The directors present the strategic report for the year ended 31 January 2024.
Turnover has increased by 5.8% from £82.6m to £87.4m. Whilst gross profit has increased, the group's gross profit margin overall has decreased slightly from 24% to 23%.
The group has performed in line with expectations and the directors are satisfied with the results tor the year, the year end position and the group's future prospects. The group is in a strong financial position to deal with the challenges and take advantage of the opportunities which are expected to arise in the following year.
The company and its subsidiaries recognise that its success is largely due to the experience and dedication of its employees, consequently every effort is made to maintain a consistent and committed workforce. There are many long term employees within every aspect of the group.
Financial risk management
The group's business, as any business, is influenced by a number of risks and uncertainties some of which are beyond the control of the group but which are minimised through good management and efficient financial reporting and controls.
In respect of bank balances the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of overdrafts and loans at floating rates of interest.
The company makes use of money market facilities where funds are available and have a confidential invoice discounting facility in place.
In respect of loans these comprise of loans from financial institutions. The interest rate on loans from financial institutions is variable. The company manages the liquidity risk by ensuring there are sufficient funds to meet the interest charges. The directors are aware of the company's required finance and have determined that these loans will only be repaid, in whole or in part, when sufficient funds are available.
Trade debtors are strictly managed in respect of credit and flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.
Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. The company is committed to paying all creditors to terms and to take advantage of settlement discount when available.
Health and Safety
Ellis Whittam, the group's health and safety advisors, have continued to monitor our health and safety policies and to provide recommendations which have been fully implemented. Risk assessments are subject to constant review and updating. Health and Safety is taken very seriously and we are constantly improving our procedures despite having an exemplary record.
Environmental
The group believes it is in the group's best interest to minimise the risk arising from the social and environmental impact of its activities and is committed to conducting its activities and operations in line with current legislation and best environmental practice.
The directors consider the key performance indicators for the business are:
Growth in sales: 5.8% increase
Gross profit margin: 23.3% (2023: 24.4%)
The directors consider, both individually and together, that they have acted in the way they consider in good faith would be most likely to promote the success of the group for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Act) in the decisions taken during the year ended 31 January 2024 and in creating future business plans ("our plans"):
Our plans are designed to have a long-term beneficial impact on the group and to contribute to its success by providing high quality service to our customers;
Our employees are fundamental to the delivery of our plans. We aim to be a responsible and attractive employer in our approach to pay and the benefits our employees receive and the opportunities they have to develop their careers;
Our plans rely on developing long term relationships with suppliers and customers, enabling us to gain a detailed understanding of their requirements and priorities. We aim to act responsibly and fairly in how we engage with all stakeholders;
Our plans consider the impact of the group's operations on the community and the environment. We encourage our employees to support the communities in which they work;
As directors, our intention is to behave responsibly and ensure the management operate the business in a responsible manner, operating with the high standards of business conduct and good governance expected for a business such as ours and in doing so, will contribute to the delivery of our plans; and
As directors, our intention is to behave responsibly to our shareholders and treat them fairly and equally, so they too may benefit from the successful delivery of our plans.
On behalf of the board
The results for the year are set out on page 9.
An ordinary dividend was paid amounting to £490,000 (2023: £545,000)
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditors, Ward Williams, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.
Following the directors' review, we have determined that our most significant emissions arise from distribution emissions within Scope 1 and Scope 3 activities and Scope 2 purchased electricity at our premises. The group has used the 2023 UK Government Conversion Factors for Company Reporting and applied these factors to the measured quantities of energy.
Distribution of finished goods is carried out directly by the group and also contracted out to a third party. Energy consumption has been calculated in reference to average mileage across the fleet.
Purchased electricity volumes under Scope 2 activities have been taken from third party supplier monthly kWh reporting and equivalent estimations.
Energy consumption and CO2 emissions relating to business travel are considered minimal and insignificant to the group operations.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £1m of revenue.
As part of an on-going programme to reduce carbon emissions the group has plans to install solar panels at several warehouse locations. Three of the group subsidiaries already have solar panels fitted in line with this strategy.
We have audited the financial statements of Brookvale Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2024 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group 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).
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 group and parent 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 group's and parent 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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
The objectives of our audit are to identify and assess the risks of material misstatement of the financial statements due to fraud or error; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud or error; and to respond appropriately to those risks. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
We obtained an understanding of the legal and regulatory frameworks applicable to the company and the sector in which they operate. We determined that the following were the most significant: the Companies Act 2006 and UK corporate taxations laws.
We obtained an understanding of how the company are complying with those legal and regulatory frameworks by making inquiries to the management of the company. We corroborated our inquiries through our review of correspondence during our audit work.
We assessed the susceptibility of the company's financial statements to material misstatement, including how fraud might occur. Audit procedures performed included:
identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;
understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;
challenging assumptions and judgements made by management in its significant accounting estimates;
identifying and testing journal entries, in particular journal entries posted with unusual account combinations; and
assessing the extent of compliance with the relevant laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
The income statement has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £377,714 (2023 - £88,537).
Brookvale Limited (“the company”) is a limited company domiciled and incorporated in England and Wales. The registered office is The Lodge, Leek Road, Endon, Stoke-on-Trent, Staffordshire, ST9 9HQ.
The group consists of Brookvale Limited and all of its subsidiaries.
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 pound.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income.
The consolidated group financial statements consist of the financial statements of the parent company Brookvale Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 January 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.
Revenue 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.
The total turnover for the group for the year has been derived from its principal activity wholly undertaken in the United Kingdom.
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.
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 recognised in the income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments 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 group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
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.
The group 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 group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, which include trade and other receivables 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, bank loans and loans from group companies, 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 payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates during the the reporting period.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is 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.
The costs of short-term employee benefits are recognised as a liability and an expense. 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.
The group operates both defined benefit and defined contricbution schemes for the benefit of its employees. The pension costs in relation to the defined contribution scheme are charged to the profit and loss account in the year they are payable in accordance with FRS102 Section 28.
The parent company has a regular cost of providing the retirement pensions, the related benefits are charged to the profit and loss account over the employees' service lives on the basis of a constant percentage of earnings. Any difference between the charge to the profit and loss account and the contributions paid to the scheme is shown as an asset or liability in the statement of financial position.
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.
The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
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 leased asset are consumed.
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.
In the application of the group’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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In determining the depreciation rates to apply against property, plant and equipment, the directors have used their knowledge and experience of both the company and the industry to assess the useful lives of each individual asset.
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.
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.
The company establishes a provision for the impairment of trade receivables in accordance with its policy in note 1. The recoverable amount of the receivables is compared to the carrying amount to determine the amount of impairment. These calculations require the use of estimates.
The company establishes a provision for slow moving inventory in accordance with the accounting policy stated in note 1. The net realisable value is compared to its book value in order to determine the amount of impairment. These calculations require the use of estimates.
Included in other reserves in the group is a balance of £3,790,500 (2023: £2,583,000) in relation to the defined benefit pension scheme, the value of which is determined by a qualified actuary using the projected unit method. Valuations are carried out triennially, the most recent being on 1 February 2023, the results of which have been updated to 31 January 2024. Various assumptions are included in the valuation exercise to measure liabilities at a point in time. The measurement is sensitive to the actuarial assumptions as reflected in the changes in the liability over recent years. For further details see the Retirement benefit schemes note.
An analysis of the group's revenue is as follows:
The total turnover of the group for the year has been derived from its principal activity wholly undertaken in the United Kingdom.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 1 (2023: 1)
Other gains and losses in 2023 comprise an impairment in value of one of the group subsidiaries, Flooring Industries Limited.
Change in tax rate
The corporation tax rate increase to 25% was substantively enacted with effect from 1 April 2023. The 24% rate used reflects 10 months of this new rate and 2 months of the previous rate of 19%. The 25% rate is used to measure UK deferred taxes in 2024 (and in 2023 to the extent the related timing differences were expected to reverse after 1 April 2023).
The actual charge for the year can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:
Restatement and reclassification of Freehold Property
Reclassification explained
During the current financial year, one of the group's subsidiaries, Pennine Flooring Supplies Limited, reclassified certain property from Leasehold land and buildings to Freehold land and buildings. This reclassification was necessary to correctly reflect the nature of the properties in accordance with FRS 102. This restatement is reflected in the group accounts.
Current Year Reclassification
Description: The reclassification involved properties previously categorised under Leasehold land and buildings.
Reason for Reclassification: Upon review, it was determined that these properties are held on a freehold basis, and therefore, should be classified as Freehold land and buildings.
Impact on Financial Statements: The reclassification has no impact on the carrying amount of the properties. The properties continue to be measured at their carrying amount as previously reported. There is no change to the accounting policy as a result of this.
Prior Year Restatement as a result of Reclassification
Description: Similar reclassification was performed in the prior financial year to ensure correctness of opening balances.
Reason for Reclassification: The properties were initially misclassified due to an administrative error.
Impact on Financial Statements: The reclassification in the prior year also had no impact on the carrying amount of the properties. The properties were reclassified to Freehold land and buildings to correct the classification error. There was no change to the accounting policy as a result of this.
Summary of Reclassified Amounts
Current Year: £2,172,408 net book value of freehold property carried at cost was reclassified from Leasehold land and buildings to Freehold land and buildings.
Prior Year: £2,209,481 net book value of freehold property recognised and carried at cost was reclassified from Leasehold land and buildings to Freehold land and buildings.
The reclassification ensures compliance with FRS 102 and provides a more accurate representation of the group’s property holdings in line with their nature and recognition criteria.
Details of the company's subsidiaries at 31 January 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
During the year shareholding in The Floor Hub Limited and The Flooring Hub Limited changed from being indirectly held by Brookvale Limited through its interest in wholly owned subsidiary Flooring Industries Limited, to being directly held by the company itself.
Brookvale Limited holds its interest in Floor IT Trade Sales Limited indirectly though its wholly owned subsidiaries, Planners Services & Sundries Limited and Volante Limited.
The following subsidiary companies are exempt from being subject to audit by virtue of guarantees put in place under section 479A of the Companies Act 2006: Flooring Industries Limited
Fixed asset investments not carried at market value
Investments in subsidiaries are measured at cost less impairment on the basis that they represent shares in entities that are not publically traded and their fair value cannot be reliably measured.
Trade receivables disclosed above are measured at amortised cost.
The company and group hold debt instruments at cost. These are repayable on demand and are not amortised.
Equity instruments are measured at cost less impairment. Please refer to the Fixed asset investment note.
Financial assets and liabilities held at fair value through profit or loss
The company does not hold any financial assets or liabilities at fair value through profit or loss.
The company and group members contribute to a group pension scheme, The Brookvale Limited Staff Retirements Benefits Scheme. The fair value of this plan is determined by an independent actuary. Please refer to the Retirement benefit schemes note for more details.
Group borrowings of £827,631 (2023: £1,682,058) are secured against trade receivables. This invoice discounting facility is secured by debentures dated 17 June 2016 and 27 September 2016 which contains a fixed and floating charge over the assets of John Palmer Carpets Limited, Planners Services & Sundries Limited, Volante Limited and Pennine Flooring Supplies Limited, and contains a negative pledge.
Deferred tax assets and liabilities are offset where the group or 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:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The company participates as a contributing member of a group pension scheme, The Brookvale Limited Staff Retirement Benefits Scheme.
Contributions to the scheme are determined by a qualified actuary on the basis of triennial valuations using the projected unit method. The scheme is a defined benefit final salary scheme. It is not possible to identify the share of underlying assets and liabilities belonging to individual participating employers.
A full actuarial valuation was carried out at 1 February 2023 and updated to 31 January 2024 by a qualified independent actuary. As at 31 January 2024, the scheme had a surplus of £5,054,000 (2023: £3,444,000) as calculated by the actuary for the purpose of FRS102 section 28.
The charge in the accounts represents the total contributions payable to the scheme and amounted to £17,740 (2023: £7,590) for the company and £413,000 (2023: £380,000) for the group.
Assumed life expectations on retirement at age 65:
The amounts included in the statement of financial position arising from obligations in respect of defined benefit plans are as follows:
The plan is a final salary pension arrangement where members receive benefits based on their final salary.
The plan is open to new entrants.
The plan also provides benefits to spouses / dependants in the event of a member's death before or after retirement.
The company/group does not expect to pay any contributions during the next accounting period (2023: £413,000 expected to be paid).
The defined benefit obligations arise from plans which are wholly or partly funded.
The actual return on plan assets was £460,000 (2023: £367,000).
Neither class of shares have a fixed right to income and both have voting rights. Where dividends are recommended by the directors, these shall be split into two equal moieties one of which shall belong to the holders of the ordinary class A shares and the other shall belong to the holders of the ordinary class B shares, to be distributed among the holders of class A and class B ordinary shares respectively in accordance with their holdings.
The pension scheme reserve represents cumulative gains and losses relating to the defined benefit pension scheme.
The retained earnings accounts represents cumulative profits and losses net of dividends and other adjustments.
Capital commitments at the period end relate to property plant and equipment at Floor IT Trade Sales Limited's High Wycombe premises. These were contracted for at the reporting date in readiness for the premises being ready for use in April 2024.
Operating lease payments represent rentals payable by the group for property and motor vehicles. Leases for property are negotiated for a period of 10 years, and motor vehicles for periods of 3-7 years.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year the group purchased goods from F. Ball and Co. Limited, a group under the control of Mr G W Ball, amounting to £6,812,156 (2023: £7,153,030) and made sales totalling £nil (2023: £nil). The balance due at the year end to F. Ball and Co. Limited was £74,384 (2023: £45,798).
Dividends totalling £450,000 (2023 - £500,000) were paid in the year in respect of shares held by the company's directors.
The company has chosen not to disclose remuneration of key management personnel under the exemption in FRS 102 33.7A as key management personnel and directors are the same.