The director presents the strategic report for the year ended 31 May 2024.
There has been no changes in the year in terms of the group structure and nature of activities, with M.P. Brothers Limited (“MPB”) continuing to be the principal trading subsidiary of the group.
With stable and positive relationships continuing with all key stakeholders, including employees, third party service providers and banking partners, MPB has continued to maintain a strong reputation for quality, technical capabilities and attention to customer care in the market. This has enabled the company to have another strong operational performance which in turn has resulted in a strong financial result for the year ended 31 May 2024 from a profitability, liquidity and overall balance sheet perspective.
M P Bros Holdings Limited has had a stable year, with no significant changes to occupancy or other operational factors which could materially impact the financial performance during the year.
Certain specific aspects which impacted the results are:
Continuation of strong customer relationships which has seen numerous major projects being worked on during the year together with a strong pipeline of future works being secured.
A stable and technically proficient workforce which has a clear understanding of the company values and deep relations with key stakeholders.
Close supervision and involvement of the director in all key aspects.
Continued support of financing partners.
Despite an increase in turnover, MPB Joinery Limited generated a loss during the year ended 31 May 2024 due to unexpected irrecoverable costs arising on certain specific projects.
The results and financial position of the group are as follows:
An increase in turnover of £4,233,676 to £20,950,717 for the current year (2023: £16,717,041). The majority of the increase is due to the strong trading performance of MPB during the year.
An increase in gross profit of £393,434 to £2,152,449 for the current year (2023: £1,759,015). With a slight improvement in gross profit margin in MPB, the growth is largely accounted from an increase in turnover in the year as a result of having a greater volume of projects during the year. The growth generated by MPB has been partially offset by the gross loss arising in MPB Joinery Limited in the year for the reason previously explained.
Operating profit for the year was £424,522 (2023: £942,820). With continued effort on controlling overheads, the decrease in operating profit, in both absolute and percentage terms, was mainly due to the write off of a historical debt totalling £913,010 in the year contained within MPB. The write off has arisen due to the customers becoming financially insolvent with MPB ensuring steps were taken to minimise the debt.
The profit for the financial year is £240,551 (2023: £708.819).
The group has maintained a strong net current assets position of £5,279,075 as at 31 May 2024 (2023: £5,497,005) which reflects all group companies maintaining their working capital cycle.
There has been a growth in net assets of £210,551 to £7,612,406 (2023: £7,401,855).
The director is satisfied with the overall financial result and balance sheet position for the year ended 31 May 2024. Importantly, the order book for 2025 in MPB is strong and the director envisages continued growth and profitability for the forthcoming periods.
The principal risks and uncertainties for our group include the following:
Credit risk
The group's credit risks are mainly attributable to the amounts receivable from our customers for services carried out. Our policy therefore remains to have a good mix of long standing and established customers and we have a financial and management reporting system that monitors our customers and our debtors book on a day to day basis. As previously noted, a bad debt charge of £913,010 has been recognised during the year. Whilst the quantum is substantial, the director, with the full support of the team, has ensured this debt has been minimised.
Liquidity risk
The group finances its operations through a mixture of trade and intercompany debtors including amounts receivable from contracts less trade creditors and combination of short and long term bank borrowings. Therefore the director is confident that they can meet their obligations as they fall due. As noted, the group continues to have strong and positive relations with all stakeholders.
Business confidence in the construction industry sector continues to grow and MPB has a strong order book from well-established customers; this is testimony to the company maintaining its strong market reputation. The director is confident that MPB and the group overall will continue to generate positive results in the future and enjoy the support of its key service delivery and financing partners.
Health and safety risk
Construction is a high risk activity and therefore health and safety procedures and training remains at the top of our business management principles.
The group is confident and foresees that it will maintain, develop and grow its principal operating units through selective project acceptance. Such operating units will continue to focus on the residential housing market and in particular on the medium and high-end market.
The group relies on a number of Key Performance Indicators as an aid to setting performance targets and for monitoring purposes. | ||||||
|
|
|
|
|
| |
| 2024 | 2023 | ||||
Gross profit margin (%) | 10.27 | 10.52 | ||||
Operating profit margin (%) | 2.03 | 5.64 | ||||
Liquidity ratio | 2.24 | 2.41 | ||||
Total equity (£’000) | 7,612 | 7,402 |
The movement in current year key performance indicators compared to 2023 have been explained above.
Our short chain of command keeps us in constant dialogue with our tradesmen and support staff and keeps them abreast of the group’s activity, performance, quality control, training, health and safety, environment issues, planning and future prospects.
We remain an equal opportunity employer without reference to age, ethnicity or gender and we are opposed to all forms of discrimination. We continue our policy regarding the employment of disabled persons and fair consideration is given to applications for employment by disabled persons where the requirements of the job can be adequately fulfilled by a handicapped person.
We extend our sincere thanks to all our staff for their continuing dedication and commitment and we hope they continue to work on developing a life-long and rewarding career where they feel valued and respected and a part of the on-going success of the company.
The future
The board looks forward with confidence to continue the success of the group into the future.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 May 2024.
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £30,000. The director does not recommend payment of a further dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Our plans for the future are to continue to win new contract tenders thus increasing our turnover and in turn profits.
The auditor, Berkeley Finch Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of M P Bros Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group and company balance sheets, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the group and company 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 FRS 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 director's 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 director 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 director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's 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 director's report.
We have nothing to report in respect of the following matters where 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 director's responsibilities statement (set out on page 4), the director is 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 director determines 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 director is responsible for assessing the group and 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 director either intends to liquidate the group or the company or to cease operations, or has 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.
To identify risks of material misstatement due to any irregularities, including fraud and non-compliance with laws and regulations, we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:-
the engagement partner ensured that the engagement team collectively had the appropriate competence;
the capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the group through discussions with directors and other management, and from our commercial knowledge and experience of the sector; and
we focused on specific laws and regulations which we considered may have a direct material effect on the operations of the group;
financial statements or the operations of the group, including the Companies Act 2006, taxation legislation and data protection, employment and health and safety legislation.
We assessed the susceptibility of the group's financial statements to material misstatement, including obtaining an understanding of how fraud may 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
considered 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;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
To address the risk of non-compliance with laws and regulations, we communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the company is subject to laws and regulations that directly effect the financial statements including financial reporting legislation (including related company legislation) and taxation legislation (including payroll taxes) and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statements items.
Secondly, the group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance the imposition of fines or litigation or the loss of the Group's licence to operate. We identified the following areas as those most likely to have such an effect: Building Regulations,2010 and healthcare and safety legislation regulations. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
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 profit and loss account 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 profit and loss account and related notes. The company’s profit for the year was £213,026 (2023 - £433,541 profit).
M P Bros Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 198-206 Acton Lane, Park Royal, London NW10 7NH.
The group consists of M P Bros Holdings 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 £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company M P Bros Holdings 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 May 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.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Turnover for contracting activities is recognised at the fair value of the consideration receivable in the normal course of business, and shown net of VAT.
In respect of long term contracts, turnover represents the value of work done in the year including estimates of amounts not invoiced. Turnover in respect of long term contracts is recognised by reference to stage of completion.
Rental income
Rental income is recognised at the fair value of the consideration received or receivable excluding value added taxes.
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 profit and loss account.
Depreciation is not provided in respect of investment properties. This policy represents a departure from the Companies Act 2006 which requires depreciation to be provided on all fixed assets. The director considers that this policy is necessary in order that the financial statements may give a true and fair view because current values and changes in current values are of prime importance rather than the calculation of systematic depreciation.
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, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
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.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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 balance sheet 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 debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, 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.
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.
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.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
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.
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 profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset 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, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
Amount recoverable on contracts
Amounts recoverable on contracts, including work-in-progress, are shown within debtors and are stated at the net sales value of the work done after provisions for contingencies and anticipated future losses on contracts, less amounts received as progress payments on account. Turnover and related costs are recorded as contract activity progresses. An appropriate proportion of the anticipated contract profit or loss is recognised as the contract activity progresses commensurate with performance and anticipated final outcome. Excess payments are included in creditors as payments received on account.
In the application of the group’s accounting policies, the director is 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 have had the most significant effect on amounts recognised in the financial statements.
In order to determine the profit and loss that the group is able to recognise on its construction contracts in a specific period, the group has to allocate total costs of the construction contracts between the proportion completing in the period and the proportion to complete in the future period. The assessment of the total costs to be incurred requires a degree of estimation, as does the assessment of a developments's valuation.
An analysis of the group's turnover is as follows:
Construction services turnover is recognised by reference to the percentage of completion. The group has used an external surveyor's report to determine the percentage of completion at the year end.
Support services turnover is recognised based on the fair value of consideration receivable.
During the year, the group wrote-off £913,010 of historical debt.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Included within freehold land and buildings, owned by the company, is land £261,314 (2023: £261,314) which is not depreciated. Freehold land and buildings with a carrying value of £370,467 (2023: £372,948) is pledged as security for the bank loan.
Investment property comprises freehold land and buildings. The fair value of the investment property has been arrived at on the basis of a valuation carried out by the director in May 2024.
The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties included in professional surveyors reports on the respective properties. The valuations were carried out in March 2024 and June 2024.
If investment properties were stated on a historical cost basis rather than a fair value basis, the amounts would have been included as £3,971,347 (2023: £3,971,347).
Investments in joint ventures rrepresents an interest of 10% in a joint controlling entity, Tenterden Developments LLP.
MPB Property Limited, a wholly owned subsidiary of the parent company, has provided a fixed security charge in favour of the lending bank over its investment in the joint venture.
Details of the company's subsidiaries at 31 May 2024 which have been included in the consolidated accounts are as follows:
The investment in subsidiaries are all stated at cost.
MPB Property Limited and MPB Joinery Limited are exempt from the requirements of the Act relating to the audit of individual accounts under section 479A of Companies Act 2006. M P Bros Holdings Limited has provided a parent guarantee under section 479C to guarantee the liabilities of the subsidiaries.
The company's bank loan is secured by a first legal charge over it's freehold property. The company also has a cross guarantee from M.P. Brothers Ltd and MPB Joinery Ltd (subsidiary companies) in respect of the obligations to the bank.
Other loans are secured by the personal guarantee of the director.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. 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 five years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The company operates a defined contribution retirement benefit scheme for all qualifying employees under the Auto Enrolment Workplace Pension scheme. The assets of the scheme are held separately from those of the company. The company contributes a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the company with respect to the scheme is to make the specified contributions.
The company has one class of ordinary share which carry no right to fixed income.
The profit and loss reserves contain £511,970 of non-distributable profits. This comprises the effect of the fair value adjustment on investment properties of £669,910 and the subsequent adjustment for deferred tax on the fair value gain of £157,940 as accounted for through the statement of income and retained earnings in the current and prior years.
There are guarantee bonds in respect of the performance of M.P. Brothers Limited, a wholly owned subsidiary, issued in the normal course of business, amounting to £2,366,244 (2023: £1,441,650).
The operating leases represent leases to third parties and group companies. The leases are negotiated over terms of 2 to 5 years and rentals are fixed for the lease term. There is no option in place for either party to extend the lease terms.
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
The Group has taken advantage of the exemption available in accordance with Financial Reporting Standard 102, Section 33.1A, 'Related Party Disclosures' not to disclose transactions entered and outstanding balances between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.
During the year, rent of £158,000 (2023: £128,385) was charged to MPB Joinery Limited, a subsidiary company. At the year end, the company was owed £561,951 (2023: £424,031) by MPB Joinery Limited.
Dividends totalling £30,000 (2023 - £30,000) were paid in the year in respect of shares held by the company's director and his spouse.
The ultimate controlling party of the group is Mr S Rabadiya.