Megasteel Ltd - Limited company accounts 20.1
Megasteel Ltd - Limited company accounts 20.1
REGISTERED NUMBER: 02665353 (England and Wales) |
Group Strategic Report, Report of the Directors and |
Consolidated Financial Statements |
for the Year Ended 31 October 2021 |
for |
Megasteel Ltd |
Megasteel Ltd (Registered number: 02665353) |
Contents of the Consolidated Financial Statements |
for the Year Ended 31 October 2021 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Directors | 4 |
Report of the Independent Auditors | 5 |
Consolidated Income Statement | 8 |
Consolidated Other Comprehensive Income | 9 |
Consolidated Balance Sheet | 10 |
Company Balance Sheet | 11 |
Consolidated Statement of Changes in Equity | 12 |
Company Statement of Changes in Equity | 13 |
Consolidated Cash Flow Statement | 14 |
Notes to the Consolidated Financial Statements | 15 |
Megasteel Ltd |
Company Information |
for the Year Ended 31 October 2021 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
Megasteel Ltd (Registered number: 02665353) |
Group Strategic Report |
for the Year Ended 31 October 2021 |
The directors present their strategic report of the company and the group for the year ended 31 October 2021. |
REVIEW OF BUSINESS |
The principal activity of Megasteel Ltd continues to be the distribution of prestressing wire and strand, a vital product used in the manufacture of prestressed concrete products and post tensioned concrete structures. Megasteel remains the leading supplier of these products in the UK. The company remains financially strong with substantial cash resources. |
During the year the group performed strongly and made a record profit of £3m (2020: £0.6m) before tax and dividends. The group has net assets of £9.3m (2020: £8.4m). |
In last year's strategic report, I said that the period to October 2020 had been the most difficult one since the formation of the business in 1991 but expressed confidence about the future. This year's accounts show how well the business recovered and again shows the strength of the business model we have developed over the past 29 years. |
The market that we sell most of our products into - UK housing - continues to be strong 'despite COVID'. In 2020 NHBC registered a total of 123,151 new homes build in 2020, down from 160,319 in 2021, which was a significant fall caused by the disruption early in the year due to COVID, however the housing market recovered strongly in 2021 and it is my estimate that about 180,000 homes will be built which is a 50% increase over 2020. But this level still remains far below the government's target which is for 300,000 a year by 2025. |
The UK simply has to build more houses in the future to satisfy the need and this clearly shows the potential for future growth of the Megasteel business - but the UK government needs to put in place a much more favourable planning environment for these targets to be achieved and they have not yet done so - more work is needed! However, there remains a shortage of housing in the UK that needs to be fulfilled and Megasteel continues to be well placed to benefit from this expected growth in the future. |
As I have said in previous years - customers remain the focus of everything we do as a company and we welcome and encourage their feedback to us on how we are doing. We continue to ask their opinions of our business as part of our ISO9001 certification and once again we have been pleased to receive very positive feedback. We will make sure we maintain the very high levels of service that we provide. |
Megasteel is an internationally oriented business and the company's directors try to visit our suppliers all over the world and we are pleased with the excellent relationships we have with them, many of which now stretch back almost 30 years. Unfortunately, because of the ongoing disruption to travel caused by the COVID pandemic we have not been able to visit our suppliers for a couple of years but we have adapted to the new world situation and our communication and relationship with our most important suppliers remains excellent. |
BREXIT has been a great benefit to us with the UK government removing anti-competitive duties on our product range and so has enabled us to rekindle relationships with suppliers around the world that the EU had previously prevented. We expect that these new 'old' relationships will pay dividends for us and our own customers in the future. Steel products remain in short supply at the moment and so we need as many suppliers as possible from every continent. |
Our engineering business Sweetnam and Bradley Ltd, a sheet metal fabrication and finishing business based in Malmesbury has contributed considerably during the year to the growth of the group. S&B has a strong customer focus and excellent product quality and produce highly engineered products for a very large number of different customers and business sectors. S&B are problem solvers for their customers and this is possible due to the huge skills and experience of the management and staff employed by the business. All of the markets and customers that S&B are selling to are doing well and showing growth and the future opportunities for the business are excellent. One opportunity in particular is the growing domestic E.V infrastructure market. The management of S&B are working hard to establish contacts and grow our presence in this area. |
Sweetnam and Bradley has prospered under the Megasteel ownership and has grown both sales, profits, and the workforce in the past year. I am pleased that all of the targets we set of the business on acquisition have been achieved or are on target to be achieved in the timescales that we set. I am very proud of the efforts that everyone in this part of the business have made since the acquisition and we have great plans to continue the growth in the future. Making an acquisition is a risk but we considered the risk / reward balance very carefully when we bought the business and I am very pleased with the outcome. |
As Megasteel enters its 30th year as a company we believe that the next financial year will will be another excellent and exciting one for the combined Megasteel and Sweetnam and Bradley Group, and we will continue to look for further opportunities to grow the business. |
If you want to know more about the us, please visit our website www.megasteel.co.uk and www.sweetnam-bradley.com and in particular we would encourage you to look at our news sections where you will learn a lot more about what we do! |
Megasteel Ltd (Registered number: 02665353) |
Group Strategic Report |
for the Year Ended 31 October 2021 |
PRINCIPAL RISKS AND UNCERTAINTIES |
The directors continue to review the risks and uncertainties that the company faces or may potentially be faced with. Measures are put in place to mitigate these risks and uncertainties and the company's strong and liquid balance sheet puts us in a very strong position. |
The biggest risk that we run is that we extend credit to most of our customers, we mitigate this by having a well-managed and proactive credit control policy. All customers are monitored every month for payment performance and if they are overdue they are chased to find out why. If a customer is late in paying we will not extend further credit without an understanding of why and a director will make a decision. Our record of bad debt over many years is excellent and this can be directly attributed to this policy. |
FINANCIAL KEY PERFORMANCE INDICATORS |
2021 | 2020 |
Turnover (£) | 19,778,523 | 12,056,400 |
Gross profit margin (%) | 20.5% | 13.5% |
Profit before tax (£) | 3,042,168 | 579,881 |
ON BEHALF OF THE BOARD: |
Megasteel Ltd (Registered number: 02665353) |
Report of the Directors |
for the Year Ended 31 October 2021 |
The directors present their report with the financial statements of the company and the group for the year ended 31 October 2021. |
DIVIDENDS |
The total distribution of dividends for the year ended 31 October 2021 will be £ 1,500,000 . |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 November 2020 to the date of this report. |
POLITICAL DONATIONS AND EXPENDITURE |
Donations made in the year total £17,474 (2020 - £2,882) |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Group 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group'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 group's auditors are aware of that information. |
AUDITORS |
The auditors, MHA Monahans, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
Megasteel Ltd |
Opinion |
We have audited the financial statements of Megasteel Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2021 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and 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 group's and of the parent company affairs as at 31 October 2021 and of the group's 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 group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Group 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 Group 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 Group 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 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. |
Report of the Independent Auditors to the Members of |
Megasteel Ltd |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent 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: |
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to employment law and company legislation and we considered the extent to which |
non-compliance might have a material effect on the financial statements of the Group. We also considered those |
laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and Corporation Tax Act 2010. We evaluated management's incentives and opportunities for fraudulent |
manipulation of the financial statements (including the risk of override of controls), and determined that the principal |
risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, and management bias in accounting estimates and judgemental areas of the financial statements. Audit procedures performed by the audit engagement team included: |
- Discussions with management, including consideration of known or suspected instances of non-compliance with laws |
and regulations and fraud; |
- Understanding of management's internal controls designed to prevent and detect irregularities, and fraud; |
- Reviewing the Group's legal costs to check for non-compliance with laws and regulations and fraud; |
- Review of tax compliance |
- Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing of |
expenses; |
- Testing transactions entered into outside of the normal course of the Group's business; and |
- Identifying and testing journal entries, in particular any journal entries with fraud characteristics such as journals with |
round numbers. |
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. Also, 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. |
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. |
Report of the Independent Auditors to the Members of |
Megasteel Ltd |
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. |
for and on behalf of |
Statutory Auditor |
Chartered Accountants |
14a Forest Gate |
Pewsham |
Chippenham |
Wiltshire |
SN15 3RS |
Megasteel Ltd (Registered number: 02665353) |
Consolidated |
Income Statement |
for the Year Ended 31 October 2021 |
2021 | 2020 |
Notes | £ | £ |
TURNOVER | 19,778,522 | 12,056,400 |
Cost of sales | 15,717,321 | 10,433,978 |
GROSS PROFIT | 4,061,201 | 1,622,422 |
Administrative expenses | 1,036,913 | 1,078,327 |
3,024,288 | 544,095 |
Other operating income | 17,758 | 28,630 |
OPERATING PROFIT | 5 | 3,042,046 | 572,725 |
Interest receivable and similar income | 672 | 8,498 |
3,042,718 | 581,223 |
Interest payable and similar expenses | 6 | 551 | 1,342 |
PROFIT BEFORE TAXATION | 3,042,167 | 579,881 |
Tax on profit | 7 | 604,261 | 101,560 |
PROFIT FOR THE FINANCIAL YEAR |
Profit attributable to: |
Owners of the parent | 2,437,906 | 478,321 |
Megasteel Ltd (Registered number: 02665353) |
Consolidated |
Other Comprehensive Income |
for the Year Ended 31 October 2021 |
2021 | 2020 |
Notes | £ | £ |
PROFIT FOR THE YEAR | 2,437,906 | 478,321 |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
2,437,906 |
478,321 |
Total comprehensive income attributable to: |
Owners of the parent | 2,437,906 | 478,321 |
Megasteel Ltd (Registered number: 02665353) |
Consolidated Balance Sheet |
31 October 2021 |
2021 | 2020 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 10 | 877,329 | 1,038,245 |
Tangible assets | 11 | 386,468 | 433,629 |
Investments | 12 | - | - |
1,263,797 | 1,471,874 |
CURRENT ASSETS |
Stocks | 13 | 4,896,959 | 1,471,114 |
Debtors | 14 | 3,891,343 | 2,502,749 |
Cash at bank and in hand | 5,298,610 | 5,073,774 |
14,086,912 | 9,047,637 |
CREDITORS |
Amounts falling due within one year | 15 | 5,964,752 | 2,067,018 |
NET CURRENT ASSETS | 8,122,160 | 6,980,619 |
TOTAL ASSETS LESS CURRENT LIABILITIES |
9,385,957 |
8,452,493 |
PROVISIONS FOR LIABILITIES | 17 | 73,014 | 77,456 |
NET ASSETS | 9,312,943 | 8,375,037 |
CAPITAL AND RESERVES |
Called up share capital | 18 | 100 | 100 |
Retained earnings | 19 | 9,312,843 | 8,374,937 |
SHAREHOLDERS' FUNDS | 9,312,943 | 8,375,037 |
The financial statements were approved by the Board of Directors and authorised for issue on 17 February 2022 and were signed on its behalf by: |
N G Roberts - Director |
Megasteel Ltd (Registered number: 02665353) |
Company Balance Sheet |
31 October 2021 |
2021 | 2020 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 10 |
Tangible assets | 11 |
Investments | 12 |
CURRENT ASSETS |
Stocks | 13 |
Debtors | 14 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 15 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CAPITAL AND RESERVES |
Called up share capital | 18 |
Retained earnings | 19 |
SHAREHOLDERS' FUNDS |
Company's profit for the financial year | 2,046,186 | 394,545 |
The financial statements were approved by the Board of Directors and authorised for issue on |
Megasteel Ltd (Registered number: 02665353) |
Consolidated Statement of Changes in Equity |
for the Year Ended 31 October 2021 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 November 2019 | 100 | 8,172,616 | 8,172,716 |
Changes in equity |
Dividends | - | (276,000 | ) | (276,000 | ) |
Total comprehensive income | - | 478,321 | 478,321 |
Balance at 31 October 2020 | 100 | 8,374,937 | 8,375,037 |
Changes in equity |
Dividends | - | (1,500,000 | ) | (1,500,000 | ) |
Total comprehensive income | - | 2,437,906 | 2,437,906 |
Balance at 31 October 2021 | 100 | 9,312,843 | 9,312,943 |
Megasteel Ltd (Registered number: 02665353) |
Company Statement of Changes in Equity |
for the Year Ended 31 October 2021 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 November 2019 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 31 October 2020 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 31 October 2021 |
Megasteel Ltd (Registered number: 02665353) |
Consolidated Cash Flow Statement |
for the Year Ended 31 October 2021 |
2021 | 2020 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 22 | 1,600,503 | 2,364,809 |
Interest element of hire purchase or finance lease rental payments paid |
(551 |
) |
(1,342 |
) |
Tax paid | - | (327,832 | ) |
Tax refund | 3,256 | - |
Net cash from operating activities | 1,603,208 | 2,035,635 |
Cash flows from investing activities |
Purchase of intangible fixed assets | (23,731 | ) | - |
Purchase of tangible fixed assets | (24,178 | ) | (31,450 | ) |
Sale of tangible fixed assets | - | 568 |
Interest received | 672 | 8,498 |
Net cash from investing activities | (47,237 | ) | (22,384 | ) |
Cash flows from financing activities |
Amount withdrawn by directors | 168,865 | (247,107 | ) |
Equity dividends paid | (1,500,000 | ) | (276,000 | ) |
Net cash from financing activities | (1,331,135 | ) | (523,107 | ) |
Increase in cash and cash equivalents | 224,836 | 1,490,144 |
Cash and cash equivalents at beginning of year |
23 |
5,073,774 |
3,583,630 |
Cash and cash equivalents at end of year | 23 | 5,298,610 | 5,073,774 |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements |
for the Year Ended 31 October 2021 |
1. | STATUTORY INFORMATION |
Megasteel Ltd is a |
2. | STATEMENT OF COMPLIANCE |
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. |
3. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Basis of consolidation |
The consolidated financial statements incorporate the financial statements of Megasteel Limited and entities controlled by Megasteel Limited. Consolidation has been performed on the acquisition basis of accounting. Uniform accounting policies are adopted throughout the Group. |
The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated. |
Business combinations |
Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree plus costs directly attributable to the business combination. |
Any excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets and liabilities is recognised as goodwill. If the net fair value of the identifiable assets and liabilities exceeds the cost of the business combination the excess is recognised separately on the face of the consolidated statement of financial position immediately below goodwill. |
Investment in subsidiaries |
The consolidated financial statements incorporate the financial statements of the company and entities (including special purpose entities) controlled by the group (its subsidiaries). Control is achieved where the group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. |
The results of subsidiaries acquired or disposed of during the year are included in total comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate using accounting policies consistent with those of the parent. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. |
Investments in subsidiaries are accounted for at cost less impairment in the individual financial statements. |
Significant judgements and estimates |
In the application of the Company's accounting policies, management is required to make judgements, |
estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. |
There are no key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements. |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
3. | ACCOUNTING POLICIES - continued |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable. Turnover is reduced for customer returns, rebates or other similar allowances and is net of value added taxes. Turnover includes revenue earned from the sale of goods. |
Revenue from the sale of goods is recognised when all of the following conditions are satisfied: |
- the company has transferred to the buyer the significant risks and rewards of ownership of the goods; |
- the company retains neither continuing managerial involvement to the degree associated with ownership |
nor effective control over the goods sold; |
- the amount of revenue can be measured reliably; |
- it is probable that the economic benefits associated with the transaction can be measured reliably. |
Specifically, revenue from the sale of goods is primarily recognised upon delivery of the goods to the customer. |
Goodwill |
Goodwill, being the amount paid in connection with the acquisition of a business in 2014 and a business in 2019, is being amortised evenly over its estimated useful life of ten years. |
Intangible assets |
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
Tangible fixed assets |
Plant and machinery | - |
Fixtures and fittings | - |
Motor vehicles | - |
Computer equipment | - |
Impairment of assets |
At each reporting date, the company reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that any items of property, plant and equipment have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is estimated and compared with its carrying amount. If estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in the profit and loss. |
Stocks |
Stock is stated at the lower of cost and estimated selling price less costs to complete and sell. Stock is recognised as an expense in the period in which the related revenue is recognised. |
At the end of each reporting period stock is assessed for impairment. If an item of stock is impaired, the identified stock is reduced to its selling price less costs to complete and sell and an impairment is recognised in the profit and loss account. Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the profit and loss account. |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
3. | ACCOUNTING POLICIES - continued |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated 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 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. |
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. |
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. |
Pension costs and other post-retirement benefits |
The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate. |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
3. | ACCOUNTING POLICIES - continued |
Financial instruments |
The company has chosen to adopt the requirements of sections 11 and 12 of FRS 102 in respect of the measurement and disclosure of financial instruments. |
Trade and other debtors |
Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method, less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for bad and doubtful debts. |
Cash and cash equivalents |
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the statement of financial position, bank overdrafts are shown within borrowings or current liabilities. |
Impairment of financial assets |
Financial assets, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when 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 of the investment have been affected. |
For all other financial assets, objective evidence of impairment could include: |
- significant financial difficulty of the issuer or counterparty; or |
- breach of contract, such as a default or delinquency in interest or principal payments; or |
- it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or |
- the disappearance of an active market for that financial asset because of financial difficulties. |
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 30 days, as well as observable changes in national or local economic conditions that correlate with default on receivables. |
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. |
For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. |
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. |
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
3. | ACCOUNTING POLICIES - continued |
Trade and other creditors |
Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost. |
Related parties |
For the purposes of these financial statements, a party is considered to be related to the company if: |
(i) the party has the ability, directly or indirectly, through one or more intermediaries, to control the Company or exercise significant influence over the company in making financial and operating policy decisions, or has joint control over the company; |
(ii) the company and the party are subject to common control; |
(iii) the party is an associate of the company or a joint venture in which the company is a venturer; |
(iv) the party is a member of key management personnel of the company or the company's parent, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals; |
(v) the party is a close family member of a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or |
(vi) the party is a post-employment benefit plan which is for the benefit of employees of the company or of any entity that is a related party of the company. |
Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity. |
Provisions |
Provisions are recognised when the company has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. |
Government grants |
Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income. |
4. | EMPLOYEES AND DIRECTORS |
2021 | 2020 |
£ | £ |
Wages and salaries | 1,161,188 | 988,899 |
Social security costs | 97,084 | 75,635 |
Other pension costs | 39,248 | 121,928 |
1,297,520 | 1,186,462 |
The average number of employees during the year was as follows: |
2021 | 2020 |
Directors | 2 | 2 |
Admin | 9 | 9 |
Management & design | 5 | 5 |
Finance | 1 | 1 |
Production | 28 | 27 |
2021 | 2020 |
£ | £ |
Directors' remuneration | 16,000 | 16,000 |
Directors' pension contributions to money purchase schemes | - | 80,000 |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
4. | EMPLOYEES AND DIRECTORS - continued |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes | 2 | 2 |
5. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
2021 | 2020 |
£ | £ |
Depreciation - owned assets | 71,339 | 87,943 |
Profit on disposal of fixed assets | - | (89 | ) |
Goodwill amortisation | 175,101 | 152,610 |
Computer software amortisation | 9,546 | - |
Foreign exchange differences | (1,838 | ) | (4,210 | ) |
Operating lease payments | 98,749 | 101,728 |
6. | INTEREST PAYABLE AND SIMILAR EXPENSES |
2021 | 2020 |
£ | £ |
Leasing | 551 | 1,342 |
7. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
2021 | 2020 |
£ | £ |
Current tax: |
UK corporation tax | 608,703 | 112,104 |
Deferred tax | (4,442 | ) | (10,544 | ) |
Tax on profit | 604,261 | 101,560 |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2021 | 2020 |
£ | £ |
Profit before tax | 3,042,167 | 579,881 |
Profit multiplied by the standard rate of corporation tax in the UK of 19 % (2020 - 19 %) |
578,012 |
110,177 |
Effects of: |
Expenses not deductible for tax purposes | 4,135 | 123 |
Depreciation in excess of capital allowances | 23,349 | 23,716 |
Adjustments to tax charge in respect of previous periods | 1,035 | - |
Deferred taxation | (4,442 | ) | (10,544 | ) |
R&D tax credit | (11,989 | ) | (32,172 | ) |
Amortisation of goodwill on consolidation | 14,533 | 10,260 |
Charges paid | (372 | ) | - |
Total tax charge | 604,261 | 101,560 |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
8. | INDIVIDUAL INCOME STATEMENT |
As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the parent company is not presented as part of these financial statements. |
9. | DIVIDENDS |
2021 | 2020 |
£ | £ |
Ordinary shares of £1 each |
Interim | 1,500,000 | 276,000 |
10. | INTANGIBLE FIXED ASSETS |
Group |
Computer |
Goodwill | software | Totals |
£ | £ | £ |
COST |
At 1 November 2020 | 1,751,011 | - | 1,751,011 |
Additions | - | 23,731 | 23,731 |
At 31 October 2021 | 1,751,011 | 23,731 | 1,774,742 |
AMORTISATION |
At 1 November 2020 | 712,766 | - | 712,766 |
Amortisation for year | 175,101 | 9,546 | 184,647 |
At 31 October 2021 | 887,867 | 9,546 | 897,413 |
NET BOOK VALUE |
At 31 October 2021 | 863,144 | 14,185 | 877,329 |
At 31 October 2020 | 1,038,245 | - | 1,038,245 |
Company |
Goodwill |
£ |
COST |
At 1 November 2020 |
and 31 October 2021 |
AMORTISATION |
At 1 November 2020 |
Amortisation for year |
At 31 October 2021 |
NET BOOK VALUE |
At 31 October 2021 |
At 31 October 2020 |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
11. | TANGIBLE FIXED ASSETS |
Group |
Fixtures |
Plant and | and | Motor | Computer |
machinery | fittings | vehicles | equipment | Totals |
£ | £ | £ | £ | £ |
COST |
At 1 November 2020 | 466,733 | 7,367 | 49,340 | 34,067 | 557,507 |
Additions | 20,444 | - | - | 3,734 | 24,178 |
At 31 October 2021 | 487,177 | 7,367 | 49,340 | 37,801 | 581,685 |
DEPRECIATION |
At 1 November 2020 | 106,041 | 1,586 | 6,341 | 9,910 | 123,878 |
Charge for year | 55,435 | 867 | 14,570 | 467 | 71,339 |
At 31 October 2021 | 161,476 | 2,453 | 20,911 | 10,377 | 195,217 |
NET BOOK VALUE |
At 31 October 2021 | 325,701 | 4,914 | 28,429 | 27,424 | 386,468 |
At 31 October 2020 | 360,692 | 5,781 | 42,999 | 24,157 | 433,629 |
Company |
Motor |
vehicles |
£ |
COST |
At 1 November 2020 |
and 31 October 2021 |
DEPRECIATION |
At 1 November 2020 |
Charge for year |
At 31 October 2021 |
NET BOOK VALUE |
At 31 October 2021 |
At 31 October 2020 |
12. | FIXED ASSET INVESTMENTS |
Company |
Shares in |
group |
undertakings |
£ |
COST OR VALUATION |
At 1 November 2020 |
and 31 October 2021 |
NET BOOK VALUE |
At 31 October 2021 |
At 31 October 2020 |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
12. | FIXED ASSET INVESTMENTS - continued |
Company |
Cost or valuation at 31 October 2021 is represented by: |
Shares in |
group |
undertakings |
£ |
Valuation in 2020 | 2,526,375 |
The group or the company's investments at the Balance Sheet date in the share capital of companies include the following: |
Subsidiary |
Registered office: Industrial Estate, Gloucester Road, Malmesbury, Wiltshire, England, SN16 0DY |
Nature of business: |
% |
Class of shares: | holding |
£ | £ |
Aggregate capital and reserves |
Profit for the year/period |
The company's subsidiaries at the balance sheet date included in the consolidated accounts are the following: |
Company name |
Registered office |
Nature of business |
Class of shares held |
% Held |
Subsidiaries |
Sweetnam & Bradley Limited | Industrial Estate, Gloucester Road, Malmesbury, Wiltshire, SN16 0DY |
Sheet metal fabrication and processing |
ordinary | 100% |
13. | STOCKS |
Group | Company |
2021 | 2020 | 2021 | 2020 |
£ | £ | £ | £ |
Stocks | 4,817,510 | 1,438,418 |
Work-in-progress | 79,449 | 32,696 |
4,896,959 | 1,471,114 |
14. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
2021 | 2020 | 2021 | 2020 |
£ | £ | £ | £ |
Trade debtors | 3,762,786 | 2,172,254 |
Amounts owed by group undertakings | - | - |
Other debtors | 16,246 | - |
Directors' current accounts | 69,330 | 238,195 |
Tax | - | 48,312 |
Prepayments and accrued income | 42,981 | 43,988 |
3,891,343 | 2,502,749 |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
15. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
2021 | 2020 | 2021 | 2020 |
£ | £ | £ | £ |
Trade creditors | 4,914,578 | 1,187,090 |
Tax | 607,713 | 44,066 |
Social security and other taxes | 23,088 | 20,013 |
VAT | 229,392 | 115,536 |
Other creditors | 11,801 | 626,638 |
Accrued expenses | 178,180 | 73,675 |
5,964,752 | 2,067,018 |
16. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Group |
Non-cancellable operating | leases |
2021 | 2020 |
£ | £ |
Within one year | 90,842 | 87,521 |
Between one and five years | 336,290 | 324,083 |
In more than five years | 226,667 | 306,667 |
653,799 | 718,271 |
Company |
Non-cancellable operating | leases |
2021 | 2020 |
£ | £ |
Within one year |
Between one and five years |
17. | PROVISIONS FOR LIABILITIES |
Group |
2021 | 2020 |
£ | £ |
Deferred tax | 73,014 | 77,456 |
Group |
Deferred | Other |
tax | provisions |
£ | £ |
Balance at 1 November 2020 | 77,456 | 18,106 |
Credit to Income Statement during year | (4,442 | ) | - |
Balance at 31 October 2021 | 73,014 | 18,106 |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
18. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2021 | 2020 |
value: | £ | £ |
Ordinary | £1 | 98 | 98 |
Ordinary A | £1 | 2 | 2 |
100 | 100 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. All ordinary shares rank equally with regard to the company's residual assets. |
19. | RESERVES |
Group |
Retained |
earnings |
£ |
At 1 November 2020 | 8,374,937 |
Profit for the year | 2,437,906 |
Dividends | (1,500,000 | ) |
At 31 October 2021 | 9,312,843 |
Company |
Retained |
earnings |
£ |
At 1 November 2020 |
Profit for the year |
Dividends | ( |
) |
At 31 October 2021 |
20. | PENSION COMMITMENTS |
During the year pension contributions of £4,620 (2020 - £80,000) were made on behalf of the directors and contributions of £34,628 (2020 - £41,928) were made on behalf of the employees. At the year end outstanding pension contributions payable amounted to £6,700 (2020 - £5,887). |
21. | RELATED PARTY DISCLOSURES |
The remuneration of directors and other members of key management during the year was as follows: |
2021 | 2020 |
£ | £ |
Salaries and other short term benefits | 16,000 | 96,000 |
Megasteel Ltd (Registered number: 02665353) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31 October 2021 |
22. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
2021 | 2020 |
£ | £ |
Profit before taxation | 3,042,167 | 579,881 |
Depreciation charges | 255,986 | 240,631 |
Profit on disposal of fixed assets | - | (89 | ) |
Revaluation of investment | - | 385,560 |
Government grants | - | (24,420 | ) |
Finance costs | 551 | 1,342 |
Finance income | (672 | ) | (8,498 | ) |
3,298,032 | 1,174,407 |
(Increase)/decrease in stocks | (3,425,845 | ) | 2,095,554 |
(Increase)/decrease in trade and other debtors | (1,605,771 | ) | 813,505 |
Increase/(decrease) in trade and other creditors | 3,334,087 | (1,718,657 | ) |
Cash generated from operations | 1,600,503 | 2,364,809 |
23. | 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 October 2021 |
31.10.21 | 1.11.20 |
£ | £ |
Cash and cash equivalents | 5,298,610 | 5,073,774 |
Year ended 31 October 2020 |
31.10.20 | 1.11.19 |
£ | £ |
Cash and cash equivalents | 5,073,774 | 3,583,630 |
24. | ANALYSIS OF CHANGES IN NET FUNDS |
At 1.11.20 | Cash flow | At 31.10.21 |
£ | £ | £ |
Net cash |
Cash at bank and in hand | 5,073,774 | 224,836 | 5,298,610 |
5,073,774 | 224,836 | 5,298,610 |
Total | 5,073,774 | 224,836 | 5,298,610 |