Company registration number SC047574 (Scotland)
G S BROWN CONSTRUCTION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 FEBRUARY 2024
G S BROWN CONSTRUCTION LIMITED
COMPANY INFORMATION
Directors
Mr G S Brown OBE
Mrs M J Brown
Mr S Brown
Mr M D A Smith
Mr D S Brown
(Appointed 6 December 2023)
Mr R C Brown
(Appointed 6 December 2023)
Secretary
Mr M D A Smith
Company number
SC047574
Registered office
St Madoes
Glencarse
PH2 7NF
Auditor
MMG Archbold Limited
78-84 Bell Street
Dundee
DD1 1RQ
Bankers
Bank of Scotland
10-16 King Edward Street
PERTH
PH1 5UT
Solicitors
Miller Gerrard
The Studio
13 High Street
Blairgowrie
Perthshire
PH10 6ET
G S BROWN CONSTRUCTION LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
G S BROWN CONSTRUCTION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 1 -

The directors present the strategic report for the year ended 29 February 2024.

Review of the business

Turnover increased to £11.2m in the year under review, an uplift of over £2m from the previous year. A welcome increase against a backdrop of an uncertain market and a challenging economic climate, with high base costs and margins consistently being squeezed.

 

The operating profit of the Company for the year ended 29th February 2024 is reflective of these ongoing challenges. However, despite all of this, the Company continues to look forward with optimism. The cash position of the Company remains extremely strong, with there being sufficient funds in the current account to meet ongoing commitments.

 

Future Developments
Whilst interest and mortgage rates are beginning to level out, the general uncertainty in the market, coupled with ongoing challenges in relation to costs and requirements for front loaded consents, all means that it is difficult for the Directors to state with full confidence how these ongoing challenges will all ultimately effect the housing market in the medium to longer term.

 

The Company will continue to gauge consumer confidence in the house purchasing market and continue with its building activities in line with this information.


Financial key performance indicators (KPIs)

The directors use the following key performance indicators to measure the company's performance:-

 

2024             2023

Gross profit % on trading activity         12.14%             24.92%

Net profit % on trading activity         2.00%              4.10%

Turnover                    £11,250,182         £9,243,824

Profit before tax                £224,892          £378,656


Non financial key performance indicators (KPIs)

The directors consider a number of non financial performance indicators on an ongoing basis, such as the recruitment and retention of talented employees with the skills to meet its objectives and the monitoring of customer satisfaction.

Financial risk management objectives and strategies

Due to the company's strong cash position and the fact that it has no external borrowings, the directors are of the opinion that the company is well placed to weather the current conditions in the housing market. The company will also continue to seek to take advantage of opportunities that may arise to enhance its land bank.

Principal risks and uncertainties

The principal risk facing the business is the continuing uncertainty facing the UK economy. Whilst the demand for new build housing remains strong at the current time there is a concern that rising inflation and rising interest rates along with the ever increasing costs of living could end up with consumers unwilling, or unable, to make significant financial commitments, which could adversely affect the house building industry.

On behalf of the board

Mr M D A Smith
Director
17 September 2024
G S BROWN CONSTRUCTION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 2 -

The directors present their annual report and financial statements for the year ended 29 February 2024.

Principal activities

The principal activity of the company continued to be that of building contractors.

Results and dividends

The results for the year are set out on page 7.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr G S Brown OBE
Mrs M J Brown
Mr S Brown
Mr M D A Smith
Mr D S Brown
(Appointed 6 December 2023)
Mr R C Brown
(Appointed 6 December 2023)
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.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
Mr M D A Smith
Director
17 September 2024
G S BROWN CONSTRUCTION LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 3 -

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:

 

 

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.

G S BROWN CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF G S BROWN CONSTRUCTION LIMITED
- 4 -
Opinion

We have audited the financial statements of G S Brown Construction Limited (the 'company') for the year ended 29 February 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

G S BROWN CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF G S BROWN CONSTRUCTION LIMITED (CONTINUED)
- 5 -
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:

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:

We enquired with management about their own identification and assessment of the risk of irregularities;

We considered the opportunities that may exist within the organisation for fraud and identified the greatest risk in relation to revenue recognition, valuation of work in progress and management override of internal controls. Our audit procedures to respond to these risks included, but were not limited to;

G S BROWN CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF G S BROWN CONSTRUCTION LIMITED (CONTINUED)
- 6 -

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities including those leading to a material misstatement in the financial statements or non-compliance with regulation. As a result of these, we considered the opportunities that may exist within the organisation for fraud and audit procedures were designed in response to the risks identified, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve, for example, forgery, deliberate concealment, or collusion.

 

As part of an audit in accordance with ISAs (UK), professional judgement was exercised, and professional scepticisms was maintained throughout the audit.

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.

Paul Crichton BAcc CTA CA
Senior Statutory Auditor
For and on behalf of MMG Archbold Limited
17 September 2024
Chartered Accountants
Statutory Auditor
78-84 Bell Street
Dundee
DD1 1RQ
G S BROWN CONSTRUCTION LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 7 -
2024
2023
Notes
£
£
Turnover
3
11,250,182
9,243,825
Cost of sales
(9,884,839)
(6,939,830)
Gross profit
1,365,343
2,303,995
Administrative expenses
(1,592,317)
(2,074,552)
Other operating income
278,503
50,767
Operating profit
4
51,529
280,210
Interest receivable and similar income
8
173,363
98,446
Profit before taxation
224,892
378,656
Tax on profit
9
(35,192)
(121,224)
Profit for the financial year
189,700
257,432

The profit and loss account has been prepared on the basis that all operations are continuing operations.

G S BROWN CONSTRUCTION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 8 -
2024
2023
£
£
Profit for the year
189,700
257,432
Other comprehensive income
-
-
Total comprehensive income for the year
189,700
257,432
G S BROWN CONSTRUCTION LIMITED
BALANCE SHEET
AS AT
29 FEBRUARY 2024
29 February 2024
- 9 -
29 February 2024
28 February 2023
Notes
£
£
£
£
Fixed assets
Tangible assets
10
465,925
471,182
Investment property
11
447,959
610,216
Investments
12
2,275,541
2,146,922
3,189,425
3,228,320
Current assets
Stocks
13
37,353,102
36,960,132
Debtors
14
1,762,261
3,012,479
Investments
15
5,917,000
5,917,000
Cash at bank and in hand
5,205,688
4,023,419
50,238,051
49,913,030
Creditors: amounts falling due within one year
16
(769,720)
(707,884)
Net current assets
49,468,331
49,205,146
Total assets less current liabilities
52,657,756
52,433,466
Provisions for liabilities
Provisions
17
20,728,382
20,728,382
Deferred tax liability
18
280,849
246,259
(21,009,231)
(20,974,641)
Net assets
31,648,525
31,458,825
Capital and reserves
Called up share capital
19
763,721
763,721
Profit and loss reserves
20
30,884,804
30,695,104
Total equity
31,648,525
31,458,825

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 17 September 2024 and are signed on its behalf by:
Mr S Brown
Mr M D A Smith
Director
Director
Company registration number SC047574 (Scotland)
G S BROWN CONSTRUCTION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 March 2022
763,721
30,437,672
31,201,393
Year ended 28 February 2023:
Profit and total comprehensive income
-
257,432
257,432
Balance at 28 February 2023
763,721
30,695,104
31,458,825
Year ended 29 February 2024:
Profit and total comprehensive income
-
189,700
189,700
Balance at 29 February 2024
763,721
30,884,804
31,648,525
G S BROWN CONSTRUCTION LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 11 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
24
921,430
(3,814,430)
Interest received
140,600
65,803
Dividends received
32,763
32,643
Income taxes paid
(84,964)
(66,097)
Net cash inflow/(outflow) from operating activities
1,009,829
(3,782,081)
Investing activities
Purchase of tangible fixed assets
(96,556)
(44,601)
Proceeds from disposal of tangible fixed assets
235,358
24,527
Proceeds from disposal of investment property
162,257
-
0
Proceeds from disposal of investments
(128,619)
(152,100)
Net cash generated from/(used in) investing activities
172,440
(172,174)
Net increase/(decrease) in cash and cash equivalents
1,182,269
(3,954,255)
Cash and cash equivalents at beginning of year
4,023,419
7,977,674
Cash and cash equivalents at end of year
5,205,688
4,023,419

The notes on pages 12 to 25 form part of these financial statements.

G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 12 -
1
Accounting policies
Company information

G S Brown Construction Limited is a private company limited by shares incorporated in Scotland. The registered office is St Madoes, Glencarse, PH2 7NF.

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 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 and is shown net of VAT and other sales related taxes. Turnover and profit are recognised as follows:

(a) Private housing development properties and land sales

Turnover is recognised when the significant risks and rewards of ownership have been transferred to the purchaser. Turnover in respect of the sale of residential properties is recognised at the fair value of the consideration received or receivable on legal completion.

(b) Small contracting work

Turnover represents the net invoiced sales, excluding value added tax.

(c) Social housing contracts

Turnover and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is normally measured by surveys of work performed to date.

 

Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

 

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.

G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 13 -

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings
2% on cost
Plant and equipment
20% on cost
Fixtures and fittings
20% on cost
Motor vehicles
20 to 25% on cost

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
Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

1.6
Fixed asset investments

Investments are shown at market value at the year-end. Any aggregate surplus or deficit arising from changes in market value is recognised in profit or loss.

1.7
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.

G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 14 -
1.8
Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost is calculated on the first-in, first-out method and includes all purchase, transport and handling costs that have been incurred in bringing the stocks to their present location and condition.

 

Work in progress is valued at cost to the company of land, materials, labour, plant hire and other attributable overheads on contracts unfinished at the year-end date.

1.9
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.10
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.

G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 15 -
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.

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.

1.11
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.

1.12
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 16 -
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.

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.

1.13
Provisions

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

1.14
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.

1.15
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.16
Leases

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 17 -
2
Judgements and key sources of estimation uncertainty
Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Unlisted investments

Unlisted investments comprise investments in investment properties, secured bonds, commodities and loans granted as part of sales transactions that are secured by way of a second legal charge on the respective property.

 

The fair value of investment properties is determined by taking into account factors such as rental yields, market rates and conditions. The variables used are kept under regular review to ensure that as far as possible they reflect current economic circumstances. At 28 February 2024 the investment recognised on the balance sheet was £447,959 (2023 - £610,216).

 

The fair value of the secured bonds is determined by taking into account factors such as the length of time the bonds have been outstanding, market conditions, including those in respect of the underlying secured assets and probability of borrower default. The variables used are kept under regular review to ensure that as far as possible they reflect current economic circumstances. At 28 February 2024 the investment recognised on the balance sheet was £5.9m (2023 - £5.9m).

 

At 28 February 2024 the commodities are recognised at the market value of £296,819 (2023 - £264,867) on the balance sheet.

 

The fair value of the secured loans are determined by taking into account factors such as the length of time the loan has been outstanding, market conditions, including those in respect of house price inflation, forced sale discount and probability of borrower default. The variables used are kept under regular review to ensure that as far as possible they reflect current economic circumstances; however changes in house prices, redemption rates, interest rates, unemployment levels and bankruptcy trends in the UK could result in actual returns differing from reported valuations. The Company is no longer making any new investments in this way. At 28 February 2024 the investment recognised on the balance sheet was £113,875 (2023 - £154,175).

Land and work in progress

Given the high quality of the Company's inventory asset base, the sensitivity of the assumptions used in assessing the Net Realisable Value ('NRV') of the Company's inventories is relatively low. As such no reasonable possible change in assumptions is likely to result in a material impact to the carrying value of the Company's land and work in progress balance within the next twelve months. The disclosure below provides additional insight into the carrying value of the Company's land and work in progress.

Valuations of the Company's developments, which include an estimation of costs to complete and anticipated revenues, are carried out at regular intervals throughout the year. The valuations allocate total expected site development costs between units built in the current year and those to be built in future ears. These valuations therefore include a degree of uncertainty when estimating the profitability of a site and in assessing any impairment provision which may be required.

 

During the year ended 28 February 2024, the Company conducted reviews of the NRV of its development land and work in progress carrying values. The reviews were conducted on a site by site basis, using assumptions surrounding anticipated selling prices and the level of future development costs, based on management's assessment of market conditions existing at the balance sheet date. Management does not believe that a reasonably possible change in the assumptions could result in a material impairment of land and work in progress carrying values in the next twelve months.

 

If there are significant movements in UK house prices or development costs, beyond management's reasonably possible expectations, then further impairments of land and work in progress may be necessary.

G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
2
Judgements and key sources of estimation uncertainty
(Continued)
- 18 -
Provisions

The Company carries a provision of £20.7m (2023 - £20.7m) based on management's best estimates of the costs of fulfilling the Company's statutory obligations under Section 75 of the Town and Country Planning (Scotland) Act 1997 in respect of land at Oudenarde, Bridge of Earn, by Perth. These estimates may change over time as further information is assessed. This is a highly complex area with judgements and estimates in respect of the cost of remedial works to be incurred.

3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
House sales
10,243,435
8,852,193
Small contract work
541,747
350,632
Land sales
465,000
41,000
11,250,182
9,243,825
2024
2023
£
£
Other revenue
Interest income
140,600
65,803
Dividends received
32,763
32,643
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
7,555
6,920
Depreciation of owned tangible fixed assets
101,813
93,708
Profit on disposal of tangible fixed assets
(235,358)
(24,527)
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
7,555
6,920
For other services
All other non-audit services
1,920
2,990
For services in respect of associated pension schemes
Audit
1,425
1,370
G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 19 -
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2024
2023
Number
Number
Office and management
25
30
Building construction
22
21
Total
47
51

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
1,845,899
1,976,221
Social security costs
198,145
213,494
Pension costs
107,964
113,465
2,152,008
2,303,180
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
232,984
188,270
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
110,562
106,540
8
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
140,600
65,803
Other income from investments
Dividends received
32,763
32,643
Total income
173,363
98,446
G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 20 -
9
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
602
84,964
Deferred tax
Origination and reversal of timing differences
34,590
36,260
Total tax charge
35,192
121,224

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
224,892
378,656
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
56,223
71,945
Tax effect of expenses that are not deductible in determining taxable profit
2,952
1,025
Tax effect of income not taxable in determining taxable profit
(8,191)
(6,202)
Gains not taxable
(7,988)
(2,843)
Unutilised tax losses carried forward
(1,350)
-
0
Effect of change in corporation tax rate
(218)
59,100
Permanent capital allowances in excess of depreciation
-
0
(1,302)
Other permanent differences
(291)
-
0
Effect of indexation allowance
(5,945)
(442)
Fair value deferred tax adjustment
-
0
(57)
Taxation charge for the year
35,192
121,224
G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 21 -
10
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 March 2023
371,377
811,813
346,422
294,047
1,823,659
Additions
-
0
85,875
10,681
-
0
96,556
Disposals
-
0
(48,720)
-
0
(47,096)
(95,816)
At 29 February 2024
371,377
848,968
357,103
246,951
1,824,399
Depreciation and impairment
At 1 March 2023
150,801
707,932
317,664
176,080
1,352,477
Depreciation charged in the year
7,427
44,739
11,769
37,878
101,813
Eliminated in respect of disposals
-
0
(48,720)
-
0
(47,096)
(95,816)
At 29 February 2024
158,228
703,951
329,433
166,862
1,358,474
Carrying amount
At 29 February 2024
213,149
145,017
27,670
80,089
465,925
At 28 February 2023
220,576
103,881
28,758
117,967
471,182
11
Investment property
2024
£
Fair value
At 1 March 2023
610,216
Disposals
(162,257)
At 29 February 2024
447,959

The investment properties were valued on an open market basis at the year-end by the directors.

12
Fixed asset investments
2024
2023
£
£
Listed investments
1,864,846
1,727,880
Unlisted investments
410,695
419,042
2,275,541
2,146,922
G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
12
Fixed asset investments
(Continued)
- 22 -
Movements in fixed asset investments
Investments
£
Cost or valuation
At 1 March 2023
2,146,922
Additions
182,350
Valuation changes
169,015
Disposals
(222,746)
At 29 February 2024
2,275,541
Carrying amount
At 29 February 2024
2,275,541
At 28 February 2023
2,146,922
13
Stocks
2024
2023
£
£
Raw materials and consumables
165,289
151,021
Land held for development and ground works
32,497,094
33,228,566
Partly completed houses
4,697,969
3,596,795
Payments received on account
(7,250)
(16,250)
37,353,102
36,960,132
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
255,040
540,107
Other debtors
170,873
130,581
Prepayments and accrued income
1,336,348
2,341,791
1,762,261
3,012,479
15
Current asset investments
2024
2023
£
£
Other investments
5,917,000
5,917,000
G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 23 -
16
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
353,916
367,176
Corporation tax
603
84,965
Other taxation and social security
65,922
82,707
Other creditors
293,320
66,020
Accruals and deferred income
55,959
107,016
769,720
707,884
17
Provisions for liabilities
2024
2023
£
£
Oudenarde provision
20,728,382
20,728,382
Movements on provisions:
Oudenarde provision
£
At 1 March 2023 and 29 February 2024
20,728,382

In accordance with the requirements of Section 21 of FRS102 the company has made a total provision of £20,728,382 (2023 - £20,728,382) in respect of land at Oudenarde, Bridge of Earn, by Perth.

 

The provision relates to the obligations placed on the company by the local planning authority under Section 75 of the Town and Country Planning (Scotland) Act 1997 agreement. The agreement provides for the building of a school, rail bridge and other local facilities, together with an upgrade and installation of a water main at Dron Service Reservoir, all of which have been costed on a prudent basis by the company for the provision.

18
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
58,630
57,778
Investment property
47,474
-
Investments
174,745
188,481
280,849
246,259
G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
18
Deferred taxation
(Continued)
- 24 -
2024
Movements in the year:
£
Liability at 1 March 2023
246,259
Charge to profit or loss
34,590
Liability at 29 February 2024
280,849

 

19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
763,721
763,721
763,721
763,721
20
Profit and loss reserves
2024
2023
£
£
At the beginning of the year
30,695,104
30,437,672
Profit for the year
189,700
257,432
At the end of the year
30,884,804
30,695,104
21
Contingent Liabilities

Indemnities are held by the Bank of Scotland covering all guarantees granted and any future guarantees granted in favour of third parties. At the year-end this amounted to £50,000 (2023 - £50,000).

 

Bonds in respect of roads that are not yet adopted by local authorities are held by NHBC and other providers. Once the road is adopted by the authority the bond is released. At the year-end the value of bonds in force amounted to £1,568,800 (2023 - £1,406,480).

22
Operating lease commitments

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
81,956
76,326
Between two and five years
54,471
85,821
136,427
162,147
G S BROWN CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 25 -
23
Related party transactions
Transactions with related parties

During the year the company entered into the following transactions with related parties:

Sales
Sales
Purchases
Purchases
2024
2023
2024
2023
£
£
£
£
Entities in which the directors or their immediate family have a significant controlling interest
67,452
86,595
414,610
337,950

The following amounts were outstanding at the reporting end date:

2024
2023
Amounts due from related parties
£
£
Entities in which the directors or their immediate family have a significant controlling interest
47,134
50,539
24
Cash generated from/(absorbed by) operations
2024
2023
£
£
Profit for the year after tax
189,700
257,432
Adjustments for:
Taxation charged
35,192
121,224
Investment income
(173,363)
(98,446)
Gain on disposal of tangible fixed assets
(235,358)
(24,527)
Depreciation and impairment of tangible fixed assets
101,813
93,708
Decrease in provisions
-
0
(2,100,000)
Movements in working capital:
Increase in stocks
(392,970)
(1,243,684)
Decrease/(increase) in debtors
1,250,218
(785,955)
Increase/(decrease) in creditors
146,198
(34,182)
Cash generated from/(absorbed by) operations
921,430
(3,814,430)
25
Analysis of changes in net funds
1 March 2023
Cash flows
29 February 2024
£
£
£
Cash at bank and in hand
4,023,419
1,182,269
5,205,688
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