Company registration number 01977945 (England and Wales)
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
COMPANY INFORMATION
Directors
Mr S P Dufton
Mr N P Fowler
Company number
01977945
Registered office
Unit 4a, Wellington Road Industrial Estate
Wellington Bridge
Leeds
LS12 2UA
Auditor
Buckle Barton Limited
Sanderson House
Station Road
Horsforth
Leeds
LS18 5NT
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Profit and loss account
9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 24
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 1 -
The directors present the strategic report for the year ended 31 January 2024.
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
It is felt that the company maintained market share in what was a difficult trading environment in 2023/24 and, although we show a drop in turnover of 3.65%, this is solely due to the loss in business of two large contractors, one strategically and the other due to insolvency.
The sharp increase in fixed rate mortgages in the latter part of 2023 undoubtedly had a negative impact in consumer confidence, and this has continued into 2024.
The Directors are pleased to report that the company’s turnover now stands at £33 million, which we feel is a solid result given the market uncertainty. 2024/25 is proving to be challenging for the reason given above and it is hoped that interest rates will ease in the coming months to boost the housing market and also to allow disposable income to be released into home improvement projects.
Our continued membership of the Plumbing and Heating Buying Group has contributed to our ongoing success. A total of 14 of the largest Independent Plumbers Merchants from around the UK have converged to ensure purchasing parity with national organisations such as City Plumbing & Wolseley. We also pay approximately 40% of our debtors early to take advantage of Prompt Payment Rebates (‘PPR’). PPR and Annual rebates received in respect of 2023/24 now stand at around £3.0 million.
The company maintains a strong Balance Sheet with shareholders’ funds standing at £11.3m at the year-end. This is particularly encouraging considering the significant costs involved in our ongoing strategic expansion including opening and manning new branches. We also continue to invest in our back-office operations to help support our depots which also increases ongoing costs, including moving to a new a more appropriate ERP system in 2024 which will help support and future proof our business operations.
The company will continue to look for opportunities to expand our branch network. This will, however, be done in a strategic manner dependent on the availability of high quality branch managers, which is a key factor in making any new venture a success, we fully expect to have two additional branches trading by the end of 2024.
Overall, the directors are of the opinion that the year ended 31 January 2024 has further consolidated our position as one of the leading regional Plumbing & Heating suppliers in the UK.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 2 -
PRINCIPAL RISKS AND UNCERTAINTIES
Competition – All our branches are situated in urban areas which are inevitably saturated with similar operations such as ours and, although we continue to hold our own in the face of stiff competition, trading can at times be challenging and internet prices continue to lower our margins on many blue chip brands.
Wider Economy – The continued high interest rates are inevitably having a detrimental effect on both consumer and trade confidence. Additional conflicts around the world, notably in Ukraine and Gaza, continue to affect global markets.
Bad Debts – Cash collection is perpetually challenging and we do not expect that this will change for the better any time soon. We incurred one particularly large bad debt during the period which was disappointing and we remain vigilant on a daily basis to keep these at a minimum.
Environmental responsibilities - We continue to be conscious of our environmental responsibilities and all our branches have the facility to recycle all of the applicable types of material which is mainly in the form of cardboard / plastic packaging and paper. We have replaced all of the old inefficient strip light fittings with new low energy LED versions at all of our depots. Two of our depot also have pv solar panels installed to help reduce our carbon footprint further. However, we must remain vigilant regarding any changes in legislation and their impact upon on the performance of the company.
Pension and employment legislation changes - We care about our employees’ wellbeing and feel this is reflected in our low staff turnover. We, as a company, believe in people being paid a fair salary, no matter what role they may have in the business, I am pleased to report that all our staff earn continue to earn more than the National Living Wage, despite the recent large increase in hourly rate. Duftons is also strongly opposed to the gender pay gap and treat male and female as equal.
KEY PERFORMANCE INDICATORS
Turnover - £33.002m (2023: £34.259m)
Gross Profit % - 27.28% (2023: 24.13%)
Debtor days – 55 (2023: 59)
Stock turnover days – 75 (2023: 66)
Head count – 84 (2023: 73)
£ Turnover per head - £393k (2023: £469k)
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 3 -
Mr N P Fowler
Director
30 August 2024
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 4 -
The directors present their annual report and financial statements for the year ended 31 January 2024.
Principal activities
The principal activity of the company is that of plumbing and heating merchants and is unchanged since last year.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £89,265. 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 S P Dufton
Mr N P Fowler
Mr P G Dufton (deceased)
(Resigned 28 July 2023)
Auditor
In accordance with the company's articles, a resolution proposing that Buckle Barton Limited be reappointed as auditor of the company will be put at a General Meeting.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
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
Mr N P Fowler
Director
30 August 2024
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JANUARY 2024
- 5 -
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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
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.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DUFTON PLUMBING & HEATING SUPPLIES LIMITED
- 6 -
Opinion
We have audited the financial statements of Dufton Plumbing & Heating Supplies Limited (the 'company') for the year ended 31 January 2024 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 January 2024 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DUFTON PLUMBING & HEATING SUPPLIES LIMITED (CONTINUED)
- 7 -
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
- We obtained an understanding of laws and regulations that affect the company, focusing on those that had a direct effect on the financial statements or that had a fundamental effect on its operations. Key laws and regulations that we identified included the UK Companies Act, tax legislation and occupational health and employment legislation.
- We enquired of the directors for evidence of non compliance with relevant laws and regulations. We also reviewed controls the directors have in place to ensure compliance.
- We gained an understanding of the controls that the directors have in place to prevent and detect fraud. We enquired of the directors about any instances of fraud that had taken place during the accounting period.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DUFTON PLUMBING & HEATING SUPPLIES LIMITED (CONTINUED)
- 8 -
- The risk of fraud and non-compliance with laws and regulations and fraud was discussed within the audit team and tests were planned and performed to address these risks.
- We reviewed financial statements disclosures and tested to supporting documentation to assess compliance with relevant laws and regulations discussed above.
- We enquired of the directors about actual and potential litigation and claims.
- We performed analytical procedures to identify any unusual or unexpected relationships that might indicate risks of material misstatement due to fraud.
- In addressing the risk of fraud due to management override of internal controls we tested the appropriateness of journal entries and assessed whether the judgements made in making accounting estimates were indicative of a potential bias.
Due 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. For example, as with any audit, there remained a higher risk of non detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing fraud or non compliance with laws and regulations and cannot be expected to detect all fraud and non compliance with laws and regulations.
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.
Ian Meek ACA FCCA
Senior Statutory Auditor
For and on behalf of Buckle Barton Limited
30 August 2024
Chartered Accountants
Statutory Auditor
Sanderson House
Station Road
Horsforth
Leeds
LS18 5NT
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JANUARY 2024
- 9 -
2024
2023
Notes
£
£
Turnover
3
33,001,773
34,259,045
Cost of sales
(23,998,559)
(25,991,723)
Gross profit
9,003,214
8,267,322
Administrative expenses
(6,701,254)
(5,755,138)
Operating profit
4
2,301,960
2,512,184
Interest receivable and similar income
8
15,602
595
Interest payable and similar expenses
9
(1,342)
Profit before taxation
2,317,562
2,511,437
Tax on profit
10
(579,388)
(550,796)
Profit for the financial year
1,738,174
1,960,641
The profit and loss account has been prepared on the basis that all operations are continuing operations.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2024
- 10 -
2024
2023
£
£
Profit for the year
1,738,174
1,960,641
Other comprehensive income
-
-
Total comprehensive income for the year
1,738,174
1,960,641
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
BALANCE SHEET
AS AT
31 JANUARY 2024
31 January 2024
- 11 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
12
1,961,319
1,102,242
Current assets
Stocks
13
4,955,495
4,913,498
Debtors
14
6,237,091
7,171,879
Cash at bank and in hand
2,961,238
2,341,151
14,153,824
14,426,528
Creditors: amounts falling due within one year
15
(4,352,365)
(5,600,901)
Net current assets
9,801,459
8,825,627
Total assets less current liabilities
11,762,778
9,927,869
Provisions for liabilities
Deferred tax liability
16
440,000
254,000
(440,000)
(254,000)
Net assets
11,322,778
9,673,869
Capital and reserves
Called up share capital
18
600
600
Capital redemption reserve
300
300
Profit and loss reserves
11,321,878
9,672,969
Total equity
11,322,778
9,673,869
The financial statements were approved by the board of directors and authorised for issue on 30 August 2024 and are signed on its behalf by:
Mr N P Fowler
Director
Company registration number 01977945 (England and Wales)
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024
- 12 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 February 2022
600
300
7,919,275
7,920,175
Year ended 31 January 2023:
Profit and total comprehensive income
-
-
1,960,641
1,960,641
Dividends
11
-
-
(206,947)
(206,947)
Balance at 31 January 2023
600
300
9,672,969
9,673,869
Year ended 31 January 2024:
Profit and total comprehensive income
-
-
1,738,174
1,738,174
Dividends
11
-
-
(89,265)
(89,265)
Balance at 31 January 2024
600
300
11,321,878
11,322,778
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JANUARY 2024
- 13 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
2,937,659
1,090,760
Interest paid
(1,342)
Income taxes paid
(911,465)
(596,673)
Net cash inflow from operating activities
2,026,194
492,745
Investing activities
Purchase of tangible fixed assets
(1,335,375)
(542,079)
Proceeds from disposal of tangible fixed assets
2,931
32,458
Interest received
15,602
595
Net cash used in investing activities
(1,316,842)
(509,026)
Financing activities
Dividends paid
(89,265)
(206,947)
Net cash used in financing activities
(89,265)
(206,947)
Net increase/(decrease) in cash and cash equivalents
620,087
(223,228)
Cash and cash equivalents at beginning of year
2,341,151
2,564,379
Cash and cash equivalents at end of year
2,961,238
2,341,151
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
- 14 -
1
Accounting policies
Company information
Dufton Plumbing & Heating Supplies Limited is a private company limited by shares incorporated in the United Kingdom and registered in England and Wales. The registered office is Unit 4a, Wellington Road Industrial Estate, Wellington Bridge, Leeds, LS12 2UA.
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, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. 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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
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:
Leasehold Land and buildings
Over the term of the lease
Fixtures, fittings & equipment
20% reducing balance
Motor vehicles
25% reducing balance
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 15 -
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
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. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
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.
1.7
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.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 16 -
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.
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.
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.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 17 -
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.
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.
1.9
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
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
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 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.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 18 -
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.
1.12
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
The company operates a money purchase self-administered pension scheme for the directors. The scheme is fully funded and contributions by both the directors and the company are held in trust administered funds completely independent of the company's finances. Employers contributions to the scheme are charged against profits.
The company operates a money purchase self-administered pension scheme for the directors. The scheme is fully funded and contributions by both the directors and the company are held in trust administered funds completely independent of the company's finances. Employers contributions to the scheme are charged against profits.
1.14
Leases
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
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 19 -
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.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2024
2023
£
£
Turnover analysed by class of business
Plumbing and heating supplies and services
33,001,773
34,259,045
2024
2023
£
£
Other revenue
Interest income
15,602
595
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
1,803
Depreciation of owned tangible fixed assets
471,953
280,436
Loss/(profit) on disposal of tangible fixed assets
1,414
(791)
Operating lease charges
478,886
427,301
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
14,000
14,000
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 20 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Office
13
12
Management
18
12
Sales and counter
26
19
Warehouse and drivers
27
30
Total
84
73
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
567,348
502,469
Pension costs
222,017
244,087
789,365
746,556
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
11,258
16,182
Company pension contributions to defined contribution schemes
-
48,000
11,258
64,182
8
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
15,602
Other interest income
595
Total income
15,602
595
2024
2023
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
15,602
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 21 -
9
Interest payable and similar expenses
2024
2023
£
£
Other finance costs:
Other interest
1,342
10
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
394,139
424,000
Adjustments in respect of prior periods
(751)
(204)
Total current tax
393,388
423,796
Deferred tax
Origination and reversal of timing differences
186,000
127,000
Total tax charge
579,388
550,796
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:
2024
2023
£
£
Profit before taxation
2,317,562
2,511,437
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
579,391
477,173
Tax effect of expenses that are not deductible in determining taxable profit
22,406
4,658
Depreciation on assets not qualifying for tax allowances
9,087
7,546
Under/(over) provided in prior years
(751)
(204)
Rounding of tax charge in accounts
795
Effect of changes in rate of deferred tax
(30,421)
61,077
Deferred tax roundings
(324)
(249)
Taxation charge for the year
579,388
550,796
11
Dividends
2024
2023
£
£
Interim paid
89,265
206,947
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 22 -
12
Tangible fixed assets
Leasehold Land and buildings
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 February 2023
1,111,034
607,574
566,690
2,285,298
Additions
561,347
310,489
463,539
1,335,375
Disposals
(22,866)
(22,866)
At 31 January 2024
1,672,381
918,063
1,007,363
3,597,807
Depreciation and impairment
At 1 February 2023
651,288
361,975
169,793
1,183,056
Depreciation charged in the year
214,689
84,505
172,759
471,953
Eliminated in respect of disposals
(18,521)
(18,521)
At 31 January 2024
865,977
446,480
324,031
1,636,488
Carrying amount
At 31 January 2024
806,404
471,583
683,332
1,961,319
At 31 January 2023
459,746
245,599
396,897
1,102,242
13
Stocks
2024
2023
£
£
Finished goods and goods for resale
4,955,495
4,913,498
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
4,930,951
5,687,130
Corporation tax recoverable
94,176
Prepayments and accrued income
1,211,964
1,484,749
6,237,091
7,171,879
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 23 -
15
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
4,049,864
4,803,706
Corporation tax
423,901
Other taxation and social security
101,647
121,616
Other creditors
70,723
96,037
Accruals and deferred income
130,131
155,641
4,352,365
5,600,901
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
440,000
254,000
2024
Movements in the year:
£
Liability at 1 February 2023
254,000
Charge to profit or loss
186,000
Liability at 31 January 2024
440,000
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
17
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
222,017
244,087
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.
18
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
600
600
600
600
DUFTON PLUMBING & HEATING SUPPLIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 24 -
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:
2024
2023
£
£
Within one year
273,974
358,102
Between two and five years
800,501
838,868
In over five years
143,038
266,409
1,217,513
1,463,379
20
Related party transactions
During the year the company received management consultancy services from Paul Dufton & Co. Limited, a company of which S P Dufton and N P Fowler are also directors and shareholders amounting to £1,188,247 (2023: £1,030,461).
The company paid dividends totalling £89,265 (2023: £206,947) in the year to P G Dufton.
21
Cash generated from operations
2024
2023
£
£
Profit for the year after tax
1,738,174
1,960,641
Adjustments for:
Taxation charged
579,388
550,796
Finance costs
1,342
Investment income
(15,602)
(595)
Loss/(gain) on disposal of tangible fixed assets
1,414
(791)
Depreciation and impairment of tangible fixed assets
471,953
280,436
Movements in working capital:
Increase in stocks
(41,997)
(1,290,664)
Decrease/(increase) in debtors
1,028,964
(1,626,957)
(Decrease)/increase in creditors
(824,635)
1,216,552
Cash generated from operations
2,937,659
1,090,760
22
Analysis of changes in net funds
1 February 2023
Cash flows
31 January 2024
£
£
£
Cash at bank and in hand
2,341,151
620,087
2,961,238
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