The directors present the strategic report for the period ended 30 June 2024.
We are extremely pleased with the financial performance of the company during a period where the economy slowed amidst political uncertainty and negative global events. The drivers of success continue to be attributable to our strong and positive PRIDE culture that delivers high levels of staff retention and the huge levels of investment into innovation resulting in a huge proportion of revenue being generated by highly differentiated product solutions. Work is underway to reposition Dura Group as the d2 Group with the clear purpose of providing the lowest carbon civil infrastructure product systems in the world.
Record revenues were once again achieved and we managed to maintain our selling prices to achieve record direct profitability. The continued investment into R&D has resulted in a total of 20 patents supported by the d2 sub brand used to differentiate our products in the market. The company continued its focus on government funded projects with growth potential expected in the rail, power and energy sectors. These markets continued to dominate sales providing more than 50% of sales revenue and around 80% of Net Profit where the d2 Grating walkway products remain core to our success and where niche high profit IP protected products such as Dura Platform for rail and Dura Slab for Industrial trenches allow the company to generate high revenues and high profit margins.
The launch of Traction2 from April 1st 2023 allowed all staff to further engage including them all in profit gain share system fuelled by quarterly ‘Rock Games’ designed to habitualise leaner methods of working.
We continued hedging a proportion of USD currency rather than take spot rates to mitigate risk in periods of foreign exchange fluctuations. FX levels were reasonably favourable during the course of the year which helped the trading performance.
The company updated its financial year end from March 31 to June 30 to avoid the major year-end challenge experienced by virtue of the fact that the company needs to plan the next financial year whilst also servicing government projects operating around April 5th year end Budgets.
The grant provided by Innovate UK is progressing well and the company was close to being able to process small amounts of waste GRP at the close of the year. This solution will allow the company to prove that’s its products have the lowest carbon in the world for products of this kind. Clients will be more likely to purchase GRP if they know that it can be re-used and makes their project lower in carbon. The Group invested in a further start up company (Mekina) that provide GRP floor tray formwork solution for bridges that are made using poured concrete. This company made strong sales in year one and managed to on-board major Tier 1 contractors which bodes well for the future. Mekina talk to the same sort of clients and as such there are benefits passed in both directions in respect of leads and clients.
As always, the strength of the UK economy has an impact on the value of the pound against foreign currency such as US Dollars, which the company relies upon as part of its treasury management. This is off-set as much as possible by up to 15% by multi-currency income and in the post balance sheet period through forward contract arrangements. It is anticipated that the interest rate increases and high inflation levels will have a negative effect on performance in 2024-25.
The management of the business is subject to a number of other risks including Quality assurance, Environmental factors and Health and Safety issues. These are mitigated by ISO 9001 Quality Management launched in 2019 and ISO 14001 Environmental Management launched in 2021 plus ISO 45001 Health and Safety launched in 2022 which not only make our operations run more smoothly but also serve to make us more attractive to major blue chip contractor clients who insist on this type of accreditation. We are investigating the launch of ISO 45003 (Psychological Health and Safety) which will further support our staff in the area of well-being, which we see as being increasingly important to the retention of staff and business continuity. To assist in this area, the company are planning to appoint a Head of Operations who will have full responsibility for all manufacturing and installation operations plus quality, safety and continuous improvement.
In order to align long term goals the Senior Leadership Team of 6 people were provided with shares at Group level of 1% each during the course of the year. This team meet weekly with Directors and operate quarterly strategic days to ensure alignment to long term company objectives and the delivery of annual goals. This de-risks the relatively small and ageing Board team. The next level of 15 managers also meet weekly and quarterly and use the Traction2 system to deliver the plans. It was determined that Lean coaching (3 days per person) would be rolled out to all staff over a 12 month period with the objective of encouraging the elimination of waste, and maximise quality and efficiency.
Other risks are reviewed by the board using the Traction Business Planning model including quarterly SWOT Analysis for each of the 15 departments plus weekly Issue tracking and Scorecard management to monitor and mitigate them.
There has been further investment to provide more capacity and greater efficiencies both at the Operations Centre in terms of storage systems, cutting machinery and handling equipment plus improved and enlarged welfare facilities as well as at our Fabrication Centre which saw further CNC equipment to increase speed and consistency of operations. The company is still considering plans for larger premises but has mitigated this huge investment by implementing novel electric Fork Lift Trucks with technology that allows storage aisle width reductions enabling 2 new aisles to be added which represents 20% more storage capacity. The company introduced a new ERP (Rootstock) and CRM (Salesforce) system in November 2023 all based around the Salesforce ecosystem, with the vision of providing a single system for all activities in the company. This cost £300k to set-up and with on-going costs is only around £75k per annum more than previous disjointed and outdated Sage systems.
The directors monitor progress on overall strategy by reference to the below key financial performance indicators:
2024-25 Plan 2023-24 (15m) 2022-23
Turnover £22.0m £22.0m £20.0m
Net Profit £3.33m £2.00m £2.08m
Net Profit Margin 15.1% 9.1% 10.3%
The Business Plan for 2024-25 assumes an increase in sales to £22m commensurate with the innovation led growth but tempered by the anticipated economic challenges. Taking into account the many planned efficiencies (eg Salesforce, Lean) that will result in lower overheads and the planned increase in Direct profit due to d2 differentiation Net Profit is targeted at £3m but with target of £4.0m for staff to earn up to a 10% Net Profit Gain share bonus. It is anticipated that further new products that carry higher margins will help gross profit margins and therefore mitigate some of the additional staffing costs incurred as the business infrastructure is developed.
On behalf of the board
The directors present their annual report and financial statements for the period ended 30 June 2024.
The results for the period are set out on page 11.
Ordinary dividends were paid amounting to £1,432,191.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The company maintains insurance policies on behalf of all the directors against liability arising from negligence, breach of duty and breach of trust in relation to the company.
The company operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities.
The company’s principal financial instruments include bank overdrafts, loans and invoice factoring facilities, the main purpose of which is to raise finance for the company’s operations. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
The company is exposed to cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The company does not use derivatives to manage this risk as the directors do not feel this is necessary in the context of the overall risk management of the business.
The company’s principal foreign currency exposures arise from trading with overseas companies and in purchasing goods from overseas. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity may often be managed on an informal basis internally, whereby the directors aim to ensure that the excess of supplies over sales in foreign currencies is minimised wherever possible. In addition, where appropriate, forward exchange contracts are also entered into in order to fix a rate of purchase.
Investments of cash surpluses, borrowings and other facilities are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
In accordance with the company's articles, a resolution proposing that Rickard Luckin Limited be reappointed as auditor of the company will be put at a General Meeting.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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; and
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.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Dura Composites Limited (the 'company') for the period ended 30 June 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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
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
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 period 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.
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.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management; and via inspection of the company’s regulatory and legal correspondence.
We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the company.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the company is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution, relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; trade legislation; legislation relevant to the commercial; data protection legislation; anti-bribery and anti-corruption legislation;
ISAs (UK) limit the required procedures to identify non-compliance with these laws and regulations, and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance which laws and regulations that could have a material impact on the financial statements.
In relation to fraud, we performed the following specific procedures in addition to those already noted:
Challenging assumptions made by management in its significant accounting estimates;
Identifying and testing journal entries, in particular any entries posted with unusual nominal ledger account combinations, journal entries crediting cash or any revenue account;
Performing analytical procedures to identify unexpected movements in account balances which may be indicative of fraud;
Ensuring that testing undertaken on both the performance statement, and the Balance Sheet includes a number of items selected on a random basis;
These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.
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.
Dura Composites Limited is a private company limited by shares incorporated in England and Wales. The registered office is Dura House, Telford Road, Clacton on Sea, Essex, CO15 4LP.
This 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:
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
The financial statements of the company are consolidated in the financial statements of Dura Group Limited. These consolidated financial statements are available from Companies House.
The reporting period for these financial statements has been increased to 15 months. The period has been increased to remain in line with the period of the parent company, which has also been increased to 15 months. The comparative amounts presented in the financial statements are therefore not entirely comparable as they relate to a 12 month period.
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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company 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 company after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, bank loans and loans from fellow group companies 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.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company 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 company.
In the application of the company’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.
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
During the year the directors have taken the decision to update the depreciation approach and rates used, determining that a straight line basis for the majority of asset classes is more appropriate in light of the usual economic lives of those assets.
In doing so, assets already held on the balance sheet and depreciated on a reducing balance basis, will be depreciated over their remaining useful economic lives on a straight line basis. The directors have considered the impact of this and believe that any corresponding change in the depreciation charge recognised is the current period is not materially different to the charge that would have arisen if applying the rates.
An analysis of the company's turnover is as follows:
During the year the company incurred expenditure attributable to research and development totalling £1,973,000 (2023: £1,715,375), including the relevant apportionment of staff costs, which have not been capitalised as permitted under FRS102.
The average monthly number of persons (including directors) employed by the company during the period was:
Their aggregate remuneration comprised:
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Hire purchase agreements are secured on the assets to which they relate.
Hire purchase agreements are secured on the assets to which they relate.
The company's borrowings are secured by a fixed and floating charge over the current and future assets of the company and a cross guarantee with three group companies.
Finance lease payments represent rentals payable by the company 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 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The 'A' and 'B' shares rank pari passu with each other save that the 'B' shares carry no voting right in general meetings.
The company has entered into an arrangement to provide security in the form of a debenture, comprising a fixed and floating charge over all the present and future assets and undertaking of the company, over loan facilities within the group. The total amount outstanding at the balance sheet date in respect of these facilities was £569,858 (2023: £654,225).
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the period the company entered into the following transactions with related parties:
Dura Group Limited - Parent Company
The company provided loans to Dura Group Limited in the year which are repayable on demand. At the balance sheet date the company was owed £557,774 (2023: £564,804) by Dura Group Limited. This amount is included in other debtors.
Dura Property Limited - Fellow subsidiary of Dura Group Limited
The company recharged expenses to Dura Property Limited in the year and paid rent to the company on normal commercial terms. At the balance sheet date the company was owed £1,273,985 (2023: £1,245,893) by Dura Property Limited. This amount is included in other debtors.
Dura Upcycling Limited - Fellow subsidiary of Dura Group Limited
The company made recharges to Dura Upcycling during the year and at the balance sheet date was owed £21,926 (2023: £97,226). This amount is included in other debtors.
Dura Composites Australasia Pty Limited - Fellow subsidiary of Dura Group Limited
The company provided loans to Dura Composites Australasia Pty Limited in the year which are repayable on demand. At the balance sheet date the company was owed £32,391 by Dura Composites Australasia Pty Limited. This amount is included in other debtors.
The Orange Train Wash Limited - Associate of Dura Group Limited
The company provided loans to The Orange Train Wash Limited in the year which are repayable on demand. At the balance sheet date the company was owed £14,598 by The Orange Train Wash Limited. This amount is included in other debtors.
Mekina Industries Limited - Joint venture of Dura Group Limited
The company provided loans to Mekina Industries Limited in the year which are repayable on demand. At the balance sheet date the company was owed £237,655 by Mekina Industries Limited. This amount is included in other debtors.
During the year advances were made to directors totalling £251,116 which has been fully repaid by the balance sheet date. These all related to personal expenses borne by the company on their behalf. In addition a balance off £333,714 has been repaid against the brought forward loan.
At the balance sheet date the directors owed the company £281,245 (2023: £614,959).