Company registration number 00838986 (England and Wales)
Browns Distribution Services Limited
Annual report and financial statements
For the year ended 30 April 2024
Browns Distribution Services Limited
Company information
Directors
Mr D A Brown
Mr D A J Brown
Secretary
Mr C Robinson
Company number
00838986
Registered office
Distribution House
Chemical Lane East
Stoke on Trent
Staffordshire
ST6 4FB
Auditor
DJH Audit Limited
The Glades
Festival Way
Festival Park
Stoke on Trent
Staffordshire
ST1 5SQ
Browns Distribution Services Limited
Contents
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Income statement
9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 26
Browns Distribution Services Limited
Strategic report
For the year ended 30 April 2024
- 1 -
The directors present the strategic report for the year ended 30 April 2024.
Review of the business
The Company continued to increase activity during the year with turnover increasing by 9.34% to £22,179,538. However Gross margin reduced to 20.70%.
The development of the new premises was completed in quarter one of 2023 and the company has seen its first full year of trading at Distribution House. The site has provided the necessary facilities for the Company to embark on its planned growth objectives.
Profits before tax for the year decreased to £812k from £1.255M in the prior year, mainly due to increased costs for operating the new site, plus increased interest costs on new hire purchase finance. The directors however remain positive about future performance of the Company, albeit with some concerns surrounding the UK economy at the present time.
There was substantial investment in vehicles as manufacturers started to catch up on back orders, this totalled over £2m in the year. This investment will add to its operational efficiency going forward.
Staffing levels have increased during the year, including appointments at senior management level in the business. However, concerns remain over the availability of HGV drivers and rates of pay.
Principal risks and uncertainties
There are several principal risks and uncertainties which face the company:
- Staffing
The Company continues to look at ways to improve driver retention, with increased focus being on pay rates, welfare, benefits and training being constantly reviewed.
- Government policy
There are a number of areas of uncertainty surrounding the policy on both business and personal taxation rates and the effects of inflation and interest rates on the economy as a whole. Inflationary pressures as a result of supply chains and rising fuel and energy costs due to the Russian invasion of Ukraine are still a concern to all businesses. With inflation in the UK only reducing to the Bank of England target levels in first quarter of 2024, leaving a high costs base, government support in these areas will be needed to allow businesses to remain competitive in a challenging world economy.
- Interest rates
Interest rates remain high after years of record lows, putting further pressure on businesses and restricting investment. The Company is continuing to monitor the situation and will decide on an appropriate course for any future investment.
Browns Distribution Services Limited
Strategic report (continued)
For the year ended 30 April 2024
- 2 -
Key performance indicators
The company monitors a number of performance indicators of which the most significant are:
- Gross Margin -this provides a measure of the overall profitability of the company.
FY 2023-24 FY 2022-23 FY 2021-22
20.70% 21.53% 20.72%
Gross margin has decreased during the year due mainly to increased depreciation relating Fleet increases in the period.
Gross margin is calculated as (Sales-Direct costs)/Sales x 100
- Direct Labour costs as a % of turnover - provides a measure of the overall use of labour resource
FY 2023-24 FY 2022-23 FY 2021-22
18.88% 19.47% 20.46%
This indicator is used to monitor the level of direct labour utilised to achieve the turnover. It identifies where inefficiency may be present in the operation of the fleet and warehousing operations in achieving the turnover. If the percentage is high, it indicates that too many man hours have been utilised which may also lead to an indication of vehicles not being utilised effectively.
Direct labour is one of the major costs of the business and as such needs to be strictly monitored in order to give early warning of potential inefficiencies.
This is calculated as (Direct wages + Agency costs)/Sales x 100
Future developments
Activity levels for the Company's services remain good and the new development will allow the Company to expand its' levels of service within both the distribution and warehousing markets. The directors continue to develop the business based on its core strengths and actively seek new profitable growth opportunities in an increasingly competitive market. They currently expect a reasonable increase in the level of turnover during the current financial year.
The directors continue to look for ways to improve efficiency and profitability within the operations of the business and with continued investment in modern vehicles, technology and training, are confident that the Company will continue to trade profitably, and that the financial stability of the Company will be maintained.
Financial instrument risk
The company is exposed to the risk that financial instruments held by the company impinge on its ability to operate effectively and profitably. The risks which are relevant to the company's operations are:
Credit risk - the business has a broad range of customers, mainly private companies. The risk that the company will suffer from significant levels of bad debts is managed by the diversified customer portfolio and the enhanced credit control procedures implemented by the company.
Cash flow risk - the company is able to meet short and medium-term obligations by having immediate access to cash reserves. In addition, as stated above, cash collection procedures ensures funds are available to meet operational needs.
Liquidity risk - the company is funded out of retained profits of the business and hire purchase finance. This is further supported by the business generating healthy cash reserves from operating activities.
Browns Distribution Services Limited
Strategic report (continued)
For the year ended 30 April 2024
- 3 -
Mr D A J Brown
Director
12 November 2024
Browns Distribution Services Limited
Directors' report
For the year ended 30 April 2024
- 4 -
The directors present their annual report and financial statements for the year ended 30 April 2024.
Principal activities
The principal activity of the company continued to be that of haulage, storage and distribution.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £940,000 (2023 - £695,000). The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr D A Brown
Mr D A J Brown
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
Browns Distribution Services Limited
Directors' report (continued)
For the year ended 30 April 2024
- 5 -
On behalf of the board
Mr D A J Brown
Director
12 November 2024
Browns Distribution Services Limited
Independent auditor's report
To the member of Browns Distribution Services Limited
- 6 -
Opinion
We have audited the financial statements of Browns Distribution Services Limited (the 'company') for the year ended 30 April 2024 which comprise the income statement, the statement of comprehensive income, the statement of financial position, 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:
give a true and fair view of the state of the company's affairs as at 30 April 2024 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The 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.
Browns Distribution Services Limited
Independent auditor's report (continued)
To the member of Browns Distribution Services Limited
- 7 -
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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities including fraud:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
Browns Distribution Services Limited
Independent auditor's report (continued)
To the member of Browns Distribution Services Limited
- 8 -
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions; and
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators, and the company's legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
Nicola Johnson
Senior Statutory Auditor
For and on behalf of DJH Audit Limited
13 November 2024
Accountants
Statutory Auditor
The Glades
Festival Way
Festival Park
Stoke on Trent
Staffordshire
ST1 5SQ
Browns Distribution Services Limited
Income statement
For the year ended 30 April 2024
- 9 -
2024
2023
Notes
£
£
Turnover
3
22,179,538
20,285,650
Cost of sales
(17,588,651)
(15,918,326)
Gross profit
4,590,887
4,367,324
Administrative expenses
(3,573,996)
(3,044,033)
Other operating income
718
480
Operating profit
4
1,017,609
1,323,771
Interest receivable and similar income
7
11,563
157
Interest payable and similar expenses
8
(217,148)
(68,927)
Profit before taxation
812,024
1,255,001
Tax on profit
9
(113,341)
(93,283)
Profit for the financial year
698,683
1,161,718
Browns Distribution Services Limited
Statement of comprehensive income
For the year ended 30 April 2024
- 10 -
2024
2023
£
£
Profit for the year
698,683
1,161,718
Other comprehensive income
-
-
Total comprehensive income for the year
698,683
1,161,718
Browns Distribution Services Limited
Statement of financial position
As at 30 April 2024
30 April 2024
- 11 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
11
5,510,152
4,790,680
Investments
12
23,000
23,000
5,533,152
4,813,680
Current assets
Stocks
13
38,263
26,671
Debtors
14
3,477,202
3,284,425
Cash at bank and in hand
1,529,254
1,030,277
5,044,719
4,341,373
Creditors: amounts falling due within one year
15
(4,467,539)
(3,576,701)
Net current assets
577,180
764,672
Total assets less current liabilities
6,110,332
5,578,352
Creditors: amounts falling due after more than one year
16
(2,780,493)
(2,245,506)
Provisions for liabilities
Deferred tax liability
18
963,600
725,290
(963,600)
(725,290)
Net assets
2,366,239
2,607,556
Capital and reserves
Called up share capital
20
100,000
100,000
Profit and loss reserves
21
2,266,239
2,507,556
Total equity
2,366,239
2,607,556
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 12 November 2024 and are signed on its behalf by:
Mr D A J Brown
Director
Company registration number 00838986 (England and Wales)
Browns Distribution Services Limited
Statement of changes in equity
For the year ended 30 April 2024
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 May 2022
100,000
2,040,838
2,140,838
Year ended 30 April 2023:
Profit and total comprehensive income
-
1,161,718
1,161,718
Dividends
10
-
(695,000)
(695,000)
Balance at 30 April 2023
100,000
2,507,556
2,607,556
Year ended 30 April 2024:
Profit and total comprehensive income
-
698,683
698,683
Dividends
10
-
(940,000)
(940,000)
Balance at 30 April 2024
100,000
2,266,239
2,366,239
Browns Distribution Services Limited
Notes to the financial statements
For the year ended 30 April 2024
- 13 -
1
Accounting policies
Company information
Browns Distribution Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is Distribution House, Chemical Lane East, Stoke on Trent, Staffordshire, ST6 4FB.
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 cover the company as an individual entity and are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This 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:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Browns Commercial Holdings Limited. These consolidated financial statements are available from its registered office, Distribution House, Chemical Lane East, Stoke-On-Trent, ST6 4FB.
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 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.
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
1
Accounting policies
(Continued)
- 14 -
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Company will received the consideration due under the contract;
it is probable that the Company will received the consideration due under the transaction; and
the costs incurred and the costs to complete the contract can be measured reliably.
Dividend income
Dividend income from investments is recognised when the shareholder's right to receive payment has been established.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Plant and equipment
20% and 10% reducing balance and 20% straight line
Motor vehicles - cars, vans, fleet and trailers
20% straight line and 15% - 25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Fixed asset investments
Interests in unlisted investments 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.
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).
Recoverable amount is the higher of fair value less costs to sell and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
1
Accounting policies
(Continued)
- 15 -
1.7
Stocks
Stock relates to fuel and consumables held for the maintenance and running of the vehicle fleet.
Stocks are valued at the lower of cost adjusted, when applicable, for any loss of "service potential" and replacement cost.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand and deposits held at call with banks.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors, amounts due from fellow group companies and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
1
Accounting policies
(Continued)
- 16 -
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, obligations under finance leases and amounts due to fellow 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 creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
1
Accounting policies
(Continued)
- 17 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
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 when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.15
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
- 18 -
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In the directors' opinion there are no critical judgements and estimates which impact the financial statements.
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.
Depreciation rates and estimated economic useful life of tangible fixed assets:
Management review the useful economic lives of depreciable assets at each reporting date so as to allocate the cost of assets, less the residual value, over their estimated useful lives. Uncertainties in these estimates relate to the actual life of the tangible fixed assets.
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Distribution services
22,179,538
20,285,650
2024
2023
£
£
Other revenue
Interest income
10,783
157
Dividends received
780
-
Other operating income
718
480
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
- 19 -
4
Operating profit
2024
2023
Operating profit for the year is stated after charging:
£
£
Research and development costs
18,951
-
Fees payable to the company's auditor for the audit of the company's financial statements
17,000
12,445
Depreciation of owned tangible fixed assets
216,784
157,472
Depreciation of tangible fixed assets held under finance leases
1,012,072
592,520
Loss on disposal of tangible fixed assets
28,447
13,815
Operating lease charges
115,891
243,626
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Office and management
44
40
Distribution and Warehouse
91
87
Directors
2
2
Total
137
129
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
4,747,905
4,404,579
Social security costs
491,261
468,509
Pension costs
137,665
143,458
5,376,831
5,016,546
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
31,875
22,047
Company pension contributions to defined contribution schemes
43,000
43,000
74,875
65,047
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
6
Directors' remuneration
(Continued)
- 20 -
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).
7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
10,783
157
Other income from investments
Dividends received
780
Total income
11,563
157
8
Interest payable and similar expenses
2024
2023
£
£
Interest on finance leases and hire purchase contracts
217,148
68,927
9
Taxation
2024
2023
£
£
Current tax
Adjustments in respect of prior periods
(124,969)
(45,547)
Deferred tax
Origination and reversal of timing differences
238,310
138,830
Total tax charge
113,341
93,283
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
9
Taxation
(Continued)
- 21 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
Profit before taxation
812,024
1,255,001
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
203,006
238,450
Tax effect of expenses that are not deductible in determining taxable profit
2,175
631
Tax effect of income not taxable in determining taxable profit
(195)
Adjustments in respect of prior years
(124,969)
(45,547)
Deferred tax adjustments in respect of prior years
27,610
Enhanced capital allowances
(133,577)
Change in taxation rate
33,326
Underprovision of deferred tax
5,714
Taxation charge for the year
113,341
93,283
10
Dividends
2024
2023
£
£
Interim paid
940,000
695,000
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
- 22 -
11
Tangible fixed assets
Plant and equipment
Motor vehicles - cars, vans, fleet and trailers
Total
£
£
£
Cost
At 1 May 2023
1,421,315
6,550,913
7,972,228
Additions
53,489
2,089,157
2,142,646
Disposals
(88,557)
(445,501)
(534,058)
At 30 April 2024
1,386,247
8,194,569
9,580,816
Depreciation and impairment
At 1 May 2023
278,511
2,903,037
3,181,548
Depreciation charged in the year
156,252
1,072,604
1,228,856
Eliminated in respect of disposals
(58,942)
(280,798)
(339,740)
At 30 April 2024
375,821
3,694,843
4,070,664
Carrying amount
At 30 April 2024
1,010,426
4,499,726
5,510,152
At 30 April 2023
1,142,804
3,647,876
4,790,680
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2024
2023
£
£
Plant and equipment
638,986
711,664
Motor vehicles - cars, vans, fleet and trailers
3,936,425
3,172,379
4,575,411
3,884,043
12
Fixed asset investments
2024
2023
£
£
Unlisted investments
23,000
23,000
13
Stocks
2024
2023
£
£
Fuel and consumables
38,263
26,671
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
- 23 -
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
3,036,854
2,592,547
Corporation tax recoverable
124,969
Amounts owed by group undertakings
240
579,765
Other debtors
75
1,000
Prepayments and accrued income
315,064
111,113
3,477,202
3,284,425
15
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Obligations under finance leases
17
1,080,224
1,005,749
Trade creditors
2,358,017
1,921,487
Amounts owed to group undertakings
25,292
Taxation and social security
559,949
307,035
Other creditors
22,372
18,483
Accruals and deferred income
421,685
323,947
4,467,539
3,576,701
16
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Obligations under finance leases
17
2,780,493
2,245,506
17
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
1,080,224
1,005,749
In two to five years
2,780,493
2,245,506
3,860,717
3,251,255
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
17
Finance lease obligations
(Continued)
- 24 -
Finance lease payments represent rentals payable by the company for certain items of equipment and motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is between 3 - 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Hire purchase liabilities are secured on the assets to which they relate.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
1,284,480
1,106,460
Tax losses
(320,880)
(381,170)
963,600
725,290
2024
Movements in the year:
£
Liability at 1 May 2023
725,290
Charge to profit or loss
238,310
Liability at 30 April 2024
963,600
19
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
137,665
143,458
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. At the year-end contributions totalling £5,455 (2023 - £1,781) were payable to the fund are included in creditors.
20
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
100,000
100,000
100,000
100,000
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
20
Share capital
(Continued)
- 25 -
All ordinary shares shall carry full voting rights, full rights to dividends, and full capital rights in the event of a distribution or winding up of the company.
21
Profit and loss reserves
Profit and loss reserves represents the accumulated profits less accumulated losses and distributions up to the reporting date. This is a distributable reserve.
22
Financial commitments, guarantees and contingent liabilities
At the balance sheet date, the company has guaranteed borrowings of fellow group undertakings.
At 30th April 2024 these borrowings amounted to £4,296,415 (2023 - £4,480,748).
As at the date of approval of these financial statements, the directors do not anticipate that the guarantees will be called upon.
23
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
86,015
98,151
Between two and five years
261,392
206,406
In over five years
77,569
115,028
424,976
419,585
24
Capital commitments
Amounts contracted for but not provided in the financial statements:
2024
2023
£
£
Acquisition of tangible fixed assets
-
1,770,463
25
Events after the reporting date
Since the year end, fixed assets totalling £494,442 have been acquired.
The company has entered into £425,085 of finance leases in order to purchase these assets.
Browns Distribution Services Limited
Notes to the financial statements (continued)
For the year ended 30 April 2024
- 26 -
26
Related party transactions
During the year, the company paid a total of £33,193 (2023: £38,654) to close family members of directors.
During the year, the company acquired services from a company with common directorship to the value of £39,990 (2023: £38,085). The balance owed by the company at the year end was £2,036 (2023: £7,182).
27
Ultimate controlling party
Browns Commercial Holdings Limited is the company's immediate and ultimate parent company.
Copies of the group accounts of Browns Commercial Holdings Limited can be obtained from Distribution House, Chemical Lane East, Stoke-On-Trent, ST6 4FB.
The ultimate controlling party is D A Brown by virtue of his majority shareholding in Browns Commercial Holdings Limited.
28
Directors' transactions
Amounts owed to directors at the year end totalled £4,459 (2023 - £8,941). During the year, advances to directors of £4,521 (2023 - £1,961) were made.
These were fully repaid in the year.
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