service levels has a strong impact on our financial performance, reputation, and on our ability to win business. The risk is increased during high inflationary periods as we are currently experiencing.
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Risk | Mitigating controls |
Cancellation or delays to major contracts |
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Safety regulation changes The Building Safety Act has the potential to allow clients to make claims against historic works and that may require remedial action.
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Losing clients to cheaper competition. Our industry faces strong competition, particularly for general construction works and non-specialist skills, which can lead to price-pressure from competitors. |
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Reputational management Maintaining our reputation is vital to the success of our business. A loss in confidence from clients and our sector would affect our ability to win business. This can, in turn, adversely affect our financial performance and growth prospects. |
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Risk | Mitigating controls |
Price inflation Inflationary pressures have an impact on input prices including labour, materials and energy.
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contracts.
client contracts and are covered by price adjustment factors.
until September 2024.
for managing suppliers. During the year the department focused on
benefit from preferential price, and
and increasing the amount of stock held in order to mitigate future price increases. |
Increased competition for skilled labour An ongoing shortage of skilled and semi-skilled labour in the construction industry has the potential to impact on the delivery of our contractual obligations.
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own staff to upskill employees and fill roles internally.
new generation of skilled workers.
benefits packages to make them more competitive.
the employee owned trust and are eligible for a share of profit-related bonuses.
from overseas where required. |
Financial controls Failure to impose strong financial controls may result in a heightened risk of error in reporting, inaccurate financial forecasting, bad debts, a lack of liquidity, exposure to uninsured losses, and exposure to liabilities arising from inter-company guarantees.
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with extensive control over working capital and cash management.
reconciliations on all projects to monitor and measure expenditures against budgets.
together with the continuing support of its holding company, ensures the Group has adequate liquidity and cash flow for foreseeable needs.
Group believes it has adequate insurance in respect of foreseeable and insurable risks.
of operations, with support from its banks, aims to minimise the risk of exposure to liabilities arising from inter-Company guarantees. |
In addition to the above, the Board would like to highlight an additional matter:
HSE Investigation
Following a fatal workplace incident on the Gatwick Rail Station project at the start of FY2023, the Group continues to work with the authorities and the client in the ongoing investigation to gain a complete understanding of the events that took place. The Group will continue to cooperate with the authorities, taking appropriate action as required.
Business Transformation - Vision 2025
The Group has made considerable progress in its business transformation programme, Vision 2025, since its launch in early 2022. The programme has involved all staff at all levels to shape the business and meet its vision.
“To deliver construction projects and services that have an enduring legacy on the UK’s infrastructure and built environment, transforming the way people live and work.”
The key priorities of Vision 2025 were to:
drive profitable growth through both operational efficiency and departmental overhead effectiveness,
improve communication, becoming more agile and connected,
maximise the effectiveness of all our talent,
succession planning, and
build a resilient business.
The business has made good progress across key financial indicators and has made improvement to internal communication, IT, and HR including recruitment, training and onboarding programmes, senior leadership development and succession planning. Internal reorganisation initiatives have enhanced operational efficiency and overhead effectiveness. Examples include:
centralising the procurement department and appointing a Procurement Manager to bring greater strategic focus and planning towards procurement; and
appointing a dedicated Head of Sustainability, elevating our approach to sustainability and bringing greater focus to this important area of the business.
One of the priorities for Vision 2025 was to set a long-term Business Strategy to replace Vision 2025 and set the tone for long-term, sustainable growth. This exercise began in 2023 involving the Board and senior leadership team in light of the current opportunities and risks. The business strategy was finalised post year-end.
Engaging with our stakeholders
The Board seeks to understand the expectations and interests of the Group's stakeholders, and to reflect these in the choices it makes in its efforts towards the long-term success of the business.
Engagement with our stakeholders, including employees, clients, contractors, suppliers, and banks forms a central part in our decision-making process. The Board tailors its engagement approach to each stakeholder group in order to foster effective, sustainable and mutually beneficial relationships.
The Board’s understanding of its stakeholder interests is taken into consideration within Boardroom discussions in relation to strategy and planning. The Board considers how stakeholder expectations may be addressed and how the Board’s decisions may impact stakeholder interests. Stakeholder expectations are determined through information gathered and provided by management and by direct engagement. The priority of each stakeholder group may increase or decrease, depending on the impact a decision may have on a particular stakeholder group.
This section of the report serves as our Section 172 Statement and should be read in conjunction with the Strategic Report. Section 172 of the Companies Act 2006 requires the Directors to act in a way that they consider, in good faith, would most likely promote the success of the Group for the benefit of its members as a whole, taking into account the factors listed in Section 172.
The table below set out the key stakeholder groups, their interests and how Kilnbridge has engaged with them over the reporting period.
Key decisions made in FY2023
Review of business strategy – the Board made the decision to review the Group's strategy in light of the current opportunities and risks. The business strategy was finalised post year-end.
Appointment of a full-time HR Director – to set the people strategy, manage training and development and recruitment.
Appointment of a Head of Communications – appointed post year-end to manage internal and external communications with key stakeholders.
Centralised procurement and appointed a Head of Procurement – to manage suppliers and procurement.
Appointment of a Head of Sustainability – to refresh and drive the Group's sustainability agenda.
Employees
Our employees are our primary asset, and the Board recognises that our employees are the key resource which enables delivery of the Group's vision and goals.
Their interests
prospects
| How we engage
procedures
appraisals
management programme involving all staff in the Group, including workshops to identify key priorities, planning, and regular meetings to provide updates on progress and achievements.
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Clients
The Board recognises that a strong reputation based around responsibility, integrity, teamwork and excellence is a vital part of the Group's growth.
Their interests
budget
and values are aligned to their own
and quality of delivery
| How we engage
project management
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Suppliers and contractors
Our contractors provide additional resources and specialist skills when required to complete projects.
Their interests
| How we engage
to our own by applying the same values, ethics and policies relevant to our own staff
management team
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Banks and debt providers
The Group has access to lines of credit in order to satisfy working capital requirements with banks and HP providers.
Their interests
sheet, net asset base, gearing and interest cover
| How we engage
and reporting.
management
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Community and environment
The Group is committed to its social responsibility by actively embracing the communities in which it operates as well as the ongoing protection and enhancement of the environment.
Their interests
environment
mutually beneficial relationships | How we engage
supported bodies to provide charitable support and assistance to local communities.
and colleges.
System accreditation.
management.
carbon management systems.
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Outlook and future prospects
We started the year with an order book of approximately £60m through to 2025, providing us with a strong foundation. This order book excludes the turnover generated by our specialist business units, which consistently generate around £25m each year through concrete cutting, fire protection, and waste management services.
The cancellation of Phase 2 of HS2, announced in October 2023, put an immediate stop to tenders under development by the pre-construction team, although HS2 Phase 1 contracts will continue to FY2025. This announcement led the Board to evaluate what impact the HS2 cancellation would have on Kilnbridge’s future prospects, balancing this against other national infrastructure construction opportunities available.
The Board concluded that whilst the cancellation of HS2 is disappointing, there remain significant opportunities in major national infrastructure and energy projects. Our sector continues to benefit from planned and projected £700-£775b of expected public and private investment over the next decade. The majority of this investment will be on transport, energy, utilities, and social infrastructure and are all areas where Kilnbridge has a strong track record and an established client base.
As a group that has successfully delivered complex projects, the Board is confident that the Group remains well-positioned to participate in a number of these schemes over the coming years. To target these opportunities we began developing our Group Strategy which will sit alongside the Vision 2025 business transformation programme. This strategy will bring clarity to the type and scale of projects we will pursue and how we will go about delivering them.
We continue to target approximately 80% of revenues towards infrastructure and energy with the remainder delivering commercial projects such as complex structural alterations.
While inflation stabilises we continue to maintain strong cost control measures and forward procurement planning to secure the best prices for materials and major plant investments.
In summary, we are focused on our core business activities and remain well-positioned to participate in major projects scheduled to take place in the UK over the coming years.
On behalf of the board
The Directors present their annual report and financial statements for the year ended 30 June 2023.
The results for the year are set out on page 22.
Ordinary dividends were paid amounting to £nil (2022: £nil). The Directors do not recommend payment of a further dividend.
Contributions to Employee Ownership Trust
A contribution to the Employee Trust of £6,000,000 was paid during the year (2022: £2,240,000)
The Directors who held office during the year and up to the date of signature of the financial statements were as follows:
ISO 4001 certification
The business has successfully continued to maintain its accreditation to the ISO 45001 standard. There were no non-conformances identified during the two visits by our UKAS accredited third party auditors during the reporting period.
The Integrated Management System and our business operations have all been successfully audited against the Achilles Utility Vendors Database (UVDB) & Building Confidence Schemes as well as Rail Industry Safety Qualification Scheme (RISQS) to demonstrate compliance across the Utilities, Construction and Rail Sectors
Sustainability report - growing our business responsibly
Operating in a responsible manner is integral to our vision to create an enduring legacy, which defines us as a sustainable business providing the best service to our clients.
Sustainability sits at the forefront of the business agenda, and our strategy is aligned to addressing the key risks and expectations of the business, our workforce, and its stakeholders, with the aim of delivering and achieving sustainable growth, economically, environmentally, and socially.
We recognise that our people are our most valuable asset and, therefore, the protection of their health, safety and wellbeing extends beyond our moral and legal requirements, ensuring that they are fit for work. In addition, we acknowledge that by tackling climate change and reducing emissions, we will help to safeguard the health and wellbeing of our people and the environment both now and for future generations.
We are very proud to have won several prestigious industry awards, which acknowledge our achievements in delivering an excellent service to our clients and rewards the hard work of our dedicated and professional employees.
Our main focus remains linked to our vision and values and we are dedicated to embedding these into every aspect of our day-to-day operations and culture.
During the period we reviewed our sustainability strategy to reflect the continuing development and increasing importance of operating in a environmentally and socially responsible manner. These have been linked to the UN Sustainable Development Goals. During this exercise we expanded and set new targets to focus our activities and ensure that we make meaningful and impactful progress in our sustainability objectives. We have published a separate sustainability report for the first time, of which a summary is included below.
Outstanding workplaces
Thrive together
We encourage and support our people’s continuous personal and professional development and recognise that we operate in a highly competitive labour market and have strategies in place to encourage staff retention and develop our own talent from within.
In 2023, we enhanced our onboarding programme and extended our compliance inductions to include all staff across all sites. We also introduced a buddy scheme to support new joiners and apprentices in their first 90 days with us. We will be training new buddies in their responsibilities and how they can help smooth a new joiner’s entry into Kilnbridge.
A key target is to see an increase in female representation at all levels of the business year on year, as we acknowledge that at Kilnbridge this sits below the industry norm of 14%. This goal was achieved at management and senior levels of the organisation with the recruitment of a permanent HR Director who sits on the Board, a Head of Communications, a Head of Sustainability, Safety & Wellbeing Manager, Lifting Manager and two Senior Project Leaders.
Foster inclusive change
Kilnbridge is an equal opportunities employer committed to creating a diverse workplace where everyone is treated fairly and with respect.
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the Group continues and that the appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
To support our HR strategy, we have trained and appointed four FIRs ambassadors, five STEM ambassadors, and continue to provide EDI training to the workforce.
Enhancing the environment
We are committed to the ongoing protection and enhancement of the environment. This is achieved through education, knowledge, and practical applications.
Our policy and ISO 14001 accredited Environmental Management System seeks to minimise the negative environmental impacts of our operations through the efficient use of resources, energy and carbon management, and creating processes to deliver our services in a more sustainable way.
We are proud to be Partners and have maintained Gold membership of the Supply Chain Sustainability School, allowing us to collaborate with like-minded businesses in helping shape the sustainable agenda both within the industry and our supply chain
Accelerated net zero transition
As a group, we are actively working towards achieving a better future with a lower overall impact on the environment. Our immediate focus is on energy efficiency, investing in new carbon reducing technologies and waste reduction. With each project, product or service delivered we are becoming more and more environmentally conscious and collaborative with clients and industry partners who share our commitments.
We are a Carbon Neutral Group, a Co2nstruct Zero Business Champion and have recently joined The Climate Group’s Concrete Zero and Steel Zero groups as part of our commitment to achieving Net Zero.
We have established a near-term Science Based Targets Initiative (SBTi) target, aiming for a 46.2% reduction in Scope 1 & 2 greenhouse gas (GHG) emissions by 2030. Additionally, our target entails a 90% reduction in Scopes 1, 2, and 3 GHG emissions by 2040, based on the FY22 as the baseline year. At the end of 2023 we submitted our application to SBTi for our targets to be validated.
We continue to invest in new plant and equipment technologies to meet the needs of the business’s innovative construction methods and to improve project performance in terms of sustainability, programme, and cost. This includes, use of electric plant to reduce CO2 emissions on our project sites, inclusion of electric vehicles in our group car fleet and using REGO-backed renewable energy sources.
In 2023, we set a Carbon Reduction Plan (PPN 06/21) which aims to reduce our carbon emission both in absolute terms and intensity.
Kilnbridge’s carbon intensity has reduced by 30% since FY2021 but rose 21% between FY2022 and FY2023. The main reason for this is the Government’s reform of rebated fuels entitlement that came into effect from April 2022, which resulted in the price of HVO fuel averaging 10% to 20% more than standard diesel, impacting our direct impact carbon emissions data.
Our Head Office, Consolidation Centre (K PLANT) and the Northampton Steel Fabrication (K FAB) facilities use renewable energy. For the entire business in FY22, 91% of electricity consumption is derived from renewable sources. Furthermore, on our sites, 26% of the energy consumption is attributed to renewable diesel, specifically HVO D+.
GHG Emissions Data | 2023 | 2022 | 2021 |
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Total energy consumed (kWh) | 9,615,290 | 8,475,654 | 7,248,715 |
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Scope 1 emissions from gas, transport and construction site fuel use (tCO2e) | 2,088.54 | 1,311.32 | 1,755.26 |
Scope 2 emissions from electricity use (tCO2e) | 17.96 | 115.75 | 117.03 |
Scope 3 emissions from vehicle business travel (tCO2e) | 39.67 | 23.70 | 18.53 |
Total gross tCO2e | 2,146.17 | 1,450.77 | 1,890.82 |
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Intensity ratio: Tonnes CO2e per £m turnover | 18.02 | 14.89 | 25.66 |
We have applied the most relevant emission factors sourced from DEFRA’s 2021 UK Greenhouse Gas (‘GHG’) Conversion Factors for Group Reporting.
Pursue circular outcomes
We achieve a lower overall impact on the environment by pursuing circular economy principles. We adopt recycle, reuse and repurpose approaches.
Our Waste Management Facility has successfully been audited against the requirements of PAS 402; which provides a standardised framework for the demonstration of performance against key areas for waste contractors.
Kilnbridge Waste Management Facility diverts 100% of waste from landfill and feeds it back into industry for reuse, ensuring the maximum use of resources whilst contributing towards a circular economy. The implementation of a trade waste collection software has enabled us to deliver an online customer portal with full electronic duty of care documentation; which improves workflows both within the business and for our customers whilst providing a sustainable and innovative solution.
Health, safety and wellbeing
Since its inception in 2015, our “Safety in Action” strategy and behavioural programme has contributed to an improving and maturing culture for health, safety, and wellbeing. This is underpinned by our values and by working to a set of golden rules, to help create an environment where everyone understands the behaviours expected, the health and safety requirements for their task and where everyone believes accidents, incidents and ill health are preventable.
Leading indicators for our cultural development focused on improvements in leadership, confidence in competence, controls, health, and wellbeing. There has been a total of 101 Leadership Engagement Tours carried out during the reporting period, leadership representation at all our bi-annual Safety and Wellbeing stand-downs, with delivery of designated topics such as work at height, dust, musculoskeletal disorders, mental health & wellbeing: together with the development of supervisor assessment standards and the management of lifting operations.
Our Reportable Accident Frequency Rate during the year was 0.09, (2022: nil) 2021 (nil). Regrettably, shortly after the year's commencement, one of our colleagues lost their life in a workplace incident on the Gatwick Rail Station project. We are deeply saddened by this tragic occurrence and are working closely with the authorities and our client to conduct a thorough investigation to gain a complete understanding of the events that took place. Our utmost priority is to offer support to the bereaved family and ensure the wellbeing of our colleagues. This incident reminds us that, despite our unwavering emphasis on safety, the construction industry is still inherently hazardous. The Board is committed to driving improvements across the business to ensure the safety and protection of all who work within our operations.
People
Health surveillance and medicals continue to be delivered by our approved Occupational Health Providers in line with the requirement of our clients. Safety critical medicals and drug and alcohol screening for workers on rail projects are also being undertaken in accordance with Network Rail requirements.
The mental health of our workforce and their families has never been more important. In line with our “Safety in Action” strategy, the business continues to provide Mental Health Awareness training for our workforce; to end the stigma surrounding mental health.
Modern slavery
We operate a zero-tolerance approach to modern slavery with our Anti-Slavery and Human Trafficking policy consistent with the requirements of the Modern Slavery Act 2015.
The auditor, Gravita II LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The financial information for the year to 30th June 2023 has been prepared assuming that the Group will continue as a going concern.
Under the going concern assumption, the Board of Directors is required to consider the Groups ability to continue as a going concern over a period of at least 12 months from the date of approval of the financial statements.
The Directors are confident that the Group can continue to trade successfully for the foreseeable future because we have a satisfactory order book from well-established clients, good liquidity and consistent profits.
We have audited the financial statements of NG Investments Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, 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 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. However, because not all future events or conditions can be predicted this statement is not a guarantee as to the group’s and parent company's ability to continue as a going concern.
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 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the group and the parent company through discussions with directors and other management, and from our commercial knowledge and experience of the construction and engineering sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group and the parent company, including the Companies Act 2006, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the group and the parent company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing internal health and safety reports and external audit reports in respect of the group and the parent company’s ISO management systems.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment by for example forgery, or intentional misrepresentation or through collusion. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
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 £6,000,000 (2022: £2,240,000).
NG Investments Limited (“the company”) is a company limited by shares incorporated in England and Wales. The registered office is McDermott House, South Crescent, Cody Road Business Park, London, E16 4TL.
The group consists of NG Investments 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 £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of investment properties. 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
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries are accounted for at cost less impairment.
The consolidated financial statements incorporate those of NG Investments Limited and all of its subsidiaries (i.e. 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 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.
At the time of approving the financial statements, the directors have a reasonable expectation that the group and company have adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The group recognises revenue when it transfers control over the product or service to its client. Revenue is measured at the fair value of the consideration received or receivable, net of sales tax.
Revenue recognition is based on the satisfaction of our performance obligations which are satisfied over the duration of a contract. Therefore, contract revenue and costs are recognised by reference to the stage of completion of each contract, as measured by the proportion of total costs at the balance sheet date to the total expected costs of the contract.
Revenue from services and construction contracts is recognised by reference to the stage of completion of the contract, as set out in the accounting policy for construction contracts.
Where the consideration is not specified in the contract with a customer and is subject to variability, the company estimates the amount of consideration to be received from its clients.
Revenue is only recognised to the extent that it is highly probable and that a significant reversal in the amount of cumulative revenue will not occur.
Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss in the income statement.
The assets' residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The effect of any change is accounted for prospectively.
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.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position 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 receipts 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.
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 income statement 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 income statement, 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 statement of financial position 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.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
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.
Research and development
The group incurs expenditure on its research and development in order to solve problems in connection with the work for which it contracts or seeks to win. This includes solving technical problems, reducing risk and seeking to provide effective and efficient solutions to problems. Where higher tax relief is available, this is accounted for when quantified with a degree of confidence. This may be after the end of the financial year, which can result in prior year adjustments on tax.
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.
The group recognises revenue and costs by reference to stage of completion of the contract. When assessing the value of construction contracts, management considers factors including final projected contract value, predicated final costs to complete, their assessment whether its receipt is probable and their historical experience
Estimates of the final outcome on each contract may include cost contingencies to take account of specific risks within each contract. Cost contingencies are reviewed on a regular basis throughout the life of the contract and are adjusted where appropriate. However, the nature of the risks on projects are such that they often cannot be resolved until the end of the project and therefore may not reverse until the end of the project. The estimated final outcomes on projects are continuously reviewed and adjustments are made where necessary.
An analysis of the group's turnover is as follows:
The total turnover of the group for the year has been derived from its principal activity wholly undertaken in 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:
There were no employees or employment costs in the parent company, NG Investments Limited.
The actual (credit)/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.
The company does not hold any fixed assets.
Details of the company's subsidiaries at 30 June 2023 are as follows:
The bank facilities are secured by a fixed and floating charge over the assets of the company and group by intercompany guarantees.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Retained earnings represents accumulated comprehensive income for the year and prior periods less dividends paid and contributions to the Employee Ownership Trust.
The obligations under hire purchase agreements are secured on the related tangible fixed assets of the group.
As at 30 June 2023, the group had given guarantees under performance bonds taken out by a subsidiary company totalling £316,659 (2022: £829,147).
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:
The remuneration of key management personnel, who are also directors of the parent company and subsidiary companies, is as follows.
The Company and its subsidiaries occupy properties comprising its head office, manufacturing base and plant depot which are owned by the Directors Pension Fund at a current rental based on an independent professional valuation. A director and close family member are trustees and beneficiaries of that fund. Rent payments totalled £518,700 (2022: £520,492).
At the end of the year, there was a balance of £11,882 (2022: £2,251,883) owed to the directors.