Company registration number 528385 (England and Wales)
C. BROWN & SONS (STEEL) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2024
C. BROWN & SONS (STEEL) LIMITED
COMPANY INFORMATION
Directors
G P Brown
Mrs S K Cheeseman
N P Brown
T G Brown
M L C Brown
J T Adkins
A S Webberley
A J Cheeseman
Secretary
G P Brown
Company number
528385
Registered office
Cochrane House
Pedmore Road
Dudley
West Midlands
DY2 0RL
Auditor
Price Pearson
Finch House
28-30 Wolverhampton Street
Dudley
West Midlands
DY1 1DB
Business address
Cochrane House
Pedmore Road
Dudley
West Midlands
DY2 0RL
Bankers
HSBC
114 High Street
Stourbridge
West Midlands
DY8 1DZ
C. BROWN & SONS (STEEL) LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14 - 35
C. BROWN & SONS (STEEL) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2024
- 1 -

The directors present their strategic report and financial statements for the year ended 31 May 2024.

Review of the business

The year to May 2024 was even more challenging than the previous year with continued price erosion against the backdrop of continued contraction in the manufacturing and construction sectors.

The fall in price started in the summer of 2022 and aside from a brief period of respite, this has continued throughout 2023. From the start of calendar year 2024 prices had appeared to broadly stabilize.

Weak demand was also reflected in reduced volumes and overall, this gave rise to a drop in turnover from £57.3 million to £42.6 million.

Consequently, the company reported a Pre-tax Loss of £1.421 million. Much of this was realised in the period up to December 2023. Since then, the level of loss has been much less. Despite this the balance sheet remained strong with net assets of £21.2 million including a cash surplus of £1.8 million.

Following on from May 2024, there has been no improvement in demand in the UK or EU markets. Although there was a further drop in input prices in the summer, at the time of writing Market Prices appear to have stabilized and there are signals that prices may start to move forwards in 2025. In the meantime, the group has remained cautious regarding purchase commitments and stock levels.

Directors have been seeking to control overheads as far as possible. There is an ongoing programme of continuous improvement initiatives to improve efficiency and eliminate waste. We continue to focus on value added activities to enhance margins.

It is expected that volumes will recover, and in conjunction with the activities outlined above, the board is confident that the business will return to Profitability.

The board remains grateful for the hard work and commitment from all our employees.

Principal risks and uncertainties

The company recognises areas of risk to the business. The primary areas of risk are considered to be the worldwide economic climate and the impact on demand and price volatility. The company looks to limit its business risk by diversifying its supplier base and expanding its customer base. In addition to this, uncertainties regarding the market price of steel are managed by effective stock control. There is also credit risk associated with customer debts. These are mitigated by credit insurance.

 

Future developments

The main aims will be to build on the investments made in recent years. However, until the market picks up capital expenditure will remain under tight control.

 

C. BROWN & SONS (STEEL) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 2 -
Other performance indicators

Section 172, Companies Act 2006

 

This report sets out how the directors have had regard to the matters set out section 172(1)(a) to (f) when performing their duties under section 172 of the Companies Act 2006. This requires directors to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole and, in doing so have regard (amongst other matters) to:

 

C Brown Services Limited is the parent company of the main operating company, C. Brown & Sons (Steel) Limited. The shareholders of C Brown Services Limited are Directors of both companies. C. Brown & Sons (Steel) Limited also has three none- shareholder Directors.

 

The board meets on a regular basis to discuss strategic and operational matters. The Board is conscious of the impact its business decisions have on stakeholders as well as the wider impact on society.

 

The likely consequence of any decision in the long term

 

The board is mindful that certain decisions can have longer term consequences. Evaluation of proposals are based on a balance of meeting shorter term objectives and due consideration to the longer-term strategy.

 

The interests of the company's employees

 

The C. Brown & Sons (Steel) Limited Board has regard to the interests of its employees in its decision making and engages with employees and employee representatives as appropriate. The Board recognises the importance of attracting, retaining and motivating employees and prioritises the health, safety and wellbeing of its workforce.

 

The need to foster the company's business relationships with suppliers, customers and others

 

The C. Brown & Sons (Steel) Limited Board has regard to stakeholder relationships in its decision making. Both customers and Suppliers are regarded with equal importance. The company reviews and measures performance in its dealings with external stakeholders.

 

The impact of the company's operations on the community and the environment

 

The board is aware of the potential impact of its activities on the community and the environment. Decisions on changes to operations are made with due consideration to the local community and any possible environmental impact, if any.

 

The desirability of the company maintaining a reputation for high standards of business conduct

 

The C. Brown & Sons (Steel) Limited Board is committed to maintaining the company’s reputation. All employees are expected to carry out their business dealings with full integrity.

 

The need to act fairly between members of the company

 

As Executive Directors of the Company, all shareholders are involved in all key decision making.

C. BROWN & SONS (STEEL) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 3 -
Other information and explanations

 

This section includes our mandatory reporting of energy and greenhouse gas emissions for the period 1 June 2023 to 31 May 2024, pursuant to the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, implementing the government’s Streamlined Energy and Carbon Reporting (SECR) policy.

 

Our methodology to calculate our greenhouse gas emissions is based on the 'Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance (March 2019)’ issued by DEFRA, using DEFRA's 2023 conversion factors. In some cases consumption has been extrapolated from available data or direct comparison made to a comparable period.

 

We report using a financial control approach to define our organisational boundary. We have reported all material emission sources required by the regulations for which we deem ourselves to be responsible and have maintained records of all source data and calculations.

 

The table below includes total energy consumption (reported as kWh) and greenhouse gas emissions for the sources required by the regulations, along with our intensity ratio.

2024      2023

Total Energy Consumption – Used for Emissions Calculation (kWh)        6,166,376    6,467,983

Gas Combustion Emissions, Scope 1 (tCO2e)                360        299

Purchased Electricity Emissions, Scope 2 (tCO2e)                313        342

Vehicle Fuel Combustion Emissions, Scope 1 (tCO2e)                746        803

Vehicle Fuel Combustion Emissions, Scope 3 (tCO2e)                -        -

Total Gross Reported Emissions (tCO2e)                    1,419        1,445

Turnover (£m)                                43        57

Intensity Ratio: Turnover (tCO2e / £m)                    33.0        25.3

On behalf of the board

N P Brown
Director
18 October 2024
C. BROWN & SONS (STEEL) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2024
- 4 -

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

Principal activities

The principal activity of the company continues to be that of steel stockholding and processing. The company also contains a division which trades as a motor vehicle repairer and seller of commercial motor spares.

Results and dividends

The results for the year are set out on page 10.

Ordinary dividends were paid amounting to £4,000. The directors do not recommend a dividend to be paid in the next financial year for the year ended 31 May 2024.

Directors

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

G P Brown
Mrs S K Cheeseman
N P Brown
T G Brown
M L C Brown
J T Adkins
A S Webberley
A J Cheeseman
Directors' interests

The directors' interests in the shares of the company were as stated below:

Ordinary shares of £1 each
31 May 2024
31 May 2023
G P Brown
-
-
Mrs S K Cheeseman
-
-
N P Brown
-
-
T G Brown
-
-
M L C Brown
-
-
J T Adkins
-
-
A S Webberley
-
-
A J Cheeseman
-
-

The interests of N P Brown, Mrs S K Cheeseman, T G Brown, M L C Brown and A J Cheeseman in the issued share capital of the holding company, C Brown Services Limited, are shown in the directors' report of that company. G P Brown, J T Adkins and A S Webberley do not have any interest in the issued share capital of the holding company.

Research and development
No significant research and development expenditure has been incurred during the period.
Business relationships

A statement regarding the need to foster the company's business relationships has been included in the Strategic Report.

Post reporting date events

There have been no significant post reporting date events.

Auditor

The auditor, Price Pearson, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

C. BROWN & SONS (STEEL) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 5 -
Energy and carbon report

A report regarding the companies emissions, energy consumptions and energy efficiency activities has been included in the Strategic Report.

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 future developments of the company have been included in the strategic report.

Statement of disclosure to auditor

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

On behalf of the board
N P Brown
Director
18 October 2024
C. BROWN & SONS (STEEL) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF C. BROWN & SONS (STEEL) LIMITED
- 6 -
Opinion

We have audited the financial statements of C. Brown & Sons (Steel) Limited (the 'company') for the year ended 31 May 2024 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity 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:

C. BROWN & SONS (STEEL) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF C. BROWN & SONS (STEEL) LIMITED
- 7 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

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.

We have obtained an understanding of the legal and regulatory frameworks which the Company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in the context were the requirements under FRS 102, the Companies Act 2006 and Tax legislation.

In addition we considered other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Companies ability to operate or to avoid a material penalty. We also considered the opportunities and incentives that may exist within the Company for fraud. The laws and regulations we considered in this context were General Data Protection Regulation (GDPR), Anti-fraud, bribery and corruption legislation, Environmental protection legislation, Health and Safety legislation, Tax legislation and Employment legislation.

C. BROWN & SONS (STEEL) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF C. BROWN & SONS (STEEL) LIMITED
- 8 -

We identified the greatest risk of material impact on the following areas: timing of the recognition of income; the valuation of stocks; the override of controls by management, including posting of any unusual journals; inappropriate treatment of non-routine transactions and areas of estimation uncertainty and manipulating the Company’s KPI’s to meet management targets.

Stock Valuation – we performed the following procedures:

 

We also considered the risk of fraud through management override and in response we incorporated testing of manual journal entries into our audit approach. As well as assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of the business.

In addition to the above, our procedures to respond to the risks also included:

 

Owing to the inherent limitations of an audit, there is an unavoidable risk we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations

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

C. BROWN & SONS (STEEL) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF C. BROWN & SONS (STEEL) LIMITED
- 9 -

Use of our 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.

Christopher Cooper FCA FCCA
Senior Statutory Auditor
For and on behalf of Price Pearson
21 October 2024
Chartered Accountants
Statutory Auditor
Finch House
28-30 Wolverhampton Street
Dudley
West Midlands
DY1 1DB
C. BROWN & SONS (STEEL) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2024
- 10 -
2024
2023
Notes
£
£
Turnover
3
42,578,949
57,263,789
Cost of sales
(39,389,413)
(52,201,712)
Gross profit
3,189,536
5,062,077
Administrative expenses
(4,841,590)
(5,136,707)
Other operating income
56,400
56,400
Operating loss
4
(1,595,654)
(18,230)
Interest receivable and similar income
8
177,891
69,751
Interest payable and similar expenses
9
(3,653)
(45,815)
(Loss)/profit before taxation
(1,421,416)
5,706
Tax on (loss)/profit
10
279,000
(2,137)
(Loss)/profit for the financial year
(1,142,416)
3,569

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

C. BROWN & SONS (STEEL) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2024
- 11 -
2024
2023
Notes
£
£
(Loss)/profit for the year
(1,142,416)
3,569
Other comprehensive income
Actuarial (loss)/gain on defined benefit pension schemes
22
(128,000)
262,000
Tax relating to other comprehensive income
21
14,000
(140,000)
Other comprehensive income for the year
(114,000)
122,000
Total comprehensive income for the year
(1,256,416)
125,569
C. BROWN & SONS (STEEL) LIMITED
BALANCE SHEET
AS AT
31 MAY 2024
31 May 2024
- 12 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
13
7,224,748
7,569,737
Investments
12
100
100
7,224,848
7,569,837
Current assets
Stocks
15
7,675,748
5,446,920
Debtors
16
10,702,530
14,509,133
Cash at bank and in hand
1,803,574
7,466,337
20,181,852
27,422,390
Creditors: amounts falling due within one year
17
(6,376,435)
(11,147,690)
Net current assets
13,805,417
16,274,700
Total assets less current liabilities
21,030,265
23,844,537
Creditors: amounts falling due after more than one year
18
(25,960)
(46,010)
Provisions for liabilities
Provisions
20
159,900
1,476,706
Deferred tax liability
21
935,000
1,207,000
(1,094,900)
(2,683,706)
Net assets excluding pension surplus
19,909,405
21,114,821
Defined benefit pension surplus
22
1,329,002
1,384,002
Net assets
21,238,407
22,498,823
Capital and reserves
Called up share capital
23
1,288,950
1,288,950
Revaluation reserve
985,834
985,834
Profit and loss reserves
18,963,623
20,224,039
Total equity
21,238,407
22,498,823
The financial statements were approved by the board of directors and authorised for issue on 18 October 2024 and are signed on its behalf by:
N P Brown
T G Brown
Director
Director
Company Registration No. 528385
C. BROWN & SONS (STEEL) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2024
- 13 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 June 2022
1,288,950
985,834
21,548,470
23,823,254
Year ended 31 May 2023:
Profit for the year
-
-
3,569
3,569
Other comprehensive income:
Actuarial gains on defined benefit plans
22
-
-
262,000
262,000
Tax relating to other comprehensive income
-
-
0
(140,000)
(140,000)
Total comprehensive income for the year
-
0
-
0
125,569
125,569
Dividends
11
-
-
(1,450,000)
(1,450,000)
Balance at 31 May 2023
1,288,950
985,834
20,224,039
22,498,823
Year ended 31 May 2024:
Loss for the year
-
-
(1,142,416)
(1,142,416)
Other comprehensive income:
Actuarial gains on defined benefit plans
22
-
-
(128,000)
(128,000)
Tax relating to other comprehensive income
-
-
0
14,000
14,000
Total comprehensive income for the year
-
0
-
0
(1,256,416)
(1,256,416)
Dividends
11
-
-
(4,000)
(4,000)
Balance at 31 May 2024
1,288,950
985,834
18,963,623
21,238,407
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2024
- 14 -
1
Accounting policies
Company information

C. Brown & Sons (Steel) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Cochrane House, Pedmore Road, Dudley, West Midlands, DY2 0RL.

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 on the historical cost convention modified to include land and buildings at fair value. The principal accounting policies adopted are set out below.

The company has taken advantage of the following exemptions:

 

(i) from preparing a statement of cash flows, on the basis that it is a qualifying entity and its ultimate parent company C Brown Services Limited, includes the company's cash flows in its own consolidated financial statements.

 

(ii) From the financial instruments disclosures, required under FRS102 paragraphs 11.39 to 11.48A and paragraphs 12.26 to 12.29, as the information is provided in the consolidated financial statement disclosures.

 

(iii) From disclosing the company key management personnel compensation, as required by FRS102 paragraph 33.7.

 

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

The company is a wholly owned subsidiary of C Brown Services Limited. It is included in the consolidated financial statements of C Brown Services Limited which are publicly available.

 

1.2
Going concern

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

1.3
Turnover

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

 

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

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 15 -
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.

Tangible fixed assets are stated at cost or valuation less depreciation. Depreciation is provided at rates calculated to write off the cost or valuation less estimated residual value of each asset over its expected useful life, as follows:
Land and buildings freehold
no depreciation
Plant and machinery
4% - 25% p.a. straight line basis
Fixtures, fittings & equipment
5% - 25% p.a. straight line basis
Motor vehicles
10% - 25% p.a. straight line basis

Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value.

 

Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and loss are recognised in profit or loss.

 

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.

 

No depreciation is charged on the company's freehold properties since, in the opinion of the directors, the expected useful lives are sufficiently long and the estimated residual values are sufficiently high that any such depreciation would be immaterial. In view of this, the directors carry out an annual impairment review of these properties.

1.5
Fixed asset investments

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.6
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 16 -

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.7
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Goods for resale are valued at purchase cost.

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

1.8
Cash and cash equivalents

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

1.9
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.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 17 -
Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

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

 

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

Derecognition of financial assets

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

Classification of financial liabilities

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

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.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 18 -
Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.10
Equity instruments

Ordinary shares are classified as equity. Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities in the financial statements in the period in which the dividends and other distributions are approved by the company's shareholders. These amounts are recognised in the statement of changes in equity.

 

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

1.11
Taxation

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

Current tax

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

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.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 19 -
1.12
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.

 

Onerous contracts

The company recognises a provision for contracts where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

 

Onerous contracts provisions represent obligations under purchase contracts that exceed the expected realisable value of those contracts and is expected to be released upon completion of contracts.

1.13
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.

1.14
Retirement benefits

The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.

The company operates a defined benefit scheme, where benefits are based on each member's salary and pensionable service prior to leaving the scheme. Members are no longer accruing defined benefits under the scheme. Benefits receive statutory revaluation in deferment. Once in payment, pension increases are applied, some of which are linked to inflation (Subject to floors and caps). The cost of providing benefits is determined using the Defined Accrued Benefit Method. Actuarial gains and losses are recognised in full in the period in which they occur in other comprehensive income. The retirement benefit obligation in the balance sheet represents the present value of the defined benefit obligation less the fair value of plan assets.

The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.

Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.

1.15
Leases

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

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

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 20 -

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

1.16
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Useful economic lives of tangible assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assed annually. They are amended when necessary to reflect current estimates, based on technological advancements, future investments, economic utilisation and physical condition of the assets. see note 13 for the carrying amount of plant and equipment, and note 1.4 for the useful economic lives for each class of assets.

Stock provision

The company sells large volumes of steel. As a result it is necessary to consider the recoverability of the cost of stock and the associated provision required. When calculating the stock provision, management considers the nature and condition of the stock, as well as applying assumptions around anticipated saleability of finished goods. See note 15 for the net carrying amount of the stock provision.

Impairment of debtors

The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note 16 for the net carrying amount of the debtors and associated impairment provision.

Defined benefit pension scheme

The company has an obligation to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including: life expectancy, salary increases, asset valuations and the discounted rate. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends. See note 22 for the disclosures relating to the defined benefit pension scheme.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 21 -
3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2024
2023
£
£
Turnover analysed by class of business
Steel sales
42,578,949
57,263,789
2024
2023
£
£
Other revenue
Interest income
177,891
69,751

In the opinion of the directors it would be seriously prejudicial to disclose geographical details regarding turnover.

4
Operating loss
2024
2023
Operating loss for the year is stated after charging/(crediting):
£
£
Depreciation of owned tangible fixed assets
420,433
478,274
Depreciation of tangible fixed assets held under finance leases
26,431
45,025
Profit on disposal of tangible fixed assets
(7,003)
(5,377)
Cost of stocks recognised as an expense
35,150,145
47,282,581
Onerous contract provision movement
(1,316,806)
(637,773)
Management charges
(39,000)
(39,000)
Operating lease charges
157,894
176,341
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
56,800
65,500
For other services
Other taxation services
23,250
18,000
All other non-audit services
-
0
150,000
23,250
168,000
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 22 -
6
Employees

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

2024
2023
Number
Number
Management
8
8
Staff and works employees
148
152
Total
156
160

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
4,890,153
4,811,933
Social security costs
464,885
464,507
Pension costs
170,568
152,665
5,525,606
5,429,105
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
743,639
725,847
Company pension contributions to defined contribution schemes
60,808
46,505
804,447
772,352

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 7 (2023 - 7).

The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 6 (2023 - 6).

Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
151,115
145,498
Company pension contributions to defined contribution schemes
9,925
9,726
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 23 -
8
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
95,637
32,751
Interest on pension scheme
73,000
37,000
Other interest income
9,254
-
Total income
177,891
69,751
9
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
-
25,278
Other interest on financial liabilities
-
0
1,815
Interest on finance leases and hire purchase contracts
3,653
3,653
Other interest
-
0
15,069
3,653
45,815
10
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
-
0
21,000
Adjustments in respect of prior periods
(21,000)
(2,863)
Total current tax
(21,000)
18,137
Deferred tax
Origination and reversal of timing differences
(258,000)
(16,000)
Total tax (credit)/charge
(279,000)
2,137
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
10
Taxation
(Continued)
- 24 -

The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2024
2023
£
£
(Loss)/profit before taxation
(1,421,416)
5,706
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.95%)
(355,354)
1,138
Tax effect of expenses that are not deductible in determining taxable profit
(9,721)
(8,962)
Unutilised tax losses carried forward
263,711
-
0
Adjustments in respect of prior years
25,550
-
0
Group relief
34,919
-
0
Permanent capital allowances in excess of depreciation
60,896
36,665
Under/(over) provided in prior years
(21,000)
(2,863)
Profit/loss on disposal
(1,751)
(1,073)
Other tax adjustments
(18,250)
(6,768)
Deferred tax
(258,000)
(16,000)
Taxation (credit)/charge for the year
(279,000)
2,137

In addition to the amount (credited)/charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2024
2023
£
£
Deferred tax arising on:
Actuarial differences recognised as other comprehensive income
(14,000)
140,000
11
Dividends
2024
2023
£
£
Interim paid
4,000
1,450,000
12
Fixed asset investments
2024
2023
Notes
£
£
Investments in subsidiaries
14
100
100
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 25 -
13
Tangible fixed assets
Land and buildings freehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 June 2023
3,599,999
9,259,127
681,168
660,470
14,200,764
Additions
-
0
109,812
-
0
1,900
111,712
Disposals
-
0
(4,967)
-
0
(28,652)
(33,619)
At 31 May 2024
3,599,999
9,363,972
681,168
633,718
14,278,857
Depreciation and impairment
At 1 June 2023
-
0
5,702,559
430,366
498,102
6,631,027
Depreciation charged in the year
-
0
346,041
45,643
55,180
446,864
Eliminated in respect of disposals
-
0
(4,967)
-
0
(18,815)
(23,782)
At 31 May 2024
-
0
6,043,633
476,009
534,467
7,054,109
Carrying amount
At 31 May 2024
3,599,999
3,320,339
205,159
99,251
7,224,748
At 31 May 2023
3,599,999
3,556,568
250,802
162,368
7,569,737

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 machinery
146,787
173,218

The freehold land and buildings are included at revaluation. This valuation was made by the directors based on an open market value basis with reference to a valuation provided by an independent firm of Chartered Surveyors In November 2022.

If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:

2024
2023
£
£
Cost
2,614,164
2,614,164
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 26 -
14
Subsidiaries

Details of the company's subsidiaries at 31 May 2024 are as follows:

Name of undertaking
Registered
Nature of business
Class of
% Held
office
shares held
Direct
Indirect
Cebron Motors Limited
Cochrane House, Pedmore Road, Dudley, West Midlands, DY2 0RL
Dormant company
Ordinary
100.00
0
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
Name of undertaking
Profit/(Loss)
Capital and Reserves
£
£
Cebron Motors Limited
-
0
100
15
Stocks
2024
2023
£
£
Goods for resale
7,675,748
5,446,920

The current replacement cost of stocks is not materially different from the historic cost.

 

Stock is stated after provisions for impairment of £180,100 (2023: £48,294).

16
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
9,166,237
13,008,911
Corporation tax recoverable
20,386
89,000
Amounts owed by group undertakings
867,016
787,316
Other debtors
25,956
18,146
Prepayments and accrued income
622,935
605,760
10,702,530
14,509,133

Trade debtors are stated after provisions for impairment of £69,609 (2023: £52,341).

 

Amounts due from group undertakings are unsecured, interest free, have no fixed repayment date and are repayable on demand.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 27 -
17
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Obligations under finance leases
19
20,098
39,025
Trade creditors
5,940,982
10,443,879
Amounts due to group undertakings
100
100
Other taxation and social security
305,924
239,779
Other creditors
10,705
27,730
Accruals and deferred income
98,626
397,177
6,376,435
11,147,690

Amounts due to group undertakings are interest free, have no fixed repayment date and are repayable on demand.

18
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Obligations under finance leases
19
25,960
46,010

The aggregate amount of creditors for which security has been given amounted to £46,058 (2023: £85,035).

19
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
21,954
42,678
In two to five years
28,358
50,264
50,312
92,942
Less: future finance charges
(4,254)
(7,907)
46,058
85,035

Finance lease payments represent rentals payable by the company for certain items of plant and machinery and motor vehicles. No restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

 

The hire purchase liabilities are secured on the assets purchased.

20
Provisions for liabilities
2024
2023
£
£
Onerous contract provisions
159,900
1,476,706
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
20
Provisions for liabilities
(Continued)
- 28 -
Movements on provisions:
Onerous contract provisions
£
At 1 June 2023
1,476,706
Utilisation of provision
(1,316,806)
At 31 May 2024
159,900

Onerous contracts provisions represent obligations under purchase contracts that exceed the expected realisable value of those contracts and is expected to be released upon completion of contracts.

 

The onerous contracts provision has been reclassified in the prior year from stock provisions to better reflect a true and fair view.

21
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2024
2023
Balances:
£
£
ACAs
603,000
861,000
Retirement benefit obligations
332,000
346,000
935,000
1,207,000
2024
Movements in the year:
£
Liability at 1 June 2023
1,207,000
Credit to profit or loss
(258,000)
Effect of change in tax rate - other comprehensive income
(14,000)
Liability at 31 May 2024
935,000
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 29 -
22
Retirement benefit obligations
The company and associated undertakings operate a defined benefit (final salary) funded pension scheme.  Since 4 April 2003 the scheme has ceased future accrual of benefits and no employees' contributions have been received into the scheme.

The assets of the scheme are held separately from those of the companies, being invested with investment management companies.

The scheme assets do not include investments issued by C. Brown & Sons (Steel) Limited nor any property occupied by C. Brown & Sons (Steel) Limited.

The most recent triennial review was as at 5 April 2023 and was carried out by a qualified actuary.

The valuation as at 5 April 2023 showed that the market value of the assets was £5,965,000.  This was sufficient to cover an average 117% of the benefits which accrued to members after allowing for future increases in benefits.

During the year ended 31 May 2024 the company made contributions of £Nil (2023 - £Nil).  The current arrangement as regards contribution rates is described in a Schedule of Contributions dated 26 April 2021. The company is required by that Schedule of Contributions to contribute £Nil every year commencing 1 May 2021 to 31 May 2026, as the deficit has been eliminated during the previous financial year.

A new schedule of contributions was completed on 28 June 2024 confirming £Nil contributions due for a 5 year period from that date.

A qualified independent actuary has updated the results of the triennial valuation as at 5 April 2023 to 31 May 2024 to obtain the following figures in accordance with FRS102. The FRS102 value placed on the pension benefit obligation has been determined by rolling forward from previous results, making adjustments to reflect benefits paid out of the scheme, and for differences between the assumptions used this year end and previous year end.
The major financial assumptions used by the actuary were:
At 31 May 2024
At 31 May 2023
Rate of increase in pensions: LPI 5%
3.82%
3.30%
Rate of increase in CPI inflation
2.50%
2.10%
Discount rate
5.20%
5.25%
Inflation assumption
3.50%
3.30%
Rate of revaluation of deferred pensions in excess of the GMP
2.50%
2.10%
Expected return on the scheme assets*
5.20%
5.25%
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
22
Retirement benefit obligations
(Continued)
- 30 -
The demographic assumptions used by the actuary were:
AX92
AX92
(pre retirement)
(pre retirement)
110% S4PxA CMI 2023 with
110% S3PxA CMI 2021 with
1%
underpin
1%
underpin
Male life expectancy at age 65 for someone who is currently 65
(pensioner)
20.5 years
21.3 years
Female life expectancy at age 65 for someone who is currently 65
(pensioner)
22.9 years
23.7 years
Male life expectancy at age 65 for someone who is currently 45
(non-pensioner)
21.4 years
22.3 years
Female life expectancy at age 65 for someone who is currently 45
(non pensioner)
24.1 years
24.8 years
Cash commutation allowance
None
None
Withdrawal allowance
None
None
* As at the beginning of each period presented.
The overall expected rate of return on the scheme assets has been based on the average expected return for each asset class, weighted by the amount of assets in each class.

The scheme holds quoted securities and these have been valued at bid price. The corresponding amounts from previous years are not bid prices and have not been restated.
The fair value of assets in the scheme were:
Value
at
31 May
2024
Proportion
Value
at
31 May
2023
Proportion
£
£
Bonds
2,482,000
46.00%
2,346,000
43.00%
Other investments
2,912,000
54.00%
3,057,000
57.00%
Total market value of assets
5,394,000
100.00%
5,403,000
100.00%
Present value of plan liability
(4,065,000)
(4,019,000)
Net pension surplus / (deficit)
1,329,000
1,384,000
2024
2023
Analysis of amount charged to operating profit
£
£
Employer's current service cost
-
-
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
22
Retirement benefit obligations
(Continued)
- 31 -
2024
2023
Analysis of the amount charged to interest receivable / (payable) (See note 8)
£
£
Expected return on pension plan assets
277,000
217,000
Interest on pension liabilities
(204,000)
(180,000)
73,000
37,000
2024
2023
Analysis of the amounts recognised in other operating income
£
£
Liability discharged via settlement
-
-
Additional contribution towards settlement
-
-
-
-
Analysis of the amounts recognised in statement of comprehensive income
2024
2023
£
£
Actual return less expected return on plan assets
(22,000)
(1,055,000)
Changes in assumptions underlying the plan liabilities
(81,000)
1,428,000
Experience gains and losses on liabilities
(25,000)
(111,000)
Liability discharged recognised in profit and loss
-
-
(128,000)
262,000
Net cumulative actuarial (losses) / gains *
1,262,000
1,390,000
* Includes net cumulative actuarial gain/(loss) since year ending 31 January 2004.
Change in the present value of the defined benefit obligation
2024
2023
£
£
Opening defined benefit obligation
4,019,000
5,465,000
Movement in year:
Interest cost
204,000
180,000
Actuarial (gains)/losses
106,000
(1,317,000)
Benefits paid
(264,000)
(309,000)
Closing defined benefit obligation
4,065,000
4,019,000
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
22
Retirement benefit obligations
(Continued)
- 32 -
Change in the fair value of the scheme assets
2024
2023
£
£
Opening fair value of the scheme assets
5,403,000
6,550,000
Movement in year:
Expected return
277,000
217,000
Actuarial gain/(loss)
(22,000)
(1,055,000)
Contributions received from employer
-
-
Benefits paid
(264,000)
(309,000)
Closing fair value of the scheme assets
5,394,000
5,403,000
Actual return on scheme assets
255,000
(838,000)
Movement on deficit during the year
2024
2023
£
£
Benefit / (Deficit) in scheme at beginning of the year
1,384,000
1,085,000
Movement in year:
Employer's contributions received by scheme
-
-
Other finance (cost)/income
73,000
37,000
Actuarial gain/(loss)
(128,000)
262,000
Surplus / (Deficit) in scheme at end of the year
1,329,000
1,384,000
C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
22
Retirement benefit obligations
(Continued)
- 33 -
History of experience gains and losses
2024
2023
2022
2021
2020
£
£
£
£
£
Defined benefit obligation
(4,065,000)
(4,019,000)
(5,465,000)
(6,380,000)
(6,577,000)
Scheme assets
5,394,000
5,403,000)
6,550,000)
6,917,000
6,429,000
Benefit / (Deficit)
1,329,000
1,384,000
1,085,000
537,000
(148,000)
Actual return less expected return on scheme assets
1,262,000
1,390,000
1,128,000
592,000
(26,000)
- as a percentage of scheme assets
23.40%
25.73%
17.22%
8.56%
0.40%
Experience gains/
(25,000)
(111,000)
(40,000)
19,000
24,000
(losses) on scheme liabilities
- as a percentage of present value
0.62%
2.76%
0.73%
0.30%
0.36%
of scheme liabilities
2024
2023
Contributions payable by the company for the year
£
£
Defined benefit
-
-
Defined contribution
170,569
152,665
170,569
152,665
Monies due to the pension fund are secured by a legal charge over the company's property.
The contributions due at the year end were £10,298 (2023 - £26,701). This was paid by the due date.
23
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Authorised
Ordinary shares of £1 each
1,300,000
1,300,000
1,300,000
1,300,000
Issued and fully paid
Ordinary shares of £1 each
1,288,950
1,288,950
1,288,950
1,288,950

The company has one class of ordinary shares. There are no restrictions on distributions of dividends and the repayment of capital.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 34 -
24
Financial commitments, guarantees and contingent liabilities

The company is party to an unlimited multilateral guarantee between itself and the following companies:

 

C Brown Services Limited

 

Cebron Motors Limited

 

This guarantee resulted in a contingent liability at the balance sheet date of £nil (2023 - £nil).

25
Operating lease commitments
Lessee

Operating lease payments represent rentals payable by the company for various properties and vehicles. The leases are fixed for an average of 5 years

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
102,400
142,113
Between two and five years
46,586
46,027
148,986
188,140
26
Capital commitments

Amounts contracted for but not provided in the financial statements:

2024
2023
£
£
Acquisition of tangible fixed assets
14,390
15,185
27
Ultimate controlling party

The ultimate holding company is C Brown Services Limited, and its registered office is Cochrane House, Pedmore Road, Dudley, West Midlands, DY2 0RL. C Brown Services Limited is not under control of any one individual.

 

The smallest and largest group to consolidate these financial statements is C Brown Services Limited. Copies of C Brown Services Limited consolidated financial statements can be obtained from the Company secretary at the registered office.

C. BROWN & SONS (STEEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 35 -
28
Related party transactions
Related Individuals
The following transactions took place with individual related parties during the year:
Directors current accounts
Debtors include the following amounts due from directors at the period end:
2024
2023
£
£
Total
9,312
-
These balances arise as a result of drawings made against opening balances due and monies introduced.
During the year interest of £Nil (2023: £1,815)  was charged on the directors loan account.
All Related Party Transactions
There are no provisions against any of the amounts owing at the year end and no amounts have been written off in respect of these transactions during the period.
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