The directors present the strategic report for the year ended 31 December 2020.
Revenue during the year has reduced to £23,217,000 (year ended 31 December 2019: £44,595,000). The decrease is due to a significant reduction in operating capacity during the period brought on by the pandemic. Gross margin has been improved to 36.9% (2019: 35.2%). but despite reduced overheads resulted in an operating loss of £3,144 ,000 for the year compared to a profit of £1,211,000 for 2019.
The exchange rate of the US$ against the pound has moved significantly during the year, with the result that the operating loss for 2020 included a gain of £112,000 (2019: Gain £1,142,000). A goodwill impairment charge of £nil has been reflected in 2020 financial statements as the goodwill has now been amortised in full (2019: £785,000).
Due to the financial performance of the group the net asset position as at 31 December 2019 became a net liability as at 31 December 2020. The net liabilities of the Group at the year-end were £1,588,000 (2019: £2,334,000 net assets).
Future developments
The directors expect the general level of activity to increase steadily in future in line with the Company’s plan from growth and expansion. The Group has devoted substantial resources to research and development during the year. This, together with contracts with outside parties, will enable the Company to maintain its leading position in technology and design.
Strategy and objectives
The Group continues to maintain its place as a world-wide leader in the technology of digital projection utilising DLP™ and new products incorporating the latest advancements continue to be brought on line. The introduction of new products results in substantial research and development tax credits, as shown in note 4.
The board acknowledges the risks from competitors, the reliance on key suppliers, the funding requirements needed to maintain its commitment to research and development, the need to constantly introduce new products incorporating the latest advances in technology, and foreign exchange issues.
The board seeks to minimise these risks wherever possible, reviewing them regularly through management reporting and planning processes.
Furthermore, at the time of approval of the financial statements the company and group face additional risk and uncertainty as a result of the Coronavirus pandemic which has had impacted global economies post balance sheet.
Financial risk management
The Group’s prime areas of financial risk include foreign currency exchange, the control of adequate liquidity, and the maintenance of adequate credit from suppliers. The Group does not utilise forward foreign exchange contracts as it is able to match its purchases in the same currency as its sales. Liquidity is closely monitored and controlled. Credit obtainable from suppliers is agreed in advance. Any potential credit risk from receivables is minimised by payments being obtained in advance where the risk is perceived and credit insurance.
The directors do not believe there are any further relevant financial and non-financial key performance indicators requiring disclosure other than those discussed above.
In carrying out their duties in respect of going concern, the directors have carried out a review of the Group’s and the Company's financial position and cash flow forecast for a period of 12 months from the date of approval of these financial statements. The forecasts have been based on a comprehensive review of revenue , expenditure and cash flows, taking into account specific business risks and the uncertainties brought about by the current economic environment.
To ensure the continuation of the Group and Company the directors regularly review the cash flows of the Group and Company both in the short and medium term, have a thorough approach to managing the working capital and hold regular reviews with each operating unit in the country of operation, which includes an assessment of any bad debt risk or inventory obsolescence concerns. This is supported by regular monitoring of key performance indicators.
The Group’s and the Company’s ability to continue as a going concern depends on the principle trading subsidiary Digital Projection Limited (“DPL”) being able to respond to market trends and to capture new business opportunities arising in the projection market. The business continues to evolve in response to customers’ needs, in particular applying products and technologies across the different customer base with value added solutions. Post balance sheet, the global economy has continued to be affected by the Coronavirus pandemic. This has had an impact on manufacturing and supply of products, and customer demand. At the time of approving the financial statements the full impact of the Corona virus pandemic on the UK and Global economy is uncertain and the effect, both immediate and long term, this may have on the company, its customers and suppliers is unknown.
The Directors continue to monitor the situation and the effect this has on liquidity and solvency and to consider mitigation of the negative impact of the pandemic through use of Government financial support packages.
The Company is wholly owned by Delta International Holding Limited who provide financial resource to the company and the group through favourable trading arrangements and extended payment terms. The directors report to the larger group and have a reasonable expectation that the group will continue to support Digital Projection International Limited and its subsidiaries such that they can continue to meet their financial obligations as they fall due. Accordingly the Directors have presented the financial statements on a going concern basis
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2020.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year ended 31 December 2020 are set out in the Group income statement on page 8. The directors are unable to recommend the payment of a dividend (2019: same). The Group statement of financial position shows net liabilities of £1,588,000 (2019 net assets : £2,334,000) attributable to ordinary shareholders. Future developments of the Group are discussed on page 1 of the strategic report.
The financial risk management policy has been disclosed on page 1 in the strategic report.
We have audited the financial statements of Digital Projection International Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2020 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 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.
Material uncertainty relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit :
the information given in the strategic report and the directors' r eport 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 its environment obtained in the course of the audit, we have not identifie d material misstatements in the strategic report and the directors' r eport .
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' r esponsibilities s tatement, 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.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The company's profit for the year was £nil (2019:£nil.).
Digital Projection International Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Greenside Way,Middleton,Manchester M24 1XX. The registered number of the company is 04319160.
The group consists of Digital Projection International Limited and all of its subsidiaries.
The principal activity of the Company is that of the ultimate UK holding Company for the Group. The principal activity of the Group continues to be the research, design, manufacture and sale of electronic video projectors based upon DLP™ technology jointly developed with Texas Instruments. The Group headquarters are in Middleton, Manchester where products are developed. The Group’s sales are made world-wide , with the largest volume being in the USA through its subsidiary Digital Projection Inc.
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 a mounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ : Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income ;
Section 26 ‘Share based Payment’ : Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements ;
Section 33 ‘Related Party Disclosures’ : Compensation for key management personnel .
The consolidated group financial statements consist of the financial statements of the parent company Digital Projection International Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates .
All financial statements are made up to 31 December 2020 . 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 g roup.
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.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
In carrying out their assessment in respect of going concern, the directors have carried out a review of the Group’s and the Company's financial position and cash flow forecast for a period of 12 months from the date of approval of these financial statements. The forecasts have been based on a comprehensive review of revenue, expenditure and cash flows, taking into account specific business risks and the uncertainties brought about by the current economic environment.
To assess the liquidity and solvency of the Group and Company the directors regularly review the cash flows both in the short and medium term, have a thorough approach to managing the working capital and hold regular reviews with each operating unit in the country of operation, which includes an assessment of any bad debt risk or inventory obsolescence concerns. This is supported by regular monitoring of key performance indicators.
The Group’s and the Company’s ability to continue as a going concern depends on the principle trading subsidiary Digital Projection Limited (“DPL”) being able to respond to market trends and to capture new business opportunities arising in the projection market. The business continues to evolve in response to customers’ needs, in particular applying products and technologies across the different customer base with value added solutions.
Post balance sheet, the global economy has continued to be affected by the Coronavirus pandemic. This has had an impact on manufacturing and supply of products, and customer demand. At the time of approving the financial statements the full impact of the Corona virus pandemic on the UK and Global economy is uncertain and the effect, both immediate and long term, this may have on the company, its customers and suppliers is unknown. The Directors continue to monitor the situation and the effect this has on liquidity and solvency and consider the mitigation of the negative impact the pandemic may have through use of Government measures to provide added financial support.
The Company is wholly owned by Delta International Holding Limited who provide financial support to the company and the group through favourable trading arrangements and extended payment terms. The directors report to the larger group and whilst they have a reasonable expectation that the group will continue to support Digital Projection International Limited and its subsidiaries, the support is not guaranteed and this indicates the existence of a material uncertainty which may cast significant doubt about the Group and the Company’s ability to continue as a going concern.
The Group and Company continue to meet financial obligations as they fall due and taking all relevant matters into consideration the Directors have a reasonable expectation that the Group and the Company can continue to operate and accordingly they have presented financial statements on a going concern basis.
The group manufactures an extensive and expanding line of ultra high-performance 3-chip and single-chip DLP® projection systems. Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes . The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The group provides extended warranties and maintenance of its goods sold. Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable
Research expenditure is written off against profits in the year in which it is incurred.
Provision is made for any impairment in the carrying value of tangible fixed assets as the directors consider appropriate.
Repairs, maintenance and minor inspection costs are expensed as incurred.
Tangible fixed assets are derecognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in Group income statement.
I n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the g roup’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent c ompany financial statements, investments in associates are accounted for at cost less impairment.
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 chosen to adopt sections 11 and 12 of FRS 102 in respect of financial instruments.
(i) Financial assets
Basic financial assets, including trade and other trade receivables and cash and bank balances are initially recognised at transaction price, 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.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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 the Group income statement.
If there is 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 the income statement.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
(ii) Financial liabilities
Basic financial liabilities, including trade and other trade payables 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. Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
The Company does not hold or issue derivatives financial instruments.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
(iii) Offsetting
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is an 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 to liability simultaneously.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The Group provides a range of benefits to employees, including paid holiday arrangement, defined contribution plan and defined benefit pension plans.
i. Short term benefits
Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.
ii. Defined contribution pension plan
The Group currently operates a defined contribution plan, under which there are no further liabilities on the Group beyond the contributions made. The assets of the scheme are held separately from the Group and are administered by trustees and managed professionally. For defined contribution schemes, the amount charged to the income statement in respect of pension costs is the contributions payable in the period. Differences between contributions payable in the period and contributions actually paid are shown as either accruals or prepayments in the statement of financial position.
iii. Defined benefit pension plan
For defined benefit pension schemes, scheme assets are measured at fair value and scheme liabilities are measured on an actuarial basis using the projected unit method and discounted at an interest rate equivalent to the current rate of return on a high-quality corporate bond of equivalent currency and term to the scheme liabilities.
Full actuarial valuations are obtained at least every three years with an adjustment for employee demographics annually and are updated at each reporting date. The resulting surplus or deficit, net of taxation thereon, is presented in the statement of financial position.
The service cost of providing pension benefits to employees for the period is charged to the income statement. The cost of making improvements to pension and benefits is recognised in the income statement on a straight-line basis over the period during which the increase in benefits vests. To the extent that the improvements in benefits vest immediately, the cost is recognised immediately. These costs are recognised as an operating expense.
A charge representing the unwinding of the discount on the scheme liabilities during the period is included within other finance expenses.
A credit representing the expected return on the scheme assets during the period is included within other finance expenses. This credit is based on the market value of the scheme assets, and expected rates of return, at the beginning of the period.
Actuarial gains and losses may result from: differences between the expected return and the actual return on scheme assets; differences between the actuarial assumptions underlying the scheme liabilities and actual experience during the period; or changes in the actuarial assumptions used in the valuation of the scheme liabilities. Actuarial gains and taxation thereon, are recognised in the statement of other comprehensive income.
In addition, the group provides unfunded pensions for four former employees, which are valued on a similar basis.
At inception the Group assesses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement.
Leased assets
i.Operating leased assets
Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Operating lease rentals are charged to the Group income statement on a straight line basis over the period of the lease.
ii.Lease incentives
Incentives received to enter into an operating lease are credited to the Group income statement, to reduce the lease expense, on a straight-line basis over the period of the lease.
The Group has taken advantage of the exemption in respect of lease incentives on leases in existence on the date of transition to FRS 102 (1 January 2014) and continues to credit such lease incentives to the income statement over the period to the first review date on which the rent is adjusted to market rates.
Government grants are recognised at the fair value of the asset receive d 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.
The Company’s functional and presentation currency is the pound sterling.
i.Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Group income statement.
ii.Translations
The trading results of Group undertakings are translated into sterling at the average exchange rates for the year. The assets and liabilities of overseas undertakings, including goodwill and fair value adjustments arising on acquisition, are translated at the exchange rates ruling at the year end.
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, revenue and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are reasonable under the circumstances. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
Useful economic lives of tangible fixed assets
The annual depreciation charge for tangible fixed 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 re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 1 1 for the carrying amount of the tangible fixed assets, and accounting policies for the useful economic lives for each class of assets .
Defined benefit pension scheme
The Group has obligations to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including: life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the statement of financial position. The assumptions reflect historical experience and current trends.
Goodwill impairment
Goodwill has been amortised over 20 years and has now been completely written off following an impairment review which is undertaken annually based on future cash flow projections, with appropriate discount rates, and expected levels of profitability.
Carrying values of tangible fixed assets and Inventories
The carrying values of property, tangible fixed assets , and inventories are assessed on a continual basis and amended to reflect current estimates based on technological advancement, future investments, economic utilisation and the physical condition of the assets. Inventories are evaluated to ensure they are carried at the lower of cost or net realisable value and are written down depending on the length of time held.
Warranty provision
Provision is made in the accounts for the estimated costs of warranty claims that may be made in relation to goods sold. The level of the provision is reviewed annually based on experience of the actual warranty claims made on recent sales over the previous 3 years, being the average length of warranty given.
Going concern
In assessing the going concern basis of preparing annual financial statements, the Directors prepare profit and cash flow forecasts for a period of at least 12 months after the date of signing the financial statements. The going concern basis was deemed suitable after taking account of available bank facilities and other relevant information.
Reporting of revenue by geographical analysis of markets and profit before tax by geographical area has not been provided. In the opinion of the directors, such disclosure would be seriously prejudicial to the interests of the Group due to the commercial sensitivity of the information, and the available exemption under Companies Act, SI 2008/410 Paragraph 68 has therefore been taken.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
More information on impairment movements in the year is given in note 9.
Details of the company's subsidiaries at 31 December 2020 are as follows:
The registered address for Digital Projection Limited and Digital Projection Holdings Limited is Greenside Way, Middleton, Manchester, M24 1XX, UK.
The registered address for Digital Projection Inc. is 55 Chastain Road, Suite 115, Kennesaw, Georgia, 30144, USA.
Details of associates at 31 December 2020 are as follows:
There are no stocks in the Company (2019: nil). In the opinion of the directors, the value of inventory is not materially different to the replacement cost.
Amounts owed by Group undertakings are unsecured, interest free and repayable on demand.
The short term borrowings are secured on all the assets of certain subsidiary undertakings.
The Company had no trade and other payables in either the current or prior year.
The short term borrowings are secured on all the assets of certain subsidiary undertakings.
The Group currently operates defined contribution plans, and there are no further liabilities on the Company beyond the contributions made. During the year the Group made contributions to the defined contributions plan of £227,000 (2019: £256,000). The assets of the schemes are held separately from the Group and are administered by trustees and managed professionally.
Unfunded liabilities
Some defined payments are made to retired employees that are not funded within the pension schemes. Provision is made in the statement of financial position for the present value of these unfunded amounts.
Liabilities
£000
At 1 January 2020 (757)
Interest expense (14)
Benefits paid 36
Actuarial gains ( 70 )
At 31 December 2020 (805)
Defined benefit scheme
The Group also operated a UK registered trust cased pension scheme that provides defined benefits. No benefits have accrued since 31 December 2007. Pension benefits are linked to the members’ final pensionable salaries and service at the date accrual ceased (or date of leaving if earlier). The Trustees are responsible for running the Plan in accordance with the Plan’s Trust deed and Rules, which sets out their powers. The Trustees of the Plan are required to act in the best interests of the beneficiaries of the Plan.
The information provided below in respect of the defined benefit plan has been prepared by an independent actuary. The most recent formal actuarial valuation was carried out at 5 April 2017, and the results have been updated to 31 December 2018 by the actuary. The key assumptions used were as follows:
Assumed life expectations on retirement at age 65:
Amounts recognised in the profit and loss account
Amounts taken to other comprehensive income
The amounts included in the balance sheet arising from obligations in respect of defined benefit plans are as follows:
Movements in the present value of defined benefit obligations
The defined benefit obligations arise from plans funded as follows:
Movements in the fair value of plan assets
Fair value of plan assets at the reporting period end
Voting:
All shares rank pari passu for voting purposes, with the exception that the Ordinary Sterling Shares and A Ordinary sterling shares vote for 80% of the number held.
Dividends:
The A Ordinary Sterling Shares have no right to any dividends. All other shares rank pari passu for dividend distributions.
Return of assets:
On a return of assets payment shall be made firstly in repayment of the share price and share premium related to the Ordinary Dollar shares, secondly in repayment of the price and related share premium of each Ordinary Sterling Share, and subsequently the A Ordinary shareholders shall receive £0.005 per share. Remaining assets shall be distributed pari passu between the holders of the Ordinary Dollar Shares and Ordinary Sterling Shares.
Until the closure of the scheme on 31 December 2007, contributions were paid into the Plan at the rate of 40% of pensionable pay by the employer and at 3.3% of pensionable pay (on average) by the employees. The Plan is a closed scheme both to new entrants and, as from 31 December 2007, to future service benefits for current members. Therefore under the projected unit method the current service cost would be expected to increase as members approach retirement. As the scheme is closed there is no set future contribution rate on employees’ pensionable pay, but the employer will make contributions to the Plan in order to reduce the scheme deficit over time.
The Trustees are required to carry out an actuarial valuation every 3 years. The last actuarial valuation of the Plan was performed by the Actuary for the Trustees as at 5 April 2017. The valuation revealed a shortfall of £400,000. The Company agreed to pay £18,750 per month from 1 July 2018 to 28 February 2019. In addition the Company will pay £60,000 per annum to cover administration expenses. The company therefore expects to pay £97,500 to the plan during the accounting year beginning 1 January 2020..
The Company has no commitments in respect of non-cancellable operating leases (2019: same).
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:
In the opinion of the directors, the company’s ultimate parent company and controlling party is Delta International Holding Limited ..