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REGISTERED NUMBER: 04933418 (England and Wales)















Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 March 2024

for

DRAIN LINE SOUTHERN LIMITED

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)






Contents of the Financial Statements
for the year ended 31 March 2024




Page

Company Information 1

Strategic Report 2

Report of the Directors 5

Report of the Independent Auditors 7

Statement of Comprehensive Income 11

Balance Sheet 12

Statement of Changes in Equity 13

Cash Flow Statement 14

Notes to the Cash Flow Statement 15

Notes to the Financial Statements 16


DRAIN LINE SOUTHERN LIMITED

Company Information
for the year ended 31 March 2024







DIRECTORS: D M Mogre
S P Whelan
T J Miles
N K Mulligan
S Staples
P Monck





SECRETARY: S P Whelan





REGISTERED OFFICE: Jobs Depot
Pookbourne Lane
Hickstead
West Sussex
BN6 9HD





REGISTERED NUMBER: 04933418 (England and Wales)





AUDITORS: Feist Hedgethorne Limited
Statutory Auditors
Chartered Accountants
Preston Park House
South Road
Brighton
East Sussex
BN1 6SB

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Strategic Report
for the year ended 31 March 2024

The directors present their strategic report for the year ended 31 March 2024.

Introduction
Drain Line is an independently owned specialist SME drainage business who, alongside our core highways drainage division, also provide small scale civil engineering and traffic management services.

79% of company turnover is earned from long term fixed highways contracts for local authority and tier 1 main contractor customers. A further 9% of income is earned from larger rail focussed infrastructure organisations with the remaining 12% coming from ad hoc clients who range in size from PLCs to small business and individual residential customers.

The business continues to invest in health, safety and wellbeing of all staff and key stakeholders with the continued collaboration and support with BSI. We invested heavily in AI vehicle safety software to provide an even safer environment for our employees and the general public. We have seen a huge reduction in vehicle incidents as a result.

Business Overview
Company turnover increased by 38.6% year on year with turnover of £16.98m (2023: £12.25m). Profit after tax was £1.70m achieving a margin of 10% (2023: £952k - 7.8% ).

Net profit margins increased 28% compared to 2023 due to several factors listed below:

- Inflationary pressures eased across the year and was felt throughout the wider economy. Diesel costs reduced to an average of £1.18/litre throughout the year compared to an average of £1.43/litre in prior year.

- Inflationary labour costs are still a concern and continue to increase as a percentage of revenue. This is mainly because of a shortage of skilled labour especially HGV drivers. This results in companies paying more across the industry to hire experienced skilled staff.

- Favourable annual uplifts were received across our portfolio of term contracts. These uplifts are based on the prior year costs which were heavily affected by inflation.

Our net assets have grown by 49% to £2.24m (2023: £1.50m). The business made several significant investments in IT equipment and vehicles as part of our CAPEX renewal and growth strategies. Over £1.8m of CAPEX investments were made in the year. Most of this investment was on commercial vehicles for our traffic management division and super combination units for our highways division.

Our closing cash position increased by 119% to £2.22m (2023: £1.01m).

Key Performance Indicators - Financial and Non-Financial
Below is a table summarising the Key Performance Indicators we use to manage our business. We monitor our vehicle utilisation on a weekly basis at our Operations Meeting held in person and via Teams at our Head Office each Thursday. Our vehicle KPI is split into different vehicle categories with combination units being the most important due to the cost of running this section of the fleet.

All KPI areas have grown positively.

Financial
2024 2023 +/(-)
Turnover £16,984,690 £12,255,312 38.6%
Gross Profit Margin 20.9% 18.8% 11.2%
Operating Profit £2,419,273 £1,361,450 77.7%
Operating Profit Margin 14.2% 11.1% 27.9%
Net Profit £1,703,352 952,151 79.0%
Net Profit Margin 10.0% 7.8% 28.2%
Adjusted EBITDA £3,040,970 £1,833,661 65.8%
Non-Financial
2024 2023 +/(-)
Average Employees 189 136 39.0%
Vehicle Utilisation 101.0% 101.0% 0.0%

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Strategic Report
for the year ended 31 March 2024




Principle Risks and Uncertainties
It is crucial to understand and address the principal risks and uncertainties that affect our operations, financial performance, and long-term sustainability.

The table below highlights the major threats along with the potential impact and our mitigating actions.

Matter for Concern Potential Impact Mitigating Actions
Labour skills shortage. Inability to operate due to lack of suitably trained employees. Increase investment in our Learning and Training Department including online training platforms like Human Focus.

Lead time delays with vehicle parts. Vehicle KPI reduction due to additional Vehicle Off Road (VOR) days. Invest in our own mobile vehicle technician to carry out a more focussed vehicle planned preventative maintenance regime to improve VOR days.

Margin erosion due to cost-of-living crisis. Continued margin erosion due to inflated wage and salary costs. Improve our employee engagement through appraisal and senior site visits. Pass on schedule of rate increases to employees via performance standard reviews and individual contract performance levels.

Economic and market risks. Increasing BoE interest rates making financing investments more expensive. Expanding our finance brokers to actively search a wider finance market. Placing our excess cash in savings accounts to take advantage of higher interest rates to help offset our higher finance costs. Working directly with finance companies to secure better terms.

Cybersecurity. As our reliance on digital systems and data increases, the risk of cyber threats, such as data breaches and ransomware attacks, becomes more significant. Improve our cyber insurance policies. Work more closely with our outsourced IT partner Docex 360 to implement more sophisticated security measures like two factor multi-authentication across all devices.


Future Developments
Our strategy of growing our business via long term highways contracts alongside our collaboration efforts with key clients continues. We recently secured several new long-term contracts that will positively impact the strategic growth plans for the new financial year and years ahead.

Our continued growth trajectory is forecast to grow revenue in 2024/25 by between 35% to 40%.

We strive to be the leading "supplier of choice" supporting local authority and tier 1 contractors in the highways sector.

In addition to the highways sector, we continue to build on our existing large rail infrastructure clients.


Research, Development, and Initiatives
The business will continue to invest in innovation, recycling, vehicles, carbon reduction and technology to support the continued growth of our business and offer best-in-class service to our clients.

Our groundbreaking social value initiative, which supports homeless people back into the construction industry will be a true measure of how social value benefits the local communities we work in.


DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Strategic Report
for the year ended 31 March 2024

We have recently created a CSR (Corporate Social Responsibility) Manager role within our business and have filled this position. We look forward to seeing the benefits this role brings to the communities we work in.

ON BEHALF OF THE BOARD:





N K Mulligan - Director


6 September 2024

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Report of the Directors
for the year ended 31 March 2024

The directors present their report with the financial statements of the company for the year ended 31 March 2024.

PRINCIPAL ACTIVITY
The principal activity of the company in the year under review was that of drainage specialists.

DIVIDENDS
The total distribution of dividends for the year ended 31 March 2024 will be £ 962,355 .

DIRECTORS
The directors shown below have held office during the whole of the period from 1 April 2023 to the date of this report.

D M Mogre
S P Whelan
T J Miles
N K Mulligan
S Staples

Other changes in directors holding office are as follows:

P Monck - appointed 25 May 2023

GOING CONCERN
The directors have a reasonable expectation that the company has adequate resources to continue in existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing the financial statements.

DISCLOSURE IN THE STRATEGIC REPORT
Certain matters required by regulation to be dealt with in the annual report have been dealt with in the Strategic Report rather than in the Director's Report. These include principal risks and uncertainties and future developments.

STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 of the profit or loss of the company 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 transactions and disclose with reasonable accuracy at any time the financial position of the company 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 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 company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Report of the Directors
for the year ended 31 March 2024


AUDITORS
The auditors, Feist Hedgethorne Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:





N K Mulligan - Director


6 September 2024

Report of the Independent Auditors to the Members of
Drain Line Southern Limited

Opinion
We have audited the financial statements of Drain Line Southern Limited (the 'company') for the year ended 31 March 2024 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the 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 company's affairs as at 31 March 2024 and of its 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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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 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 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 Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Report of the Independent Auditors to the Members of
Drain Line Southern Limited


Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, or returns adequate for our audit have not been received from branches not visited by us; or
- the 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 five, 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 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.

Report of the Independent Auditors to the Members of
Drain Line Southern Limited


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:

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

The extent to which the audit was considered capable of detecting irregularities, including fraud

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 company through discussions with directors and other
management, and from our commercial knowledge and experience of the telecommunications industry;
- 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 company, including the Companies Act 2006, taxation legislation,
data protection, anti-bribery, 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 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 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;
- enquiring of management as to actual and potential litigation and claims.

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 or collusion.

Report of the Independent Auditors to the Members of
Drain Line Southern Limited


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.




Chris Morey (Senior Statutory Auditor)
for and on behalf of Feist Hedgethorne Limited
Statutory Auditors
Chartered Accountants
Preston Park House
South Road
Brighton
East Sussex
BN1 6SB

6 September 2024

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Statement of Comprehensive
Income
for the year ended 31 March 2024

2024 2023
Notes £    £   

TURNOVER 16,984,690 12,255,312

Cost of sales (13,437,688 ) (9,955,030 )
GROSS PROFIT 3,547,002 2,300,282

Administrative expenses (1,127,729 ) (938,832 )
OPERATING PROFIT 2,419,273 1,361,450

Interest receivable and similar income 19,722 14
2,438,995 1,361,464

Interest payable and similar expenses 4 (152,785 ) (126,917 )
PROFIT BEFORE TAXATION 5 2,286,210 1,234,547

Tax on profit 6 (582,858 ) (282,396 )
PROFIT FOR THE FINANCIAL YEAR 1,703,352 952,151

OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

1,703,352

952,151

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Balance Sheet
31 March 2024

2024 2023
Notes £    £   
FIXED ASSETS
Intangible assets 8 59,691 89,536
Tangible assets 9 4,224,799 3,113,165
Investments 10 200 200
4,284,690 3,202,901

CURRENT ASSETS
Debtors 11 3,035,085 2,326,199
Cash at bank 2,217,699 1,011,919
5,252,784 3,338,118
CREDITORS
Amounts falling due within one year 12 (3,929,303 ) (2,617,567 )
NET CURRENT ASSETS 1,323,481 720,551
TOTAL ASSETS LESS CURRENT
LIABILITIES

5,608,171

3,923,452

CREDITORS
Amounts falling due after more than one
year

13

(2,379,731

)

(1,746,793

)

PROVISIONS FOR LIABILITIES 16 (984,509 ) (673,725 )
NET ASSETS 2,243,931 1,502,934

CAPITAL AND RESERVES
Called up share capital 17 164 164
Share premium 39,991 39,991
Capital redemption reserve 24 24
Retained earnings 2,203,752 1,462,755
SHAREHOLDERS' FUNDS 2,243,931 1,502,934

The financial statements were approved by the Board of Directors and authorised for issue on 6 September 2024 and were signed on its behalf by:





N K Mulligan - Director


DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Statement of Changes in Equity
for the year ended 31 March 2024

Called up Capital
share Retained Share redemption Total
capital earnings premium reserve equity
£    £    £    £    £   
Balance at 1 April 2022 164 1,234,696 39,991 24 1,274,875

Changes in equity
Dividends - (724,092 ) - - (724,092 )
Total comprehensive income - 952,151 - - 952,151
Balance at 31 March 2023 164 1,462,755 39,991 24 1,502,934

Changes in equity
Dividends - (962,355 ) - - (962,355 )
Total comprehensive income - 1,703,352 - - 1,703,352
Balance at 31 March 2024 164 2,203,752 39,991 24 2,243,931

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Cash Flow Statement
for the year ended 31 March 2024

2024 2023
Notes £    £   
Cash flows from operating activities
Cash generated from operations 1 3,103,001 1,826,031
Interest element of hire purchase and finance
lease rental payments paid

(152,785

)

(126,917

)
Tax paid (36,743 ) (66,921 )
Net cash from operating activities 2,913,473 1,632,193

Cash flows from investing activities
Purchase of intangible fixed assets - (19,382 )
Purchase of tangible fixed assets (1,815,298 ) (1,226,767 )
Sale of tangible fixed assets 113,470 13,088
Interest received 19,722 14
Net cash from investing activities (1,682,106 ) (1,233,047 )

Cash flows from financing activities
Capital repayments in year 936,768 506,669
Equity dividends paid (962,355 ) (724,092 )
Net cash from financing activities (25,587 ) (217,423 )

Increase in cash and cash equivalents 1,205,780 181,723
Cash and cash equivalents at beginning of
year

2

1,011,919

830,196

Cash and cash equivalents at end of year 2 2,217,699 1,011,919

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Cash Flow Statement
for the year ended 31 March 2024

1. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
2024 2023
£    £   
Profit before taxation 2,286,210 1,234,547
Depreciation charges 621,697 472,211
Profit on disposal of fixed assets (1,657 ) (3,184 )
Finance costs 152,785 126,917
Finance income (19,722 ) (14 )
3,039,313 1,830,477
Increase in trade and other debtors (708,886 ) (508,965 )
Increase in trade and other creditors 772,574 504,519
Cash generated from operations 3,103,001 1,826,031

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 March 2024
31.3.24 1.4.23
£    £   
Cash and cash equivalents 2,217,699 1,011,919
Year ended 31 March 2023
31.3.23 1.4.22
£    £   
Cash and cash equivalents 1,011,919 830,196


3. ANALYSIS OF CHANGES IN NET DEBT

At 1.4.23 Cash flow At 31.3.24
£    £    £   
Net cash
Cash at bank 1,011,919 1,205,780 2,217,699
1,011,919 1,205,780 2,217,699
Debt
Hire purchase and finance leases (2,289,758 ) (936,768 ) (3,226,526 )
(2,289,758 ) (936,768 ) (3,226,526 )
Total (1,277,839 ) 269,012 (1,008,827 )

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements
for the year ended 31 March 2024

1. STATUTORY INFORMATION

Drain Line Southern Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).


Monetary amounts in these financial statements are rounded to the nearest pound.

2. ACCOUNTING POLICIES

Basis of preparing the financial statements
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Significant judgements and estimates
Preparation of the financial statements requires management to make significant judgements and estimates and these 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The items in the financial statements where these judgements and estimates have been made include the useful economic life of intangible and tangible fixed assets, the depreciation and amortisation of these assets and provisions.

Key sources of estimation uncertainty:

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are depreciated over the approved depreciation rates. The carrying amount of tangible fixed assets is £4,224,799 (2023: £3,113,165) as noted in note 9.

The company considers whether intangible assets are impaired. Where an indication of impairment is identified the recoverable value requires estimation. Goodwill is amortised over its useful economic life. The carrying amount of intangible assets is £59,691 (2023: £89,536) as noted in note 8.

The value of accrued income for the year ended 31 March 2024, of £438,794 (2023: £161,953) represents the directors' best estimates of the value of accrued income. The estimates take into account work completed to date.

No significant judgements have been made by management in preparing these financial statements.

Turnover
Turnover represents the fair value of consideration received or receivable net of VAT and trade discounts for fixed highways contracts for local authority and tier 1 main contractor customers and for ad hoc services relating to small scale civil engineering and traffic management services.

Income earned from applications on fixed highways contracts is recognised on receipt of an assessment from the contractors, at a preset date each month. Works completed but not yet assessed are recognised in the Statement of Comprehensive Income and included in the Balance Sheet as accrued income, whilst works completed which are not expected to be assessed are deferred.

Ad hoc services are recognised as contract activity progresses. Revenue not billed is included in debtors and payments on account in excess of the relevant amount of revenue are included in creditors.

Goodwill
Goodwill, being the amount paid in connection with the acquisition of a business in 2022, is being amortised evenly over its estimated useful life of five years.

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements - continued
for the year ended 31 March 2024

2. ACCOUNTING POLICIES - continued

Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes costs directly attributable to making the asset capable of operating as intended by management.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant & machinery-straight line over 4-7 years
Fixtures, fittings & equipment-straight line over 3-4 years
Motor vehicles-straight line over 5-7 years or over lease period
Computer equipment-straight line over 3 years

Impairment policy
At each balance sheet date, the company reviews the carrying amount of its assets to determine whether there is any indication that any items have suffered an impairment loss. If any such indication exists, the recoverable amount of an asset is estimated in order to determine the extent of the impairment loss, if any.

Investments in subsidiaries
Investments in subsidiary undertakings are recognised at cost.

Financial instruments
The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities such as trade and other accounts receivable and payable, loans from banks and loans to and from related parties.

Debt instruments that are payable or receivable within one year, typically trade payables or receivables, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However if the arrangements of a short-term instrument constitutes a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. If evidence of impairment is found, an impairment loss is recognised in the profit and loss account.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate, which is an approximation of the amount that the company would receive for the asset if it were to be sold at the balance sheet date. If evidence of impairment is found, an impairment loss is recognised in the profit and loss account.

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis as to realise the asset and settle the liability simultaneously.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in the profit and loss account as finance costs or finance income as appropriate. The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.


DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements - continued
for the year ended 31 March 2024

2. ACCOUNTING POLICIES - continued
Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the Company. All other leases are classified as operating leases.

Assets held under finance leases are recognised initially at the fair value of the leased asset or, if lower, the present value of minimum lease payments at the inception of the lease. The corresponding liability is included in the balance sheet as ‘hire purchase contracts and finance leases’ with creditors. Lease payments are apportioned between finance charges and reduction of the lease liability using the effective interest method so as to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are included in tangible fixed assets and are depreciated and assessed for impairment losses in the same way as owned assets.

Pension costs and other post-retirement benefits
The company operates a defined contribution pension plan for its employees. A defined contribution pension plan is a pension plan under which the company pays contributions into a separate entity. Once the contributions have been paid, the company has no further obligations.

The contributions are recognised as an expense in the income statement when they fall due. Amounts owed but not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

Holiday pay accrual
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Balance Sheet date and carried forward to future periods.

This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the Balance Sheet date.

Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements - continued
for the year ended 31 March 2024

3. EMPLOYEES AND DIRECTORS
2024 2023
£    £   
Wages and salaries 7,237,185 5,278,541
Social security costs 695,646 519,017
Other pension costs 146,201 107,518
8,079,032 5,905,076

The average number of employees during the year was as follows:
2024 2023

Field based operatives 159 112
Office based staff 24 19
Directors 6 5
189 136

2024 2023
£    £   
Directors' remuneration 279,482 122,670
Directors' pension contributions to money purchase schemes 18,091 15,171

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 4 3

Information regarding the highest paid director for the year ended 31 March 2024 is as follows:
2024
£   
Emoluments etc 116,530

4. INTEREST PAYABLE AND SIMILAR EXPENSES
2024 2023
£    £   
Hire purchase interest 150,243 121,190
Finance lease charges 2,542 5,727
152,785 126,917

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements - continued
for the year ended 31 March 2024

5. PROFIT BEFORE TAXATION

The profit is stated after charging/(crediting):

2024 2023
£    £   
Hire of plant & machinery 1,220,901 956,788
Other operating leases 17,921 10,242
Depreciation - owned assets 591,851 442,365
Profit on disposal of fixed assets (1,657 ) (3,184 )
Goodwill amortisation 29,845 29,846
Auditors' remuneration 10,000 7,500

6. TAXATION

Analysis of the tax charge
The tax charge on the profit for the year was as follows:
2024 2023
£    £   
Current tax:
UK corporation tax 272,075 36,743

Deferred tax 310,783 245,653
Tax on profit 582,858 282,396

Reconciliation of total tax charge included in profit and loss
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2024 2023
£    £   
Profit before tax 2,286,210 1,234,547
Profit multiplied by the standard rate of corporation tax in the UK of 25%
(2023 - 19%)

571,553

234,564

Effects of:
Expenses not deductible for tax purposes 2,986 526
Disallowed amortisation 7,461 5,671
Disallowed deprecation of non-qualifying assets 858 652
Capital allowance super deduction - (42,565 )
Difference between rate of deferred tax and corporation tax - 51,984
Deferred tax on goodwill - 31,564
Total tax charge 582,858 282,396

7. DIVIDENDS

The total distribution of dividends for the year ended 31 March 2024 will be £962,355 (2023: £724,092).

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements - continued
for the year ended 31 March 2024

8. INTANGIBLE FIXED ASSETS
Goodwill
£   
COST
At 1 April 2023
and 31 March 2024 145,637
AMORTISATION
At 1 April 2023 56,101
Amortisation for year 29,845
At 31 March 2024 85,946
NET BOOK VALUE
At 31 March 2024 59,691
At 31 March 2023 89,536

9. TANGIBLE FIXED ASSETS
Fixtures,
fittings
Leasehold Plant & and
improvements machinery equipment
£    £    £   
COST
At 1 April 2023 4,784 444,182 119,673
Additions - 65,349 -
Disposals - - -
At 31 March 2024 4,784 509,531 119,673
DEPRECIATION
At 1 April 2023 1,595 231,056 104,471
Charge for year 683 62,383 8,363
Eliminated on disposal - - -
At 31 March 2024 2,278 293,439 112,834
NET BOOK VALUE
At 31 March 2024 2,506 216,092 6,839
At 31 March 2023 3,189 213,126 15,202

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements - continued
for the year ended 31 March 2024

9. TANGIBLE FIXED ASSETS - continued

Motor Computer
vehicles equipment Totals
£    £    £   
COST
At 1 April 2023 4,200,243 80,738 4,849,620
Additions 1,740,043 9,906 1,815,298
Disposals (170,300 ) (1,616 ) (171,916 )
At 31 March 2024 5,769,986 89,028 6,493,002
DEPRECIATION
At 1 April 2023 1,332,736 66,597 1,736,455
Charge for year 510,287 10,135 591,851
Eliminated on disposal (59,030 ) (1,073 ) (60,103 )
At 31 March 2024 1,783,993 75,659 2,268,203
NET BOOK VALUE
At 31 March 2024 3,985,993 13,369 4,224,799
At 31 March 2023 2,867,507 14,141 3,113,165

10. FIXED ASSET INVESTMENTS
Shares in
group
undertakings
£   
COST
At 1 April 2023
and 31 March 2024 200
NET BOOK VALUE
At 31 March 2024 200
At 31 March 2023 200

Drain Line Southern Limited owns 100% of the share capital of Enviroflow Services Limited.

11. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2024 2023
£    £   
Trade debtors 2,269,476 2,031,084
Other debtors 58,574 34,955
Accrued income 438,794 161,953
Prepayments 268,241 98,207
3,035,085 2,326,199

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements - continued
for the year ended 31 March 2024

12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2024 2023
£    £   
Hire purchase contracts and finance leases (see note 14)
846,795

542,965
Trade creditors 1,108,124 670,706
Corporation tax 272,074 36,742
Social security and other taxes 743,970 617,501
Other creditors 11,335 1,423
Accrued expenses 947,005 748,230
3,929,303 2,617,567

13. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR
2024 2023
£    £   
Hire purchase contracts and finance leases (see note 14)
2,379,731

1,746,793

14. LEASING AGREEMENTS

Minimum lease payments fall due as follows:

Hire purchase contracts Finance leases
2024 2023 2024 2023
£    £    £    £   
Net obligations repayable:
Within one year 841,206 531,532 5,589 11,433
Between one and five years 2,248,421 1,565,729 2,214 7,802
In more than five years 129,096 173,262 - -
3,218,723 2,270,523 7,803 19,235

Non-cancellable operating leases
2024 2023
£    £   
Within one year 30,000 30,000

The total fixed lease payments recognised as an expense is £30,000 (2023: £30,000).

15. SECURED DEBTS

Aldermore Bank has a fixed and floating charge over the assets of the company.

16. PROVISIONS FOR LIABILITIES
2024 2023
£    £   
Deferred tax 984,509 673,725

DRAIN LINE SOUTHERN LIMITED (REGISTERED NUMBER: 04933418)

Notes to the Financial Statements - continued
for the year ended 31 March 2024

16. PROVISIONS FOR LIABILITIES - continued

Deferred
tax
£   
Balance at 1 April 2023 673,725
Accelerated capital allowances 310,784
Balance at 31 March 2024 984,509

17. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number: Class: Nominal 2024 2023
value: £    £   
102,300 Ordinary A 0.1p 102 102
3,300 Ordinary B 0.1p 3 3
51,150 Ordinary C 0.1p 51 51
8,250 Ordinary D 0.1p 8 8
164 164