Company registration number 02438711 (England and Wales)
Brown Recycling Limited
Annual report and financial statements
For the year ended 31 January 2024
Brown Recycling Limited
Company information
Directors
Mr R W Brown
D M Brown
M R Brown
Secretary
Mr R W Brown
Company number
02438711
Registered office
Vanguard House
Sneyd Hill
Burslem
Stoke on Trent
Staffordshire
ST6 2DZ
Auditor
DJH Audit Limited
The Glades
Festival Way
Festival Park
Stoke-on-Trent
Staffordshire
ST1 5SQ
Brown Recycling Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of income and retained earnings
9
Statement of financial position
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
Brown Recycling 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

The company’s principal activities continue to be waste collection, recycling and processing and scrap metal merchants.

The directors are satisfied with the performance of the company during a difficult economic period. The company has continued to display growth year on year, increasing profits and turnover with a mix of new customer contracts and inflationary price rises to cover increasing costs.

The gross margin has also increased due to the above, along with profitability which has resulted in cash reserves increasing.

The company has continued with its investment strategy by investing in technology, updating HGV’s mobile plant and fixed plant with more environmental and energy efficient models during the period, with net assets remaining consistent with the prior year.

Principal risks and uncertainties

As for many businesses of our size the business environment in which we operate continues to very competitive and influenced by the general state of the UK economy, consequently margins remain tight. Operational risks are offset by the continuing development of our customer base and improving customer relations to maintain a widely spread customer base.

 

Development and performance

The directors assess the financial performance of the company by reviewing key financial benchmarks, namely, reported turnover and earnings before interest, tax, depreciation and amortisation (EBITDA).

Reported turnover is the value of goods and services provided by the company during the year and the modest increase reflects the success of the company’s sales strategy during this period of economic challenges and uncertainty.

 

2024             2023

Turnover         £20,448,965         £19,937,712

 

EBITDA is the benchmark which in the director’s opinion, best reflects the performance of the business during that period.

2024         2023

EBITDA         £2,408,271         £1,849,453

Brown Recycling Limited
Strategic report (continued)
For the year ended 31 January 2024
- 2 -
Other information and explanations

Financial Instrument Risk

The financial instrument risks affecting the company relate to cash flow risk, credit risk and liquidity risk.

Cashflow risk is the risk that sufficient levels of cash do not flow into the business to allow working capital requirements to be met in a timely manner. The management of the cashflow timing of cash inflows and outflows is achieved by the close involvement of management with customer and supplier relationships. Management also reviews financial information on a regular basis to determine whether further measures are needed to ensure sufficient cashflows in the business.

Credit risk is the risk that the company will not receive full settlement on amount due from the customer. The risk is managed through continually monitored credit procedures including having regular dialogue with customers during the conduct of business.

Liquidity risk is the risk that the company will not have sufficient funds to carry out its short and long- term objectives. Historically, the company has managed its funding requirements through the use of bank debt and hire purchase finance.

Future Development

The trading outlook for the next financial year is healthy and the directors expect to continue its programme of investment in the company, and to pursue sustainable growth.

On behalf of the board

Mr R W Brown
Director
16 September 2024
Brown Recycling Limited
Directors' report
For the year ended 31 January 2024
- 3 -

The directors present their annual report and financial statements for the year ended 31 January 2024.

Principal activities

The company’s principal activities continue to be waste collection, recycling and processing, scrap metal merchants.

Results and dividends

The results for the year are set out on page 9.

Ordinary dividends were paid amounting £820,460 (2023 - £853,960). The directors do not recommend payment of a final dividend.

Directors

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

Mr R W Brown
D M Brown
M R Brown
Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Strategic report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments, principal risks and uncertainties and financial instrument risks.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Brown Recycling Limited
Directors' report (continued)
For the year ended 31 January 2024
- 4 -
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 R W Brown
D M Brown
Director
Director
M R Brown
Director
16 September 2024
Brown Recycling Limited
Independent auditor's report
To the member of Brown Recycling Limited
- 5 -
Opinion

We have audited the financial statements of Brown Recycling Limited (the 'company') for the year ended 31 January 2024 which comprise the statement of income and retained earnings, the statement of financial position, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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.

Brown Recycling Limited
Independent auditor's report (continued)
To the member of Brown Recycling Limited
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

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

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:

Brown Recycling Limited
Independent auditor's report (continued)
To the member of Brown Recycling Limited
- 7 -

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brown Recycling Limited
Independent auditor's report (continued)
To the member of Brown Recycling Limited
- 8 -

Use of our report

This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.

Nicola Johnson
Senior Statutory Auditor
For and on behalf of DJH Audit Limited
22 October 2024
Accountants
Statutory Auditor
The Glades
Festival Way
Festival Park
Stoke-on-Trent
Staffordshire
ST1 5SQ
Brown Recycling Limited
Statement of income and retained earnings
For the year ended 31 January 2024
- 9 -
2024
2023
Notes
£
£
Turnover
3
20,448,965
19,937,712
Cost of sales
(16,202,095)
(16,176,028)
Gross profit
4,246,870
3,761,684
Administrative expenses
(3,042,052)
(2,851,523)
Other operating income
5,298
27,813
Operating profit
4
1,210,116
937,974
Interest receivable and similar income
7
21,434
4,148
Interest payable and similar expenses
8
(163,262)
(90,359)
Profit before taxation
1,068,288
851,763
Tax on profit
9
(187,000)
(112,960)
Profit for the financial year
881,288
738,803
Retained earnings brought forward
4,044,725
4,159,882
Dividends
10
(820,460)
(853,960)
Retained earnings carried forward
4,105,553
4,044,725
Brown Recycling Limited
Statement of financial position
As at 31 January 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
11
7,777,047
6,780,596
Current assets
Stocks
12
67,882
110,556
Debtors
13
3,113,884
2,742,242
Cash at bank and in hand
1,101,987
948,790
4,283,753
3,801,588
Creditors: amounts falling due within one year
14
(4,029,956)
(4,290,581)
Net current assets/(liabilities)
253,797
(488,993)
Total assets less current liabilities
8,030,844
6,291,603
Creditors: amounts falling due after more than one year
15
(3,197,689)
(1,706,276)
Provisions for liabilities
Deferred tax liability
18
726,600
539,600
(726,600)
(539,600)
Net assets
4,106,555
4,045,727
Capital and reserves
Called up share capital
20
1,002
1,002
Profit and loss reserves
21
4,105,553
4,044,725
Total equity
4,106,555
4,045,727

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 16 September 2024 and are signed on its behalf by:
Mr R W Brown
Director
Company registration number 02438711 (England and Wales)
Brown Recycling Limited
Statement of cash flows
For the year ended 31 January 2024
- 11 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
2,045,331
2,511,739
Interest paid
-
(90,359)
Income taxes paid
-
0
(12,871)
Net cash inflow from operating activities
2,045,331
2,408,509
Investing activities
Purchase of tangible fixed assets
(682,126)
(590,768)
Proceeds from disposal of tangible fixed assets
173,811
53,569
Interest received
21,434
4,148
Net cash used in investing activities
(486,881)
(533,051)
Financing activities
Repayment of bank loans
(452,046)
(576,473)
Payment of finance leases obligations
(789,945)
(589,624)
Interest paid
(163,262)
-
0
Dividends paid
-
0
(853,960)
Net cash used in financing activities
(1,405,253)
(2,020,057)
Net increase/(decrease) in cash and cash equivalents
153,197
(144,599)
Cash and cash equivalents at beginning of year
948,790
1,093,389
Cash and cash equivalents at end of year
1,101,987
948,790
Brown Recycling Limited
Notes to the financial statements
For the year ended 31 January 2024
- 12 -
1
Accounting policies
Company information

Brown Recycling Limited is a private company limited by shares incorporated in England and Wales. The registered office is Vanguard House, Sneyd Hill, Burslem, Stoke on Trent, Staffordshire, ST6 2DZ.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on despatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

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

Freehold land and buildings
4% on cost
Plant and equipment
20% reducing balance and 8.33% on cost
Fixtures, fittings and equipment
15% reducing balance basis and 33% on cost
Motor vehicles
25% reducing balance basis

Freehold land is not depreciated.

Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
1
Accounting policies
(Continued)
- 13 -

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.

 

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

1.6
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.7
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand and cash at bank.

1.8
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, loans to fellow group companies and bank loans, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

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
Taxation

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

Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
1
Accounting policies
(Continued)
- 15 -
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

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.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

1.11
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.12
Retirement benefits

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

1.13
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
1
Accounting policies
(Continued)
- 16 -
1.14
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

 

Key sources of estimation uncertainty

 

The directors consider that there are no key estimates or assumptions used in preparing the financial statements.

 

Critical judgements

 

The directors consider that there are no critical judgements used in preparing the financial statements.

3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Rendering of services
15,723,384
15,167,933
Scrap sales
4,725,581
4,769,779
20,448,965
19,937,712
2024
2023
£
£
Other revenue
Interest income
21,434
4,148
Grants received
-
10,193
Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
- 17 -
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(17)
148
Government grants
-
(10,193)
Fees payable to the company's auditor for the audit of the company's financial statements
19,000
12,000
Depreciation of owned tangible fixed assets
622,727
567,646
Depreciation of tangible fixed assets held under finance leases
611,584
289,677
(Profit)/loss on disposal of tangible fixed assets
(36,155)
54,156
Operating lease charges
60,351
43,078

 

5
Employees

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

2024
2023
Number
Number
Production
70
71
Administration
36
33
Total
106
104

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
3,878,699
3,578,912
Social security costs
389,249
384,329
Pension costs
86,578
80,100
4,354,526
4,043,341
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
54,275
134,856
Company pension contributions to defined contribution schemes
508
1,981
54,783
136,837
Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
6
Directors' remuneration
(Continued)
- 18 -

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023 - 2).

7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
21,434
4,148
2024
2023
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
21,434
4,148
8
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
39,158
45,995
Other finance costs:
Interest on finance leases and hire purchase contracts
124,104
44,364
163,262
90,359
9
Taxation
2024
2023
£
£
Deferred tax
Origination and reversal of timing differences
187,000
112,960
Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
9
Taxation
(Continued)
- 19 -

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
1,068,288
851,763
Expected tax charge based on the standard rate of corporation tax in the UK of 24.00% (2023: 19.00%)
256,389
161,835
Tax effect of expenses that are not deductible in determining taxable profit
5,838
4,787
Effect of change in corporation tax rate
25,955
-
0
Depreciation on assets not qualifying for tax allowances
27,567
25,282
Enhanced capital allowances
(4,249)
(91,791)
Increased deferred tax rate
-
0
12,847
Deferred tax underprovided for
(124,500)
-
0
Taxation charge for the year
187,000
112,960
10
Dividends
2024
2023
£
£
Interim paid
820,460
853,960
Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
- 20 -
11
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 February 2023
4,877,738
7,510,429
153,108
4,048,631
16,589,906
Additions
6,050
1,253,520
19,730
1,089,118
2,368,418
Disposals
-
0
(392,818)
-
0
(298,794)
(691,612)
At 31 January 2024
4,883,788
8,371,131
172,838
4,838,955
18,266,712
Depreciation and impairment
At 1 February 2023
1,723,910
4,975,068
103,990
3,006,342
9,809,310
Depreciation charged in the year
135,604
651,613
35,922
411,172
1,234,311
Eliminated in respect of disposals
-
0
(290,178)
-
0
(263,778)
(553,956)
At 31 January 2024
1,859,514
5,336,503
139,912
3,153,736
10,489,665
Carrying amount
At 31 January 2024
3,024,274
3,034,628
32,926
1,685,219
7,777,047
At 31 January 2023
3,153,828
2,535,361
49,118
1,042,289
6,780,596

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2024
2023
£
£
Plant and equipment
1,686,476
1,176,631
Motor vehicles
1,270,466
725,608
2,956,942
1,902,239
12
Stocks
2024
2023
£
£
Finished goods and goods for resale
67,882
110,556
Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
- 21 -
13
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
2,960,069
2,524,073
Other debtors
12,775
78,051
Prepayments and accrued income
141,040
140,118
3,113,884
2,742,242
14
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Bank loans
16
435,238
420,245
Obligations under finance leases
17
809,508
546,613
Trade creditors
1,505,382
1,449,460
Amounts owed to group undertakings
-
0
750,000
Taxation and social security
458,582
279,759
Other creditors
28,637
49,578
Accruals and deferred income
792,609
794,926
4,029,956
4,290,581

The bank loans are secured on the freehold properties of the company. Hire purchase contracts and finance leases are secured on the assets acquired under those agreements.

15
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Bank loans
16
193,416
660,455
Obligations under finance leases
17
1,679,273
1,045,821
Amounts owed to group undertakings
1,325,000
-
0
3,197,689
1,706,276

The bank loans are secured on the freehold properties of the company. Hire purchase contracts and finance leases are secured on the assets acquired under those agreements.

Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
- 22 -
16
Loans and overdrafts
2024
2023
£
£
Bank loans
628,654
1,080,700
Payable within one year
435,238
420,245
Payable after one year
193,416
660,455
17
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
809,508
546,613
In two to five years
1,679,273
1,045,821
2,488,781
1,592,434

Finance lease payments represent rentals payable by the company for certain items of plant and machinery and motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

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
735,900
539,600
Tax losses
(9,300)
-
726,600
539,600
2024
Movements in the year:
£
Liability at 1 February 2023
539,600
Charge to profit or loss
187,000
Liability at 31 January 2024
726,600
Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
18
Deferred taxation
(Continued)
- 23 -

The deferred tax account consists of the tax effect of timing differences in respect of accelerated capital allowances and taxable losses.

19
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
86,578
80,100

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

 

Contributions totalling £7,623 (2023 - £9,064) were payable to the fund at the balance sheet date and are included in creditors.

20
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,002
1,002
1,002
1,002

Each ordinary share has full voting rights, full dividend rights, is non-redeemable and has no right to participate in a distribution of capital, except on winding up.

21
Profit and loss reserves

Profit and loss reserves represents the accumulated profits less accumulated losses and distributions up to the reporting date. This is a distributable reserve.

22
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
42,507
14,137
Between two and five years
83,271
8,089
125,778
22,226
Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
- 24 -
23
Capital commitments

Amounts contracted for but not provided in the financial statements:

2024
2023
£
£
Acquisition of tangible fixed assets
692,000
-
24
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2024
2023
£
£
Aggregate compensation
183,252
292,268
25
Directors' transactions

Dividends totalling £nil (2023 - £103,960) were paid in the year in respect of shares held by the company's directors.

Directors current accounts

At the balance sheet date the company owed £20,514 (2023 - £40,514) to the directors.

 

No interest was payable on the loan amounts due to the directors.

26
Ultimate controlling party

At the year-end, the company is a 100% owned subsidiary of H Brown & Son Group Limited, which is the ultimate parent company. The registered office of the ultimate parent company is Vanguard House, Sneyd Hill, Burslem, Stoke-on-Trent, Staffordshire, ST6 2DZ.

The ultimate controlling party is Mr R W Brown.

Brown Recycling Limited
Notes to the financial statements (continued)
For the year ended 31 January 2024
- 25 -
27
Cash generated from operations
2024
2023
£
£
Profit for the year after tax
881,288
738,803
Adjustments for:
Taxation charged
187,000
112,960
Finance costs
163,262
90,359
Investment income
(21,434)
(4,148)
(Gain)/loss on disposal of tangible fixed assets
(36,155)
54,156
Depreciation and impairment of tangible fixed assets
1,234,311
857,323
Movements in working capital:
Decrease in stocks
42,674
9,931
Increase in debtors
(371,642)
(206,580)
(Decrease)/increase in creditors
(33,973)
858,935
Cash generated from operations
2,045,331
2,511,739
28
Analysis of changes in net debt
1 February 2023
Cash flows
New finance leases
Other non-cash changes
31 January 2024
£
£
£
£
£
Cash at bank and in hand
948,790
153,197
-
-
1,101,987
Borrowings excluding overdrafts
(1,080,700)
452,046
-
-
(628,654)
Obligations under finance leases
(1,592,434)
789,945
(1,686,292)
-
(2,488,781)
Amounts owed to group undertakings due after more than 1 year
-
-
-
(1,325,000)
(1,325,000)
(1,724,344)
1,395,188
(1,686,292)
(1,325,000)
(3,340,448)

Other non-cash changes relate to the ageing of amounts owed to group undertakings due after more than 1 year now treated as debt, following the company entering into a formal loan agreement with its parent company during the year.

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