European Steel Sheets Limited - Limited company accounts 20.1

REGISTERED NUMBER: 06436498 (England and Wales)

EUROPEAN STEEL SHEETS LIMITED

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

8

Other Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Cash Flow Statement

12

Notes to the Cash Flow Statement

13

Notes to the Financial Statements

15

DIRECTORS:

D W Broadhurst

Miss S L Broadhurst

REGISTERED OFFICE:

Jean Broadhurst Works

Doris Road

Bordesley Green

Birmingham

West Midlands

B9 4SJ

REGISTERED NUMBER:

06436498 (England and Wales)

AUDITORS:

Sephton & Company LLP

Chartered Certified Accountants

Statutory Auditors

Marston House

5 Elmdon Lane

Marston Green

Solihull

West Midlands

B37 7DL

The directors present their strategic report for the year ended 31 December 2021.

REVIEW OF BUSINESS

We aim to present a balanced and comprehensive review of the development and performance of our business during the period and its position at the period end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.

There has been no change in the principal activities of the company during the period.

PRINCIPAL RISKS AND UNCERTAINTIES

As for many business of our size, the business environment in which we operate continues to be challenging. The market is highly competitive and margins continue to be under pressure. we are of course subject to world economic patterns and the level of activity within our economy.

With these risks and uncertainties in mind, we are aware that any plans for the future development of the business may be subject to unforeseen future events outside our control.

The company's principle financial instruments comprise bank balances, trade creditors and trade debtors. The main purpose of these instruments is to raise funds for the company's operations.

Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet the amounts due.

Investments of cash surpluses are made through banks and companies which must fulfil credit rating criteria approved by the board.

DEVELOPMENT AND PERFORMANCE

We consider that our key performance indicators are those that communicate performance and strength of the company as a whole, these being turnover, gross margin and return on capital employed.

Turnover has increased by 18.8% compared to the previous period. Gross margin has increased to 27.42% (2020 21.35%).

Overall there has been an operating profit of £4,984,704 (2020 £1,981,605) and a profit before tax of £4,690,127 (2020 £1,997,905). After taxation £3,785,632 (2020 £1,612,523) has been added to reserves.

Return on capital employed has increased to 10.8% (2020 4.8%). Return on capital employed is calculated as profit before surplus arising on revaluation, exceptional items, interest and tax divided by capital employed, which constitutes total assets less current liabilities.

ON BEHALF OF THE BOARD:

D W Broadhurst - Director

18 August 2022

The directors present their report with the financial statements of the company for the year ended 31 December 2021.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of steel stockholders.

DIVIDENDS

An interim dividend of £9558.82 per share was paid on 31 December 2021. The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 December 2021 will be £ 650,000 .

DIRECTORS

D W Broadhurst has held office during the whole of the period from 1 January 2021 to the date of this report.

POLITICAL DONATIONS AND EXPENDITURE

No political donations were made during the year.

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, Sephton & Company LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

D W Broadhurst - Director

18 August 2022

Opinion

We have audited the financial statements of European Steel Sheets Limited (the 'company') for the year ended 31 December 2021 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 31 December 2021 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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The 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 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 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognizing that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

We focussed on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management and enquiries of legal counsel. There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. We did not identify any key audit matters relating to irregularities, including fraud. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

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.

Steven Douglas Connell (Senior Statutory Auditor)

for and on behalf of Sephton & Company LLP

Chartered Certified Accountants

Statutory Auditors

Marston House

5 Elmdon Lane

Marston Green

Solihull

West Midlands

B37 7DL

25 August 2022

TURNOVER

3

21,723,233

18,274,201

Cost of sales

15,764,760

15,449,868

GROSS PROFIT

5,958,473

2,824,333

Distribution costs

287,329

221,702

Administrative expenses

1,862,071

1,743,216

2,149,400

1,964,918

3,809,073

859,415

Other operating income

875,631

1,122,190

OPERATING PROFIT

5

4,684,704

1,981,605

Investment income

6,921

6,718

Interest receivable and similar income

1,274

9,582

8,195

16,300

4,692,899

1,997,905

Interest payable and similar expenses

6

2,772

-

PROFIT BEFORE TAXATION

4,690,127

1,997,905

Tax on profit

7

904,495

385,382

PROFIT FOR THE FINANCIAL YEAR

3,785,632

1,612,523

PROFIT FOR THE YEAR

3,785,632

1,612,523

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

3,785,632

1,612,523

FIXED ASSETS

Tangible assets

9

3,217,674

3,324,239

Investment property

10

16,898,162

16,898,162

20,115,836

20,222,401

CURRENT ASSETS

Stocks

11

5,680,050

3,488,906

Debtors

12

7,184,941

8,527,871

Investments

13

186,847

206,847

Cash at bank and in hand

11,123,729

10,009,395

24,175,567

22,233,019

CREDITORS

Amounts falling due within one year

14

1,060,835

2,352,260

NET CURRENT ASSETS

23,114,732

19,880,759

TOTAL ASSETS LESS CURRENT LIABILITIES

43,230,568

40,103,160

PROVISIONS FOR LIABILITIES

18

2,329,374

2,337,598

NET ASSETS

40,901,194

37,765,562

CAPITAL AND RESERVES

Called up share capital

19

68

68

Revaluation reserve

20

2,274,514

2,274,514

Capital redemption reserve

20

34

34

Retained earnings

20

38,626,578

35,490,946

SHAREHOLDERS' FUNDS

40,901,194

37,765,562

The financial statements were approved by the Board of Directors and authorised for issue on 18 August 2022 and were signed on its behalf by:

D W Broadhurst - Director

Called up

Capital

share

Retained

Revaluation

redemption

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 January 2020

68

34,378,423

2,274,514

34

36,653,039

Changes in equity

Dividends

-

(500,000

)

-

-

(500,000

)

Total comprehensive income

-

1,612,523

-

-

1,612,523

Balance at 31 December 2020

68

35,490,946

2,274,514

34

37,765,562

Changes in equity

Dividends

-

(650,000

)

-

-

(650,000

)

Total comprehensive income

-

3,785,632

-

-

3,785,632

Balance at 31 December 2021

68

38,626,578

2,274,514

34

40,901,194

Cash flows from operating activities

Cash generated from operations

1

2,891,179

1,267,014

Interest paid

(2,772

)

-

Tax paid

(1,062,227

)

-

Net cash from operating activities

1,826,180

1,267,014

Cash flows from investing activities

Purchase of tangible fixed assets

(7,301

)

(89,950

)

Purchase of investment property

-

(353,162

)

Sale of tangible fixed assets

30,000

-

Sale of fixed asset investments

5,502

-

Interest received

1,274

9,582

Dividends received

6,921

6,718

Net cash from investing activities

36,396

(426,812

)

Cash flows from financing activities

Amount introduced by directors

-

500,000

Amount withdrawn by directors

(35,415

)

(373,374

)

Equity dividends paid

(650,000

)

(500,000

)

Net cash from financing activities

(685,415

)

(373,374

)

Increase in cash and cash equivalents

1,177,161

466,828

Cash and cash equivalents at beginning of year

2

9,892,925

9,426,097

Cash and cash equivalents at end of year

2

11,070,086

9,892,925

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

2021

2020

£

£

Profit before taxation

4,690,127

1,997,905

Depreciation charges

86,798

79,694

Loss on disposal of fixed assets

11,566

-

Finance costs

2,772

-

Finance income

(8,195

)

(16,300

)

4,783,068

2,061,299

(Increase)/decrease in stocks

(2,191,144

)

3,147,495

Decrease/(increase) in trade and other debtors

1,160,302

(2,889,848

)

Decrease in trade and other creditors

(861,047

)

(1,051,932

)

Cash generated from operations

2,891,179

1,267,014

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 31 December 2021

31/12/21

1/1/21

£

£

Cash and cash equivalents

11,123,729

10,009,395

Bank overdrafts

(53,643

)

(116,470

)

11,070,086

9,892,925

Year ended 31 December 2020

31/12/20

1/1/20

£

£

Cash and cash equivalents

10,009,395

9,426,097

Bank overdrafts

(116,470

)

-

9,892,925

9,426,097

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1/1/21

Cash flow

At 31/12/21

£

£

£

Net cash

Cash at bank and in hand

10,009,395

1,114,334

11,123,729

Bank overdrafts

(116,470

)

62,827

(53,643

)

9,892,925

1,177,161

11,070,086

Liquid resources

Current asset investments

206,847

(20,000

)

186,847

206,847

(20,000

)

186,847

Total

10,099,772

1,157,161

11,256,933

1.	STATUTORY INFORMATION

European Steel Sheets Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

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 as modified by the revaluation of certain assets.

Significant judgements and estimates

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.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Rental income is recognised on a straight line basis over the course of the lease.

Dividend income from investments is recognised when the shareholder's right to receive payment has been established.

Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.

Tangible fixed assets

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

Land & buildings

-

1% on cost

Plant and machinery

-

10% on reducing balance

Fixtures and fittings

-

20% on cost

Motor vehicles

-

25% on reducing balance

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

Financial instruments

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, cash and bank balances, loans to or from related parties and current asset investments. All such instruments are measured initially and subsequently at the transaction price.

At the end of each reporting period debt financial assets are assessed for impairment, and their carrying value reduced if necessary. Any impairment is recognised in the profit and loss account.

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.

Deferred tax

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.

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 a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2021

2020

£

£

Steel sales

21,723,233

18,274,201

21,723,233

18,274,201

An analysis of turnover by geographical market is given below:

2021

2020

£

£

United Kingdom

21,723,233

18,274,201

21,723,233

18,274,201

4.	EMPLOYEES AND DIRECTORS

2021

2020

£

£

Wages and salaries

1,101,470

509,069

Social security costs

130,934

60,777

Other pension costs

8,876

8,528

1,241,280

578,374

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

2021

2020

Directors

2

2

Direct Labour

2

5

Sales

3

3

Administration

2

3

9

13

2021

2020

£

£

Directors' remuneration

624,794

80,249

Directors' pension contributions to money purchase schemes

1,319

109

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

1

1

Information regarding the highest paid director for the year ended 31 December 2021 is as follows:

2021

£

Emoluments etc

333,203

Pension contributions to money purchase schemes

1,319