European Steel Sheets Limited - Limited company accounts 20.1

REGISTERED NUMBER: 06436498 (England and Wales)

Strategic Report,

Report of the Directors and

Financial Statements

for the Year Ended 31 December 2020

for

EUROPEAN STEEL SHEETS 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:

D Broadhurst

S Broadhurst

Secretary:

S Broadhurst

Registered office:

Jean Broadhurst Works

Doris Road

Bordesley Green

Birmingham

West Midlands

B9 4SJ

Registered number:

06436498 (England and Wales)

Auditors:

Haines Watts Birmingham LLP

5-6 Greenfield Crescent

Edgbaston

Birmingham

B15 3BE

The directors present their strategic report for the year ended 31 December 2020.

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 businesses 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.

Development and performance

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

Turnover has increased by 20.7% compared to the previous period. Gross margin has increased to 21.35% (2019 12.61%).

Overall there has been an operating profit of £1,981,605 (2019 £581,220) and a profit before tax of £1,997,905 (2019 £622,913). After taxation, £1,612,523 (2019 £491,072) has been added to reserves

Return on capital employed has increased to 4.8% (2019 1.5%). 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.

Events since the end of the year

Information relating to events since the end of the year is given in the notes to the financial statements.

On behalf of the board:

D Broadhurst - Director

27 September 2021

The directors present their report with the financial statements of the company for the year ended 31 December 2020.

Principal activity

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

Dividends

The total distribution of dividends for the year ended 31 December 2020 will be £ 500,000 .

Directors

The directors shown below have held office during the whole of the period from 1 January 2020 to the date of this report.

D Broadhurst

S Broadhurst

Financial instruments

Credit risk

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

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

Political donations

No political donations were made in 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

In accordance with section 485 of the Companies Act 2006, a resolution proposing that Haines Watts Birmingham LLP be re-appointed as auditor will be put to the Annual General Meeting.

On behalf of the board:

D Broadhurst - Director

27 September 2021

Opinion

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

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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We obtained an understanding of the legal and regulatory framework applicable to both the company itself and the industry in which it operates. We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with the director and other management. The most significant were identified as the Companies Act 2006, FRS102 and relevant tax legislation.

Whilst our audit did not identify any significant matters relating to the detection of irregularities including fraud, and despite the audit being planned and conducted in accordance with ISAs (UK), there remains an unavoidable risk that material misstatements in the financial statements may not be detected owing to inherent limitations of the audit, and that by their very nature, any such instances of fraud or irregularity would likely involve collusion, forgery, intentional misrepresentations, or the override of internal controls.

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.

Lee Meredith ACA (Senior Statutory Auditor)

for and on behalf of Haines Watts Birmingham LLP

5-6 Greenfield Crescent

Edgbaston

Birmingham

B15 3BE

27 September 2021

Turnover

3

18,274,201

15,137,380

Cost of sales

(15,449,868

)

(13,228,751

)

Gross profit

2,824,333

1,908,629

Distribution costs

(221,702

)

(118,716

)

Administrative expenses

(1,743,216

)

(1,932,773

)

859,415

(142,860

)

Other operating income

4

1,122,190

724,080

Operating profit

6

1,981,605

581,220

Income from fixed asset investments

6,718

13,152

Interest receivable and similar income

7

9,582

28,541

Profit before taxation

1,997,905

622,913

Tax on profit

8

(385,382

)

(131,841

)

Profit for the financial year

1,612,523

491,072

Profit for the year

1,612,523

491,072

Other comprehensive income

-

-

Total comprehensive income for the year

1,612,523

491,072

Fixed assets

Tangible assets

10

3,324,239

3,313,983

Investment property

11

16,898,162

16,545,000

20,222,401

19,858,983

Current assets

Stocks

12

3,488,906

6,636,401

Debtors

13

8,527,869

5,522,758

Investments

14

206,847

206,847

Cash at bank and in hand

10,009,395

9,426,097

22,233,017

21,792,103

Creditors

Amounts falling due within one year

15

2,352,258

2,670,062

Net current assets

19,880,759

19,122,041

Total assets less current liabilities

40,103,160

38,981,024

Provisions for liabilities

19

2,337,598

2,327,985

Net assets

37,765,562

36,653,039

Capital and reserves

Called up share capital

20

68

68

Revaluation reserve

21

2,274,514

2,274,514

Capital redemption reserve

21

34

34

Retained earnings

21

35,490,946

34,378,423

Shareholders' funds

37,765,562

36,653,039

The financial statements were approved by the Board of Directors and authorised for issue on 27 September 2021 and were signed on its behalf by:

D Broadhurst - Director

Called up

Capital

share

Retained

Revaluation

redemption

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 January 2019

68

33,887,351

2,274,514

34

36,161,967

Changes in equity

Total comprehensive income

-

491,072

-

-

491,072

Balance at 31 December 2019

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

Cash flows from operating activities

Cash generated from operations

1

1,267,014

2,305,594

Tax paid

-

(250,000

)

Net cash from operating activities

1,267,014

2,055,594

Cash flows from investing activities

Purchase of tangible fixed assets

(89,950

)

-

Purchase of investment property

(353,162

)

-

Sale of tangible fixed assets

-

11,000

Interest received

9,582

28,541

Dividends received

6,718

13,152

Net cash from investing activities

(426,812

)

52,693

Cash flows from financing activities

Amount introduced by directors

500,000

-

Amount withdrawn by directors

(373,374

)

(918,101

)

Equity dividends paid

(500,000

)

-

Net cash from financing activities

(373,374

)

(918,101

)

Increase in cash and cash equivalents

466,828

1,190,186

Cash and cash equivalents at beginning of year

2

9,426,097

8,235,911

Cash and cash equivalents at end of year

2

9,892,925

9,426,097

1.	Reconciliation of profit before taxation to cash generated from operations

2020

2019

£

£

Profit before taxation

1,997,905

622,913

Depreciation charges

79,694

91,410

Profit on disposal of fixed assets

-

(9,108

)

Finance income

(16,300

)

(41,693

)

2,061,299

663,522

Decrease/(increase) in stocks

3,147,495

(969,177

)

(Increase)/decrease in trade and other debtors

(2,889,848

)

1,479,415

(Decrease)/increase in trade and other creditors

(1,051,932

)

1,131,834

Cash generated from operations

1,267,014

2,305,594

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 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

Year ended 31 December 2019

31/12/19

1/1/19

£

£

Cash and cash equivalents

9,426,097

8,235,911

3.	Analysis of changes in net funds

At 1/1/20

Cash flow

At 31/12/20

£

£

£

Net cash

Cash at bank and in hand

9,426,097

583,298

10,009,395

Bank overdrafts

-

(116,470

)

(116,470

)

9,426,097

466,828

9,892,925

Liquid resources

Current asset investments

206,847

-

206,847

206,847

-

206,847

Total

9,632,944

466,828

10,099,772

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.

Going concern

At the time of approval of these financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. In making this assessment the directors are required to consider a period of at least 12 months from the date of approval of the financial statements.

The impact of COVID-19

In response to the COVID-19 pandemic, the drectors have further considered their cash flow projections to take into account the impact on the business of possible scenarios brought on by the impact of COVID-19, alongside the measures that they can take to mitigate the impact. Based on these assessments, and given the measures that could be taken to mitigate the current adverse conditions, together with the current resources available, the directors have concluded that they can continue to adopt the going concern basis in preparing the financial statements.

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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Asset valuation

Asset impairment reviews and calculations require the exercise of judgement by the directors which may include references to market conditions, general economic conditions and recent trends in the business.

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

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold property

1% straight line

Plant and machinery

10% reducing balance

Fixtures and fittings

20% on cost

Motor vehicles

25% 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.

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:

2020

2019

£

£

Steel sales

18,274,201

15,137,380

18,274,201

15,137,380

An analysis of turnover by geographical market is given below:

2020

2019

£

£

United Kingdom

18,274,201

15,011,886

Europe

-

125,494

18,274,201

15,137,380

4.	Other operating income

2020

2019

£

£

Rents received

988,817

724,080

Sundry receipts

133,373

-

1,122,190

724,080

5.	Employees and directors

2020

2019

£

£

Wages and salaries

509,067

890,137

Social security costs

60,777

114,578

Other pension costs

8,528

9,129

578,372

1,013,844

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

2020

2019

Directors

2

2

Direct labour

5

4

Sales

3

3

Administration

3

4

13

13

2020

2019

£

£

Directors' remuneration

80,249

423,027

Directors' pension contributions to money purchase schemes

109

750

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

Money purchase schemes

1

1

6.	Operating profit

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

2020

2019

£

£

Other operating leases

30,197

27,251

Depreciation - owned assets

79,694

91,410

Profit on disposal of fixed assets

-

(9,108

)

Auditors' remuneration

9,000

16,650

Stock impairment write off (back)

82,599

(124,078

)

7.

Interest receivable and similar income

2020

2019

£

£

Deposit account interest

9,582

28,541

8.

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

375,769

139,426

Deferred tax

9,613

(7,585

)

Tax on profit

385,382

131,841

UK corporation tax has been charged at 19% .

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:

2020

2019

£

£

Profit before tax

1,997,905

622,913

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

379,602

118,353

Effects of:

Expenses not deductible for tax purposes

1,176

10,107

Income not taxable for tax purposes

(1,276

)

(2,499

)

Depreciation on assets not qualifying for capital allowances

5,880

5,880

Total tax charge

385,382

131,841

9.

Dividends

2020

2019

£

£

Interim

500,000

-