G S Brown Construction Limited - Limited company accounts 20.1

REGISTERED NUMBER: SC047574 (Scotland)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 29 February 2020

for

G S Brown Construction Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

13

DIRECTORS:

Geoffrey Stewart Brown

Margaret Joyce Brown

Steven Brown

Martin David Alexander Smith

SECRETARY:

Martin David Alexander Smith

REGISTERED OFFICE:

St Madoes

Glencarse

PH2 7NF

REGISTERED NUMBER:

SC047574 (Scotland)

SENIOR STATUTORY AUDITOR:

Paul Crichton, BAcc, CA, CTA

AUDITORS:

MMG Archbold Ltd

Statutory Auditor

Chapelshade House

78-84 Bell Street

Dundee

DD1 1RQ

BANKERS:

Bank of Scotland

10 - 16 King Edward Street

Perth

PH1 5UT

SOLICITORS:

Miller Gerrard

The Studio

13 High Street

Blairgowrie

Perthshire

PH10 6ET

The directors present their strategic report for the year ended 29 February 2020.

REVIEW OF BUSINESS

In the year under review, the Company's turnover was broadly similar to what had been achieved in the prior financial year.

The Company had anticipated having a stronger year but, continued delays in receiving consents, coupled with the ongoing effect that the decision of the Scottish Government to call in the application for the Bridge of Earn site has had on the Company, contributed to a lower number of completions than had been hoped.

Despite all of this, the Company continues to look forward with optimism. The cash position of the Company remains extremely strong, with there being sufficient funds in the current account to meet ongoing commitments.

Financial key performance indicators (KPIs)

The directors use the following key performance indicators to measure the company's performance:-

2020

2019

Gross profit % on trading activity

32.36%

18.22%

Net profit % on trading activity

3.10%

13.19%

Turnover

£4,308,733

£4,370,739

Profit before tax

£133,627

£576,286

Non financial key performance indicators (KPIs)

The directors consider a number of non financial performance indicators on an ongoing basis, such as the recruitment and retention of talented employees with the skills to meet its objectives and the monitoring of customer satisfaction.

Financial risk management objectives and strategies

Due to the company's strong cash position and the fact that it has no external borrowings, the directors are of the opinion that the company is well placed to weather the current conditions in the housing market. The company will also continue to seek to take advantage of opportunities that may arise to enhance its land bank.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risk facing the business is the continuing uncertainty facing the UK economy. This has caused a lack of confidence in the general public, deterring consumers from making significant financial commitments. Restrictions on mortgage lending are also having an adverse effect on demand. These issues have been present for a number of years, although to some extent there are signs that those problems are beginning to ease.

ON BEHALF OF THE BOARD:

Martin David Alexander Smith - Secretary

19 February 2021

The directors present their report with the financial statements of the company for the year ended 29 February 2020.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of building contractors.

DIVIDENDS

No dividends will be distributed for the year ended 29 February 2020.

FUTURE DEVELOPMENTS

With the uncertainty brought about by the global COVID-19 pandemic, it is difficult for the Directors to state with full confidence how this will all ultimately effect the housing market in the medium to longer term although completions during 2020 have been considerably higher than anticipated.

The Company will continue to gauge consumer confidence in the house purchasing market and continue with its building activities in line with this information.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 March 2019 to the date of this report.

Geoffrey Stewart Brown

Margaret Joyce Brown

Steven Brown

Other changes in directors holding office are as follows:

Charles Bain Brown - resigned 5 April 2019

Martin David Alexander Smith - appointed 1 March 2019

DISCLOSURE IN THE STRATEGIC REPORT

The review of business and principal risks and uncertainties are not shown in the Report of the Directors as they are now shown in the Strategic Report under section 414C (11) of the Companies Act 2006.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, MMG Archbold Ltd, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Martin David Alexander Smith - Secretary

19 February 2021

Opinion

We have audited the financial statements of G S Brown Construction Limited (the 'company') for the year ended 29 February 2020 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of 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 29 February 2020 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.

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 Auditors' 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors 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 Report of the Directors.

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, 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 directors' 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 Statement of Directors' Responsibilities set out on page three, 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 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.

Auditors' 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 a Report of the Auditors 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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Paul Crichton, BAcc, CA, CTA (Senior Statutory Auditor)

for and on behalf of MMG Archbold Ltd

Statutory Auditor

Chapelshade House

78-84 Bell Street

Dundee

DD1 1RQ

19 February 2021

TURNOVER

4,308,733

4,370,739

Cost of sales

2,914,292

3,574,601

GROSS PROFIT

1,394,441

796,138

Administrative expenses

1,445,187

1,358,211

(50,746

)

(562,073

)

Other operating income

(44,950

)

59,837

OPERATING LOSS

4

(95,696

)

(502,236

)

Income from fixed asset investments

35,180

32,539

Interest receivable and similar income

194,143

1,045,983

229,323

1,078,522

PROFIT BEFORE TAXATION

133,627

576,286

Tax on profit

5

20,330

103,045

PROFIT FOR THE FINANCIAL YEAR

113,297

473,241

PROFIT FOR THE YEAR

113,297

473,241

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

113,297

473,241

FIXED ASSETS

Tangible assets

6

387,273

444,138

Investments

7

1,787,094

1,847,549

Investment property

8

610,216

610,216

2,784,583

2,901,903

CURRENT ASSETS

Stocks

9

34,518,822

29,949,894

Debtors

10

1,803,532

1,289,535

Investments

11

5,317,000

4,150,000

Cash at bank and in hand

10,009,721

16,081,142

51,649,075

51,470,571

CREDITORS

Amounts falling due within one year

12

490,997

547,904

NET CURRENT ASSETS

51,158,078

50,922,667

TOTAL ASSETS LESS CURRENT LIABILITIES

53,942,661

53,824,570

PROVISIONS FOR LIABILITIES

14

24,038,818

24,034,024

NET ASSETS

29,903,843

29,790,546

CAPITAL AND RESERVES

Called up share capital

15

763,721

763,721

Retained earnings

16

29,140,122

29,026,825

SHAREHOLDERS' FUNDS

29,903,843

29,790,546

The financial statements were approved by the Board of Directors and authorised for issue on 19 February 2021 and were signed on its behalf by:

Geoffrey Stewart Brown - Director

Steven Brown - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 March 2018

763,721

28,553,584

29,317,305

Changes in equity

Total comprehensive income

-

473,241

473,241

Balance at 28 February 2019

763,721

29,026,825

29,790,546

Changes in equity

Total comprehensive income

-

113,297

113,297

Balance at 29 February 2020

763,721

29,140,122

29,903,843

Cash flows from operating activities

Cash generated from operations

1

(5,116,736

)

(655,331

)

Tax paid

(114,228

)

(268,144

)

Net cash from operating activities

(5,230,964

)

(923,475

)

Cash flows from investing activities

Purchase of tangible fixed assets

(42,303

)

(38,602

)

Purchase of fixed asset investments

(4,783

)

(221,873

)

Sale of tangible fixed assets

2,950

39,200

Sale of fixed asset investments

141,356

232,603

Sale of investment property

-

247,000

Purchase of current asset investments

(1,167,000

)

(4,150,000

)

Interest received

194,143

1,045,983

Dividends received

35,180

32,539

Net cash from investing activities

(840,457

)

(2,813,150

)

Decrease in cash and cash equivalents

(6,071,421

)

(3,736,625

)

Cash and cash equivalents at beginning of year

2

16,081,142

19,817,767

Cash and cash equivalents at end of year

2

10,009,721

16,081,142

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2020

2019

£

£

Profit before taxation

133,627

576,286

Depreciation charges

99,167

103,962

Profit on disposal of fixed assets

(8,867

)

(75,563

)

Change in fair value of investments

(70,200

)

9,905

Finance income

(229,323

)

(1,078,522

)

(75,596

)

(463,932

)

Increase in stocks

(4,568,928

)

(469,637

)

(Increase)/decrease in trade and other debtors

(513,997

)

289,954

Increase/(decrease) in trade and other creditors

41,785

(11,716

)

Cash generated from operations

(5,116,736

)

(655,331

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 29 February 2020

29.2.20

1.3.19

£

£

Cash and cash equivalents

10,009,721

16,081,142

Year ended 28 February 2019

28.2.19

1.3.18

£

£

Cash and cash equivalents

16,081,142

19,817,767

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.3.19

Cash flow

At 29.2.20

£

£

£

Net cash

Cash at bank and in hand

16,081,142

(6,071,421

)

10,009,721

16,081,142

(6,071,421

)

10,009,721

Liquid resources

Current asset investments

4,150,000

1,167,000

5,317,000

4,150,000

1,167,000

5,317,000

Total

20,231,142

(4,904,421

)

15,326,721

1.	STATUTORY INFORMATION

G S Brown Construction Limited is a private company, limited by shares , registered in Scotland. The company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The company's forecast and projections, taking account of reasonable changes in trading performance, indicate that the company plans to operate within cash generated. The Board of Directors confirm that, after making appropriate enquiries, it has reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. For this reason, it continues to adopt the going concern basis in preparing these Financial Statements.

Turnover

Turnover comprises the fair value of the consideration received or receivable, net of value added tax. Turnover and profit are recognised as follows:

(a) Private housing development properties and land sales

Turnover is recognised when the significant risks and rewards of ownership have been transferred to the purchaser. Turnover in respect of the sale of residential properties is recognised at the fair value of the consideration received or receivable on legal completion.

(b) Small contracting work

Turnover represents the net invoiced sales, excluding value added tax.

(c) Social housing contracts

Turnover and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is normally measured by surveys of work performed to date.

Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Freehold property

-

2% on cost

Plant and machinery

-

20% on cost

Fixtures fittings & equipment

-

20% on cost

Motor vehicles

-

20 to 25% on cost

Investment property

Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in fair value is recognised in profit or loss.

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.

Work-in-progress is valued at cost to the company of land, materials, labour and plant hire on contracts unfinished at the year-end date.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company operates two defined contribution pension schemes. Contributions payable are charged to the profit and loss account in the period to which they relate..

Financial instruments

Financial instruments are classified, and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

3.	EMPLOYEES AND DIRECTORS

2020

2019

£

£

Wages and salaries

1,377,073

1,272,543

Social security costs

153,180

141,111

Other pension costs

129,268

72,355

1,659,521

1,486,009

The average number of employees during the year was as follows:

2020

2019

Office and management

27

29

Building construction

18

16

45

45

2020

2019

£

£

Directors' remuneration

172,971

92,760

4.	OPERATING LOSS

The operating loss is stated after charging/(crediting):

2020

2019

£

£

Hire of plant and machinery

47,983

53,757

Depreciation - owned assets

99,168

103,962

Profit on disposal of fixed assets

(8,867

)

(75,563

)

Auditors' remuneration

7,975

7,160

Auditors' remuneration for non audit work

1,576

1,377

5.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2020

2019

£

£

Current tax:

UK corporation tax

15,536

114,228

Deferred tax

4,794

(11,183

)

Tax on profit

20,330

103,045

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2020

2019

£

£

Profit before tax

133,627

576,286

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

25,389

109,494

Effects of:

Expenses not deductible for tax purposes

2,586

4,104

Income not taxable for tax purposes

(6,684

)

(6,182

)

Effect of indexation allowance

(935

)

(4,353

)

tax used for deferred taxation

Fair value deferred tax adjustment

(26

)

(18

)

Total tax charge

20,330

103,045

6.	TANGIBLE FIXED ASSETS

Fixtures

Freehold

Plant and

fittings

Motor

property

machinery

& equipment

vehicles

Totals

£

£

£

£

£

COST

At 1 March 2019

371,377

653,610

298,229

236,912

1,560,128

Additions

-

6,482

9,622

26,199

42,303

Disposals

-

-

-

(14,115

)

(14,115

)

At 29 February 2020

371,377

660,092

307,851

248,996

1,588,316

DEPRECIATION

At 1 March 2019

121,091

580,138

270,596

144,165

1,115,990

Charge for year

7,428

41,143

12,814

37,783

99,168

Eliminated on disposal

-

-

-

(14,115

)

(14,115

)

At 29 February 2020

128,519

621,281

283,410

167,833

1,201,043

NET BOOK VALUE

At 29 February 2020

242,858

38,811

24,441

81,163

387,273

At 28 February 2019

250,286

73,472

27,633

92,747

444,138

7.	FIXED ASSET INVESTMENTS

Listed

Unlisted

investments

investments

Totals

£

£

£

COST

At 1 March 2019

1,458,134

389,415

1,847,549

Additions

4,783

-

4,783

Disposals

(16,199

)

(119,240

)

(135,439

)

Share of profit/(loss)

70,201

-

70,201

At 29 February 2020

1,516,919

270,175

1,787,094

NET BOOK VALUE

At 29 February 2020

1,516,919

270,175

1,787,094

At 28 February 2019

1,458,134

389,415

1,847,549

8.	INVESTMENT PROPERTY

Total

£

FAIR VALUE

At 1 March 2019

and 29 February 2020

610,216

NET BOOK VALUE

At 29 February 2020

610,216

At 28 February 2019

610,216

The investment properties were valued on an open market basis at the year-end by the directors.