Company registration number 01471913 (England and Wales)
N.D. BROWN LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
N.D. BROWN LIMITED
COMPANY INFORMATION
Directors
N D Brown
S J Brown
M J Fernyhough
H D Brown
G S Chungh
Secretary
G S Chungh
Company number
01471913
Registered office
Slade Heath Garage
Old Stafford Road
Slade Heath
Wolverhampton
WV10 7PD
Auditor
CK Audit
No 4 Castle Court 2
Castlegate Way
Dudley
West Midlands
DY1 4RH
Business address
Slade Heath Garage
Old Stafford Road
Slade Heath
Wolverhampton
WV10 7PD
N.D. BROWN LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 23
N.D. BROWN LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -
The directors present the strategic report for the year ended 31 March 2023.
Review of the business
The Company continues to operate from its main head office site, Slade Heath Garage, near Wolverhampton along with four satellite depots based in Scotland, Devon, Kent, and Northern Ireland. The new purpose-built facility near Sevenoaks is now fully operational and contributing strongly to the company’s overall results. The locations of the depots enable the business to provide efficient and prompt attention to its clients as well as minimising journey distances for both improved financial and carbon emission efficiencies. All depots continue to contribute positively to the wellbeing of the business.
The period under review reflects another strong year of steady growth. The company’s turnover has continued to grow as a direct result of increases in number of vehicle hires. The increase in vehicle hire turnover is resulting from an increase in fleet size, additional vehicle variants, the overall strengthening of the N D Brown brand in the marketplace, the embracing of ISO standards in Quality Management (ISO 9001), Environmental Management (ISO 14001) and Health & Safety Management (ISO 45001) and the maintenance of the highest standards of customer service. The Company has maintained its attention to and assessment of Carbon emissions and remains classified as a Carbon Neutral Organisation, the latter due to the company’s commitment to Carbon offset schemes across the world.
Principal risks and uncertainties
Factors of main concern to the Directors include high inflation, increasingly high interest rates, and ongoing global supply chain issues. At the present time the Directors have no specific areas of significant concern but will continue to monitor the impact of these issues, amongst others.
Economic & Political climate
Due to economic uncertainties, Political influences, the ongoing war in Ukraine and the slow global recovery from the pandemic, Vehicle Rental continues to be a suitable and critical solution to many client’s requirements. The Directors see no reason why this will change in the immediate future as rental continues to be a competitive and sound alternative for its client base.
Liquidity Risk
The Directors have reviewed the financial risk management and associated policies and do not believe there to be significant risks in this area. The fleet is principally funded via HP and fixed rate finance lease debt and the Company has not experienced any difficulty in securing agreements, at appropriate rates, with its funding providers. The Directors remain confident that this availability of funding for fleet replacement and growth will remain robust. The continuing global pressures on supply chains and inflationary pressures on proprietary purchases such as vehicles has led to a beneficial knock on effect in so much that residual values of fleet vehicles have remained robust. These residual values are dependent on the used vehicle marketplace which can be volatile due to fluctuations in demand and both availability of used and new vehicles. Consequently, depreciation rates are set to ensure the vehicle net book values are not overstated and are achievable as a minimum base line.
Climate Change
The Company continues its dedication and determination to assess and to minimise carbon emissions in line with its Carbon Neutral certification. The Directors consider this to be significant in line with its ISO 14001 policy and global carbon impacts of business activities. The company continues to invest in the most modern practical vehicle technologies available and now has a 99% Euro VI compliant fleet offering. The majority of the fleet is also compliant with the usage of HVO fuels.
Retention of key personnel
The Directors recognise the importance of key management personnel and the retention of same. The company carries out regular reviews to assist and develop these key individuals along with regular training provisions for the employees of the company as a whole. The Sustainability policy along with the skills analysis documents are reviewed regularly in accordance with both the Company’s Quality Management Policy and best practice. The Company has recruited senior management to ensure sustainability along with levels of services, business performance and control.
N.D. BROWN LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
Key performance indicators
A significant tool for the measurement of the Company's efficiency remains the operating margin after direct costs which for 2022 is 40.9% (2022 39.7%). The Directors continue to maintain the fleet at a very high standard of specification and modernity to enable the Company to be at the forefront of meeting the impending requirement for the latest emission levels within certain operating regions and projects nationally. The move towards alternative fuels, along with the resulting appearance of the fleet reflects the company's profile within the marketplace. The maintenance of the fleet continues to be an expensive but essential cost.
N D Brown
Director
24 August 2023
N.D. BROWN LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 March 2023.
Principal activities
The principal activity of the company continued to be that of vehicle hire.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
N D Brown
S J Brown
M J Fernyhough
H D Brown
G S Chungh
Auditor
The auditor, CK Audit, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
N D Brown
Director
24 August 2023
N.D. BROWN LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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.
N.D. BROWN LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF N.D. BROWN LIMITED
- 5 -
Opinion
We have audited the financial statements of N.D. Brown Limited (the 'company') for the year ended 31 March 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 March 2023 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.
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.
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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
N.D. BROWN LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF N.D. BROWN LIMITED
- 6 -
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 directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, 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 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 directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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.
Auditor's 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 an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was considered capable of detecting irregularities, including fraud
We identified and assessed the risks of material misstatement of the financial statements, in respect of irregularities whether due to fraud or error, or non compliance with laws and regulations and then designed and performed audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company by discussion and enquiry with the directors and management team and our general knowledge and experience of the vehicle hire sector.
We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, employment, and health and safety legislation;
We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and reviewing correspondence with relevant regulators;
N.D. BROWN LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF N.D. BROWN LIMITED
- 7 -
Audit response to risks identified
We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur. Audit procedures performed included but were not limited to:
Discussions with directors and management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
Confirming our understanding of controls by performing a walk through test or observation and enquiry
Performing analytical procedures to identify any unusual or unexpected relationships;
Challenging assumptions and judgements made by management in its significant accounting estimates;
Identifying and testing journal entries;
Reviewing unusual or unexpected transactions; and
Agreeing the financial statement disclosures to underlying supporting documentation.
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 auditing standards. 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.
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.
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.
Frances Clapham
Senior Statutory Auditor
For and on behalf of CK Audit
24 August 2023
Chartered Accountants
Statutory Auditor
No 4 Castle Court 2
Castlegate Way
Dudley
West Midlands
DY1 4RH
N.D. BROWN LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
20,996,770
17,137,658
Cost of sales
(12,400,959)
(10,319,875)
Gross profit
8,595,811
6,817,783
Administrative expenses
(3,509,266)
(3,196,776)
Operating profit
4
5,086,545
3,621,007
Interest payable and similar expenses
7
(761,701)
(472,294)
Profit before taxation
4,324,844
3,148,713
Tax on profit
8
(926,042)
(1,089,001)
Profit for the financial year
3,398,802
2,059,712
The profit and loss account has been prepared on the basis that all operations are continuing operations.
N.D. BROWN LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 9 -
2023
2022
£
£
Profit for the year
3,398,802
2,059,712
Other comprehensive income
-
-
Total comprehensive income for the year
3,398,802
2,059,712
N.D. BROWN LIMITED
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
9
41,222,173
33,641,005
Current assets
Stocks
10
60,000
60,000
Debtors
11
3,660,415
3,102,643
Cash at bank and in hand
191,200
399,474
3,911,615
3,562,117
Creditors: amounts falling due within one year
12
(13,735,586)
(11,248,246)
Net current liabilities
(9,823,971)
(7,686,129)
Total assets less current liabilities
31,398,202
25,954,876
Creditors: amounts falling due after more than one year
13
(12,565,404)
(11,030,283)
Provisions for liabilities
Deferred tax liability
16
2,588,396
2,078,993
(2,588,396)
(2,078,993)
Net assets
16,244,402
12,845,600
Capital and reserves
Called up share capital
18
200
200
Profit and loss reserves
16,244,202
12,845,400
Total equity
16,244,402
12,845,600
The notes on pages 13 to 23 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 24 August 2023 and are signed on its behalf by:
N D Brown
Director
Company Registration No. 01471913
N.D. BROWN LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 April 2021
200
10,785,688
10,785,888
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
2,059,712
2,059,712
Balance at 31 March 2022
200
12,845,400
12,845,600
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
3,398,802
3,398,802
Balance at 31 March 2023
200
16,244,202
16,244,402
N.D. BROWN LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
11,187,075
8,235,386
Interest paid
(761,701)
(472,294)
Income taxes paid
(277,418)
(71,245)
Net cash inflow from operating activities
10,147,956
7,691,847
Investing activities
Purchase of tangible fixed assets
(17,230,874)
(15,527,572)
Proceeds from disposal of tangible fixed assets
3,965,973
3,772,043
Net cash used in investing activities
(13,264,901)
(11,755,529)
Financing activities
New borrowings
355,018
Repayment of bank loans
(110,427)
392,246
Net movement in finance leases obligations
2,631,254
3,432,777
Net cash generated from financing activities
2,875,845
3,825,023
Net decrease in cash and cash equivalents
(241,100)
(238,659)
Cash and cash equivalents at beginning of year
201,007
439,666
Cash and cash equivalents at end of year
(40,093)
201,007
Relating to:
Cash at bank and in hand
191,200
399,474
Bank overdrafts included in creditors payable within one year
(231,293)
(198,467)
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 13 -
1
Accounting policies
Company information
N.D. Brown Limited is a private company limited by shares incorporated in England and Wales. The registered office is Slade Heath Garage, Old Stafford Road, Slade Heath, Wolverhampton, WV10 7PD.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
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.
Turnover from the rendering of services comprises hire services relating to the year.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
over 20 years, land is not depreciated
Leasehold land and buildings
over 20 years, land is not depreciated
Plant and equipment
15% reducing balance basis
Motor vehicles
20% and 25% reducing balance basis
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.
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
1.6
Stocks
Stocks of spare parts and consumables are valued at cost. Stocks of vehicles and parts for resale are measured at the lower of cost and net realisable value.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
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
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.
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Classification of financial liabilities
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
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
1.9
Equity instruments
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -
Deferred tax
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 when the company has 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.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 17 -
2
Judgements and key sources of estimation uncertainty
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Depreciation
Except for freehold land, all fixed assets are included at cost less depreciation, which writes down each asset to its estimated residual value over it's expected useful life.
Key sources of estimation uncertainty
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.
Useful Economic Lives
The useful economic lives of non-current assets have been derived from the judgement of the directors using their best estimate of write down period.
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
645,564
541,689
Services rendered
20,351,206
16,595,969
20,996,770
17,137,658
2023
2022
£
£
Turnover analysed by geographical market
UK
20,996,770
17,137,658
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 18 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
14,208
12,351
Depreciation of owned tangible fixed assets
301,452
310,476
Depreciation of tangible fixed assets held under finance leases
7,007,229
5,623,768
Profit on disposal of tangible fixed assets
(1,624,948)
(1,156,388)
Operating lease charges
184,871
195,435
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Total
65
59
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,441,016
3,819,841
Social security costs
561,484
455,664
Pension costs
141,056
124,364
5,143,556
4,399,869
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
1,657,240
1,428,159
Company pension contributions to defined contribution schemes
60,290
56,508
1,717,530
1,484,667
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2022 - 4).
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
6
Directors' remuneration
(Continued)
- 19 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
887,215
781,193
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
29,517
16,574
Other finance costs:
Interest on finance leases and hire purchase contracts
732,184
455,720
761,701
472,294
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
416,639
277,438
Deferred tax
Origination and reversal of timing differences
509,403
811,563
Total tax charge
926,042
1,089,001
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
4,324,844
3,148,713
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
821,720
598,255
Tax effect of expenses that are not deductible in determining taxable profit
528
4,054
Permanent capital allowances in excess of depreciation
(283,811)
(324,872)
Other non-reversing timing differences
387,605
811,564
Taxation charge for the year
926,042
1,089,001
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 20 -
9
Tangible fixed assets
Leasehold land and buildings
Plant and equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 April 2022
1,675,208
469,054
47,649,000
49,793,262
Additions
1,325,378
124,186
15,781,310
17,230,874
Disposals
(6,852)
(5,777,141)
(5,783,993)
At 31 March 2023
3,000,586
586,388
57,653,169
61,240,143
Depreciation and impairment
At 1 April 2022
173,511
253,625
15,725,121
16,152,257
Depreciation charged in the year
45,468
50,440
7,212,773
7,308,681
Eliminated in respect of disposals
(3,497)
(3,439,471)
(3,442,968)
At 31 March 2023
218,979
300,568
19,498,423
20,017,970
Carrying amount
At 31 March 2023
2,781,607
285,820
38,154,746
41,222,173
At 31 March 2022
1,501,697
215,429
31,923,879
33,641,005
The carrying value of land and buildings comprises:
2023
2022
£
£
Freehold
2,670,198
1,375,293
Short leasehold
111,409
126,405
2,781,607
1,501,698
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and equipment
101,348
19,072
Motor vehicles
37,111,452
30,566,172
37,212,800
30,585,244
10
Stocks
2023
2022
£
£
Finished goods and goods for resale
60,000
60,000
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 21 -
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,379,962
2,958,920
Other debtors
109,858
Prepayments and accrued income
170,595
143,723
3,660,415
3,102,643
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
329,767
310,216
Obligations under finance leases
15
10,990,561
9,636,562
Trade creditors
1,578,230
552,357
Corporation tax
416,659
277,438
Other taxation and social security
275,007
311,292
Other creditors
16,593
16,677
Accruals and deferred income
128,769
143,704
13,735,586
11,248,246
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
385,113
482,265
Obligations under finance leases
15
11,825,273
10,548,018
Other borrowings
14
355,018
12,565,404
11,030,283
14
Loans and overdrafts
2023
2022
£
£
Bank loans
483,587
594,014
Bank overdrafts
231,293
198,467
Loans from related parties
355,018
1,069,898
792,481
Payable within one year
329,767
310,216
Payable after one year
740,131
482,265
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
14
Loans and overdrafts
(Continued)
- 22 -
The long-term loans are secured against the relevant freehold properties.
The loans are subject to interest rates of 2.5% and 3.5% respectively.
15
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
10,990,561
9,636,562
In two to five years
11,825,273
10,548,018
22,815,834
20,184,580
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
2,588,396
2,078,993
2023
Movements in the year:
£
Liability at 1 April 2022
2,078,993
Charge to profit or loss
509,403
Liability at 31 March 2023
2,588,396
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
141,056
124,364
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.
N.D. BROWN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
200
200
200
200
19
Operating lease commitments
Lessee
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:
2023
2022
£
£
Within one year
91,853
95,968
Between two and five years
337,190
232,136
In over five years
33,104
89,854
462,147
417,958
20
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
750,000
750,000
21
Related party transactions
2023
2022
Amounts due to related parties
£
£
Other related parties
355,018
-
The loan is subject to interest charged at a rate of 3% above BoE base rate.
Full repayment of the loan is due on 31st August 2026.
Other information
The company rents the Wolverhampton property from The Nigel Dundas Brown SIPP on a commercial rent of £56,750 per annum. Nigel D Brown who is a director and shareholder in the company is a trustee and beneficiary of the SIPP.
22
Ultimate controlling party
The company is under the control of Nigel D Brown.
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