Company registration number 02438711 (England and Wales)
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Annual report and financial statements
For the year ended 31 January 2023
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Company information
Directors
Mr R W Brown
D M Brown
(Appointed 6 April 2022)
M R Brown
(Appointed 6 April 2022)
Secretary
Mr R W Brown
Company number
02438711
Registered office
Vanguard House
Sneyd Hill
Burslem
Stoke on Trent
Staffordshire
ST6 2DZ
Auditor
DJH Mitten Clarke Audit Limited
The Glades
Festival Way
Festival Park
Stoke-on-Trent
Staffordshire
ST1 5SQ
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of income and retained earnings
9
Statement of financial position
10
Statement of cash flows
11
Notes to the financial statements
12 - 26
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Strategic report
For the year ended 31 January 2023
- 1 -
The directors present the strategic report for the year ended 31 January 2023.
Review of the business
The company’s principal activities continue to be waste collection, recycling and processing, scrap metal merchants.
The directors are satisfied with the performance of the company during the period, the above average growth is considered to be a result targeted sales combined with manufacturing and construction catch up after covid, resulting in a significant growth in turnover for the period.
The gross profit has increased along with overall profitability.
The company has continued with its investment strategy by updating HGV’s mobile plant and fixed plant during the period.
Principal risks and uncertainties
As for many businesses of our size the business environment in which we operate continues to very competitive and influenced by the general state of the UK economy, consequently margins remain tight. Operational risks are offset by the continuing development of customer relations and a widely spread customer base.
Development and performance
The directors assess the financial performance of the company by reviewing key financial benchmarks, namely, reported turnover and earnings before interest, tax, depreciation and amortisation (EBITDA).
Reported turnover is the value of goods and services provided by the company in the year and the significant increase reflects the success of the company’s sales strategy during the period.
2023 2022
Turnover £19,937,712 £17,674,385
EBITDA is the benchmark which in the director’s opinion, best reflects the performance of the business during that period.
2023 2022
EBITDA £1,849,453 £1,549,919
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Strategic report (continued)
For the year ended 31 January 2023
- 2 -
Other information and explanations
Financial Instrument Risk
The financial instrument risks affecting the company relate to cash flow risk, credit risk and liquidity risk.
Cashflow risk is the risk that sufficient levels of cash do not flow into the business to allow working capital requirements to be met in a timely manner. The management of the cashflow timing of cash inflows and outflows is achieved by the close involvement of management with customer and supplier relationships. Management also reviews financial information on a regular basis to determine whether further measures are needed to ensure sufficient cashflows in the business.
Credit risk is the risk that the company will not receive full settlement on amount due from the customer. The risk is managed through continually monitored credit procedures including having regular dialogue with customer during the conduct of business.
Liquidity risk is the risk that the company will not have sufficient funds to carry out it short and long- term objectives. Historically, the company has managed its funding requirements through the use of bank debt and hire purchase finance.
Future Development
The trading outlook for the next financial year is healthy and the directors expect to continue its programme of investment in the company.
Mr R W Brown
Director
13 October 2023
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Directors' report
For the year ended 31 January 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 January 2023.
Principal activities
The company’s principal activities continue to be waste collection, recycling and processing, scrap metal merchants.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting £853,960 (2022 - £90,180). 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:
Mr R W Brown
D M Brown
(Appointed 6 April 2022)
M R Brown
(Appointed 6 April 2022)
Statement of directors' responsibilities
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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments, principal risks and uncertainties and financial instrument risks.
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.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Directors' report (continued)
For the year ended 31 January 2023
- 4 -
On behalf of the board
Mr R W Brown
D M Brown
Director
Director
M R Brown
Director
13 October 2023
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Independent auditor's report
To the members of Brown Recycling Limited
- 5 -
Opinion
We have audited the financial statements of Brown Recycling Limited (the 'company') for the year ended 31 January 2023 which comprise the statement of income and retained earnings, the statement of financial position, 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 January 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.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Independent auditor's report (continued)
To the members of Brown Recycling Limited
- 6 -
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.
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management;
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 legislation such as the Companies Act 2006, taxation legislation, data protection, employment, health and safety legislation and the Environment Agency regulations; and
we assessed the extent of compliance with the laws and regulations through making enquiries of management, reviewing legal and professional fee invoices and by ensuring required licences were in place.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Independent auditor's report (continued)
To the members of Brown Recycling Limited
- 7 -
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries posted during the period and at the period end to identify unusual transactions;
investigated the rationale behind significant or unusual transactions;
reviewed the reasonableness of accounting estimates; and
performed walkthrough tests on all major transaction cycles.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims;
reviewing correspondence with HMRC
reviewing correspondence with relevant authorities such as the Environment Agency;
reviewing legal and professional fees incurred during the period to identify any potential indications of non-compliance with laws and regulations.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Independent auditor's report (continued)
To the members of Brown Recycling Limited
- 8 -
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.
Nicola Johnson
Senior Statutory Auditor
For and on behalf of DJH Mitten Clarke Audit Limited
25 October 2023
Accountants
Statutory Auditor
The Glades
Festival Way
Festival Park
Stoke-on-Trent
Staffordshire
ST1 5SQ
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Statement of income and retained earnings
For the year ended 31 January 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
19,937,712
17,674,385
Cost of sales
(16,176,028)
(14,002,186)
Gross profit
3,761,684
3,672,199
Administrative expenses
(2,851,523)
(3,157,872)
Other operating income
27,813
52,728
Operating profit
4
937,974
567,055
Interest receivable and similar income
7
4,148
83
Interest payable and similar expenses
8
(90,359)
(118,801)
Profit before taxation
851,763
448,337
Tax on profit
9
(112,960)
(143,464)
Profit for the financial year
738,803
304,873
Retained earnings brought forward
4,159,882
3,945,189
Dividends
10
(853,960)
(90,180)
Retained earnings carried forward
4,044,725
4,159,882
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Statement of financial position
As at 31 January 2023
31 January 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
6,780,596
6,052,884
Investments
12
1,000
6,780,596
6,053,884
Current assets
Stocks
14
110,556
120,487
Debtors
15
2,742,242
2,535,662
Cash at bank and in hand
948,790
1,436,226
3,801,588
4,092,375
Creditors: amounts falling due within one year
16
(4,290,581)
(3,894,832)
Net current (liabilities)/assets
(488,993)
197,543
Total assets less current liabilities
6,291,603
6,251,427
Creditors: amounts falling due after more than one year
17
(1,706,276)
(1,663,903)
Provisions for liabilities
Deferred tax liability
20
539,600
426,640
(539,600)
(426,640)
Net assets
4,045,727
4,160,884
Capital and reserves
Called up share capital
22
1,002
1,002
Profit and loss reserves
23
4,044,725
4,159,882
Total equity
4,045,727
4,160,884
The financial statements were approved by the board of directors and authorised for issue on 13 October 2023 and are signed on its behalf by:
Mr R W Brown
Director
Company Registration No. 02438711
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Statement of cash flows
For the year ended 31 January 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
29
2,511,739
1,462,659
Interest paid
(90,359)
(118,801)
Income taxes (paid)/refunded
(12,871)
36,544
Net cash inflow from operating activities
2,408,509
1,380,402
Investing activities
Purchase of tangible fixed assets
(590,768)
(416,720)
Proceeds from disposal of tangible fixed assets
53,569
1
Interest received
4,148
83
Net cash used in investing activities
(533,051)
(416,636)
Financing activities
Proceeds from new bank loans
350,000
Repayment of bank loans
(576,473)
(443,262)
Payment of finance leases obligations
(589,624)
(559,727)
Amounts withdrawn by directors
85,000
Dividends paid
(853,960)
(90,180)
Net cash used in financing activities
(2,020,057)
(658,169)
Net (decrease)/increase in cash and cash equivalents
(144,599)
305,597
Cash and cash equivalents at beginning of year
1,093,389
787,792
Cash and cash equivalents at end of year
948,790
1,093,389
Relating to:
Cash at bank and in hand
948,790
1,436,226
Bank overdrafts included in creditors payable within one year
(342,837)
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements
For the year ended 31 January 2023
- 12 -
1
Accounting policies
Company information
Brown Recycling Limited is a private company limited by shares incorporated in England and Wales. The registered office is Vanguard House, Sneyd Hill, Burslem, Stoke on Trent, Staffordshire, ST6 2DZ.
The entity has legally changed their name from H Brown & Son (Recycling) Limited to Brown Recycling Limited on 12/01/2023.
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 despatch 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.
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. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold buildings
4% on cost
Plant and equipment
20% reducing balance and 8.33% on cost
Fixtures, fittings and equipment
15% reducing balance basis and 33% on cost
Motor vehicles
25% reducing balance basis
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 13 -
Freehold land is not depreciated.
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.
1.5
Fixed asset investments
Interests in subsidiaries entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.6
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.
Recoverable amount is the higher of fair value less costs to sell and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
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 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 in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 14 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position 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.
Impairment of financial assets
Financial assets 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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including creditors and bank loans, 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.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
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.
1.11
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 income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 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 income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset 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.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
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 statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
1.15
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 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.
Key sources of estimation uncertainty
The directors consider that there are no key estimates or assumptions used in preparing the financial statements.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Rendering of services
19,937,712
17,674,385
2023
2022
£
£
Other revenue
Interest income
4,148
83
Grants received
10,193
52,728
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
148
Government grants
(10,193)
(52,728)
Fees payable to the company's auditor for the audit of the company's financial statements
12,000
8,000
Depreciation of owned tangible fixed assets
567,646
516,286
Depreciation of tangible fixed assets held under finance leases
289,677
466,579
Loss on disposal of tangible fixed assets
54,156
20,923
Exceptional item
-
615,134
Operating lease charges
43,078
23,859
The exceptional item in the prior period related to the termination benefits in respect of one employee.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 18 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
71
78
Administration
33
36
Total
104
114
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,578,912
3,204,848
Social security costs
384,329
310,708
Pension costs
80,100
66,465
4,043,341
3,582,021
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
134,856
8,400
Company pension contributions to defined contribution schemes
1,981
-
136,837
8,400
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 0).
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
4,148
83
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
4,148
83
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 19 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
45,995
75,737
Other finance costs:
Interest on finance leases and hire purchase contracts
44,364
43,064
90,359
118,801
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(10,201)
Deferred tax
Origination and reversal of timing differences
112,960
153,665
Total tax charge
112,960
143,464
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
851,763
448,337
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
161,835
85,184
Tax effect of expenses that are not deductible in determining taxable profit
4,787
3,102
Adjustments in respect of prior years
(800)
Depreciation on assets not qualifying for tax allowances
25,282
Depreciation in excess of capital allowances
78,250
Effect on concessions (research and development allowance)
(22,272)
Enhanced capital allowances
(91,791)
Increased deferred tax rate
12,847
Taxation charge for the year
112,960
143,464
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
9
Taxation
(Continued)
- 20 -
Factors affecting future tax charges
The main corporation tax rate was legislated to increase from 19% to 25% with effect from 1 April 2023, significantly increasing the tax payable on profits earned.
Given the recent change to the main corporation tax rate, deferred tax has been provided for at 25% where appropriate.
10
Dividends
2023
2022
£
£
Interim paid
853,960
90,180
11
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 February 2022
4,877,738
6,825,405
127,527
3,713,693
15,544,363
Additions
1,332,241
25,581
334,938
1,692,760
Disposals
(647,217)
(647,217)
At 31 January 2023
4,877,738
7,510,429
153,108
4,048,631
16,589,906
Depreciation and impairment
At 1 February 2022
1,590,848
5,074,989
72,916
2,752,726
9,491,479
Depreciation charged in the year
133,062
439,571
31,074
253,616
857,323
Eliminated in respect of disposals
(539,492)
(539,492)
At 31 January 2023
1,723,910
4,975,068
103,990
3,006,342
9,809,310
Carrying amount
At 31 January 2023
3,153,828
2,535,361
49,118
1,042,289
6,780,596
At 31 January 2022
3,286,890
1,750,416
54,611
960,967
6,052,884
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
1,176,631
566,544
Motor vehicles
725,608
810,585
1,902,239
1,377,129
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 21 -
12
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
13
1,000
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 February 2022 & 31 January 2023
1,000
Impairment
At 1 February 2022
-
Impairment losses
1,000
At 31 January 2023
1,000
Carrying amount
At 31 January 2023
-
At 31 January 2022
1,000
13
Subsidiaries
Details of the company's subsidiaries at 31 January 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Direct Coal and Haulage Co. Limited
Vanguard House, Sneyd Hill, Burslem, Stoke-on-Trent, ST6 2DZ
Ordinary
100.00
Since the year-end, the subsidiary company has been dissolved.
14
Stocks
2023
2022
£
£
Finished goods and goods for resale
110,556
120,487
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 22 -
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,524,073
2,467,356
Other debtors
78,051
26,918
Prepayments and accrued income
140,118
41,388
2,742,242
2,535,662
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
18
420,245
893,744
Obligations under finance leases
19
546,613
522,429
Trade creditors
1,449,460
1,123,052
Amounts owed to group undertakings
750,000
1,000
Corporation tax
12,871
Other taxation and social security
279,759
610,026
Other creditors
49,578
43,334
Accruals and deferred income
794,926
688,376
4,290,581
3,894,832
The bank loans are secured on the freehold properties of the company. Hire purchase contracts and finance leases are secured on the assets acquired under those agreements.
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans
18
660,455
1,106,266
Obligations under finance leases
19
1,045,821
557,637
1,706,276
1,663,903
The bank loans are secured on the freehold properties of the company. Hire purchase contracts and finance leases are secured on the assets acquired under those agreements.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 23 -
18
Loans and overdrafts
2023
2022
£
£
Bank loans
1,080,700
1,657,173
Bank overdrafts
342,837
1,080,700
2,000,010
Payable within one year
420,245
893,744
Payable after one year
660,455
1,106,266
19
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
546,613
522,429
In two to five years
1,045,821
557,637
1,592,434
1,080,066
Finance lease payments represent rentals payable by the company for certain items of plant and machinery and motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
20
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
539,600
426,640
2023
Movements in the year:
£
Liability at 1 February 2022
426,640
Charge to profit or loss
112,960
Liability at 31 January 2023
539,600
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
20
Deferred taxation
(Continued)
- 24 -
The deferred tax account consists of the tax effect of timing differences in respect of accelerated capital allowances.
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
80,100
66,465
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.
Contributions totalling £9,064 (2022 - £nil) were payable to the fund at the balance sheet date and are included in creditors.
22
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,002
1,002
1,002
1,002
Each ordinary share has full voting rights, full dividend rights, is non-redeemable and has no right to participate in a distribution of capital, except on winding up.
23
Profit and loss reserves
Profit and loss reserves represents the accumulated profits less accumulated losses and distributions up to the reporting date. This is a distributable reserve.
24
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
14,137
18,255
Between two and five years
8,089
4,940
22,226
23,195
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 25 -
25
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
-
299,000
26
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Aggregate compensation
292,268
220,960
27
Directors' transactions
Dividends totalling £103,960 (2022 - £90,180) were paid in the year in respect of shares held by the company's directors.
Directors current accounts
At the balance sheet date the company owed £40,514 (2022 - £43,334) to the directors.
No interest was payable on the loan amounts due to the directors.
28
Ultimate controlling party
At the year-end, the company is a 100% owned subsidiary of H Brown & Son Group Limited, which is the ultimate parent company. The registered office of the ultimate parent company is Vanguard House, Sneyd Hill, Burslem, Stoke-on-Trent, Staffordshire, ST6 2DZ.
The ultimate controlling party is Mr R W Brown.
Brown Recycling Limited
(Formally H Brown & Son (Recycling) Limited)
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 26 -
29
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
738,803
304,873
Adjustments for:
Taxation charged
112,960
143,464
Finance costs
90,359
118,801
Investment income
(4,148)
(83)
Loss on disposal of tangible fixed assets
54,156
20,923
Goverment grants
(52,728)
Depreciation and impairment of tangible fixed assets
857,323
982,864
Movements in working capital:
Decrease/(increase) in stocks
9,931
(57,126)
Increase in debtors
(206,580)
(773,768)
Increase in creditors
858,935
775,439
Cash generated from operations
2,511,739
1,462,659
30
Analysis of changes in net debt
1 February 2022
Cash flows
New finance leases
31 January 2023
£
£
£
£
Cash at bank and in hand
1,436,226
(487,436)
-
948,790
Bank overdrafts
(342,837)
342,837
-
1,093,389
(144,599)
948,790
Borrowings excluding overdrafts
(1,657,173)
576,473
-
(1,080,700)
Obligations under finance leases
(1,080,066)
589,624
(1,101,992)
(1,592,434)
(1,643,850)
1,021,498
(1,101,992)
(1,724,344)
2023-01-312022-02-01falseCCH SoftwareCCH Accounts Production 2023.300D M BrownM R BrownMr M R BrownMr R W Brownfalse024387112022-02-012023-01-3102438711bus:CompanySecretaryDirector12022-02-012023-01-3102438711bus:Director12022-02-012023-01-3102438711bus:Director22022-02-012023-01-3102438711bus:CompanySecretary12022-02-012023-01-3102438711bus:Director32022-02-012023-01-3102438711bus:RegisteredOffice2022-02-012023-01-31024387112023-01-31024387112021-02-012022-01-3102438711core:RetainedEarningsAccumulatedLosses2022-01-3102438711core:RetainedEarningsAccumulatedLosses2021-01-3102438711core:ShareCapital2023-01-3102438711core:ShareCapital2022-01-3102438711core:RetainedEarningsAccumulatedLosses2023-01-3102438711core:RetainedEarningsAccumulatedLosses2022-01-31024387112022-01-3102438711core:RetainedEarningsAccumulatedLosses2021-02-012022-01-3102438711core:LandBuildingscore:OwnedOrFreeholdAssets2023-01-3102438711core:PlantMachinery2023-01-3102438711core:FurnitureFittings2023-01-3102438711core:MotorVehicles2023-01-3102438711core:LandBuildingscore:OwnedOrFreeholdAssets2022-01-3102438711core:PlantMachinery2022-01-3102438711core:FurnitureFittings2022-01-3102438711core:MotorVehicles2022-01-3102438711core:CurrentFinancialInstrumentscore:WithinOneYear2023-01-3102438711core:CurrentFinancialInstrumentscore:WithinOneYear2022-01-3102438711core:Non-currentFinancialInstrumentscore:AfterOneYear2023-01-3102438711core:Non-currentFinancialInstrumentscore:AfterOneYear2022-01-3102438711core:CurrentFinancialInstruments2023-01-3102438711core:CurrentFinancialInstruments2022-01-3102438711core:Non-currentFinancialInstruments2023-01-3102438711core:Non-currentFinancialInstruments2022-01-310243871112022-02-012023-01-310243871112021-02-012022-01-310243871122022-02-012023-01-31024387112022-01-31024387112021-01-3102438711core:WithinOneYear2023-01-3102438711core:WithinOneYear2022-01-3102438711core:LandBuildingscore:OwnedOrFreeholdAssets2022-02-012023-01-3102438711core:PlantMachinery2022-02-012023-01-3102438711core:FurnitureFittings2022-02-012023-01-3102438711core:MotorVehicles2022-02-012023-01-3102438711bus:Original2022-02-012023-01-3102438711bus:Original2021-02-012022-01-3102438711core:UKTax2022-02-012023-01-3102438711core:UKTax2021-02-012022-01-310243871122021-02-012022-01-310243871132022-02-012023-01-310243871132021-02-012022-01-310243871142022-02-012023-01-310243871142021-02-012022-01-310243871152022-02-012023-01-310243871152021-02-012022-01-3102438711core:LandBuildingscore:OwnedOrFreeholdAssets2022-01-3102438711core:PlantMachinery2022-01-3102438711core:FurnitureFittings2022-01-3102438711core:MotorVehicles2022-01-310243871112022-02-012023-01-3102438711core:BetweenTwoFiveYears2023-01-3102438711core:BetweenTwoFiveYears2022-01-3102438711bus:OrdinaryShareClass12021-02-012022-01-3102438711bus:PrivateLimitedCompanyLtd2022-02-012023-01-3102438711bus:FRS1022022-02-012023-01-3102438711bus:Audited2022-02-012023-01-3102438711bus:FullAccounts2022-02-012023-01-31xbrli:purexbrli:sharesiso4217:GBP