Megasteel Ltd - Limited company accounts 22.3

REGISTERED NUMBER: 02665353 (England and Wales)

for

Page

Company Information  

1

Group Strategic Report  

2

Report of the Directors  

5

Report of the Independent Auditors  

6

Consolidated Statement of Profit or Loss  

9

Consolidated Statement of Profit or Loss and Other

Comprehensive Income

10

Consolidated Statement of Financial Position  

11

Company Statement of Financial Position  

12

Consolidated Statement of Changes in Equity  

13

Company Statement of Changes in Equity  

14

Consolidated Statement of Cash Flows  

15

Notes to the Consolidated Financial Statements

16

Reconciliation of Equity  

34

Reconciliation of Profit  

36

DIRECTORS:

N G Roberts

Mrs B B Roberts

REGISTERED OFFICE:

Rodbourne Rail Business Centre

Grange Lane

Malmesbury

Wiltshire

SN16 0ES

REGISTERED NUMBER:

02665353 (England and Wales)

The directors present their strategic report of the company and the group for the year ended 31 October 2022.

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. In addition, our subsidiary engineering company Sweetnam and Bradley Ltd based in Malmesbury is a sheet metal fabrication and finishing business suppling high quality engineered steel and other metal product to their customers mostly based in the UK.

Megasteel remains one of the leading suppliers of prestressing wire and strand in the UK. The company remains financially strong with substantial cash resources. The business has had an excellent year with record turnover and profits and significant cash generation.

During the year the company performed strongly and made a record profit of £6.58m (2021 - £3.21m) before tax and dividends. The company has net assets of £15.42m (2021 - £10.57m).

In my strategic report last year, I forecast that there would be 180,000 new houses built in 2021, in the end this was a small overestimate with the actual number of new housing starts coming in at 175,390 - this was an increase of 44% over 2020. For 2022 my estimate of the new housing starts is about 180,000 as I believe that the market has remained fairly stable - but this is still well below the 300,000 a year government target.

It would seem that the Government is now 'watering down' its targets and the housing secretary has told councils that while housing targets remain, they are a "starting point", with new flexibilities to "reflect local circumstances". Michael Gove said: "If we are to deliver the new homes this country needs, new development must have the support of local communities. That requires people to know it will be beautiful, accompanied by the right infrastructure, approved democratically, that it will enhance the environment and create proper neighbourhoods."

While we all want local democracy and housebuilding to reflect local circumstances it is clear that while everyone will agree we need more houses, they will also agree that they want them in "someone else's" back garden and not their own. This will not help hard pressed (and mostly young) people to get on the housing ladder. The number of new houses built in the UK is still less than half of the number of houses that are built in France, a country with a similar population to the UK, which managed to build in excess of 400,000 houses in 2021. We often wonder why house prices are cheaper in France that the UK - there is the answer! We need more supply!

The UK simply has to build more houses in the future to satisfy the need and I am sure that more houses will be built, but it is very unfair on the average first time buyer in the UK that they do not have more choice and lower prices when compared to their French counterparts and we continue to urge that the UK government puts in place a much more favourable planning environment.

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 continue to receive very positive feedback. We will make sure we maintain the very high levels of service that we provide.

We were very pleased that in 2022 Megasteel became CARES approved for our supplies of prestressing wire and strand - CARES is the world's leading independent provider of assured certification for the constructional steels industry and having CARES approval is a great accoladed for the Megasteel business. For more information see https://www.carescertification.com/

In November 2022, after the year end, we completed the purchase of a warehouse on Ransoms Industrial Park in Ipswich. This warehouse has approximately 44,000 square feet of covered storage and sits on a 2-acre site. It will take a while to get this warehouse up and running but the intention is that we will consolidate all of our stockholding activities into this site and in the long run this will help us to reduce costs and improve our service levels even further.

Megasteel remains 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 over 30 years. The continued disruption to travel caused by the COVID pandemic means that we have still not been able to visit our suppliers but we have adapted to the new world situation and our communication and relationship with our most important suppliers remains excellent.

Our Engineering business Sweetnam and Bradley Ltd has extended its contribution during the year to the growth of the group. The management team of S&B has now fully integrated quoting and capacity management I.T. systems into the business. With these, they are able to better understand their costs, increase profitability and enable effective capacity management.

Whilst continuing to grow and explore new customers and markets, S&B have invested in plant and people, with the in-house spray shop refurbishment project of particular note.

All of the markets and customers that S&B are selling to are doing well, particularly London Underground who have benefitted from government grants in order to further improve their aging infrastructure and Siemens Rail, who's orders with S&B are being used on the HS2 project.

The strengthened relationships with our customers and suppliers alike have resulted in two corporate videos being commissioned in the last year, featuring the S&B team. One by Siemens documents in detail the fantastic relationship they have with S&B and how the two businesses interact on a day-to-day basis. The other by IMSM (an ISO 9001 accreditation and support business) recounts how they were able to work with the S&B Team to 'declutter' their ISO system and bring it up to date. All of the S&B team have worked incredibly hard this year to increase the company's profile and this is now starting to happen.

Sweetnam and Bradley have prospered under the Megasteel ownership and has grown both sales and profits in the past year. I am pleased that all of the targets we set of the business on acquisition 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.

On Friday 23rd September we were pleased to announce the planned reverse takeover (RTO) of the London Stock Market listed company, More Acquisitions PLC.

Trading in More Acquisitions PLC (TMOR) was suspended at 7.30am on the 23rd of September 2022 - The Proposed Acquisition remains subject, amongst other things, to completion of customary due diligence and so there is no certainty that the Proposed Acquisition will proceed.

If the proposed acquisition is completed it will constitute a reverse takeover under the Listing Rules. More Acquisitions intends, as soon as practicable, to publish a prospectus and to make an application for the Company, as enlarged by the Proposed Acquisition, to have its Ordinary Shares admitted to the Official List and to trading on the Main Market for listed securities on the London Stock Exchange. This is a REVERSE TAKOEVER under the listing rules and, when completed, the current shareholders of Megasteel Ltd will own 85-90% of More Acquisitions PLC.

This is not the end of the Megasteel journey but the start of an exciting new one. We are actively pursuing a number of acquisition opportunities which we hope to complete soon after we re-list More on the LSE - assuming the deal goes through.

For the Megasteel business nothing will change except that we will be a public limited company with a listing on the main market of the London Stock Exchange, which will bring lots of opportunities for our business in the future. The interests of the directors and existing shareholders of Megasteel will be fully aligned with the investors in More Acquisitions PLC and we look forward to the future with excitement and pride!

As Megasteel enters its 31st year as a company we believe that the next financial year 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 websites 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!

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

2022

2021

Turnover (£)

30,016,331

19,778,523

Gross profit margin (%)

25.5%

20.9%

Profit before tax (£)

6,584,470

3,211,811

ON BEHALF OF THE BOARD:

N G Roberts - Director

10 February 2023

The directors present their report with the financial statements of the company and the group for the year ended 31 October 2022.

DIVIDENDS

The total distribution of dividends for the year ended 31 October 2022 will be £ 500,000 .

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.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 November 2021 to the date of this report.

N G Roberts

Mrs B B Roberts

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 UK-adopted international accounting standards. 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,  Monahans, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

N G Roberts - Director

10 February 2023

Opinion

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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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.

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.

David Iain Black (Senior Statutory Auditor)

for and on behalf of Monahans

Statutory Auditor

Chartered Accountants

14a Forest Gate

Pewsham

Chippenham

Wiltshire

SN15 3RS

10 February 2023

CONTINUING OPERATIONS

Revenue

3

30,016,330

19,778,524

Cost of sales

(22,361,396

)

(15,637,321

)

GROSS PROFIT

7,654,934

4,141,203

Other operating income

-

17,758

Administrative expenses

(1,057,249

)

(932,344

)

OPERATING PROFIT

6,597,685

3,226,617

Finance costs

5

(13,578

)

(15,477

)

Finance income

5

363

672

PROFIT BEFORE INCOME TAX

6

6,584,470

3,211,812

Income tax

7

(1,240,617

)

(603,224

)

PROFIT FOR THE YEAR

5,343,853

2,608,588

Profit attributable to:

Owners of the parent

5,343,853

2,608,588

PROFIT FOR THE YEAR

5,343,853

2,608,588

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR

THE YEAR

5,343,853

2,608,588

Total comprehensive income attributable to:

Owners of the parent

5,343,853

2,608,588

ASSETS

NON-CURRENT ASSETS

Goodwill

10

2,211,771

2,136,571

Owned

Intangible assets

11

21,490

14,185

Property, plant and equipment

12

506,837

386,468

Right-of-use

Property, plant and equipment

12, 21

493,723

564,255

Investments

13

-

-

3,233,821

3,101,479

CURRENT ASSETS

Inventories

14

8,540,243

4,896,959

Trade and other receivables

15

4,392,775

3,891,343

Cash and cash equivalents

16

9,968,227

5,298,610

22,901,245

14,086,912

TOTAL ASSETS

26,135,066

17,188,391

EQUITY

SHAREHOLDERS' EQUITY

Called up share capital

17

100

100

Retained earnings

18

15,415,212

10,571,360

TOTAL EQUITY

15,415,312

10,571,460

LIABILITIES

NON-CURRENT LIABILITIES

Financial liabilities - borrowings

Interest bearing loans and borrowings

20

447,596

515,964

Deferred tax

23

127,312

69,516

574,908

585,480

CURRENT LIABILITIES

Trade and other payables

19

9,168,154

5,357,037

Financial liabilities - borrowings

Interest bearing loans and borrowings

20

68,368

66,701

Tax payable

908,324

607,713

10,144,846

6,031,451

TOTAL LIABILITIES

10,719,754

6,616,931

TOTAL EQUITY AND LIABILITIES

26,135,066

17,188,391

The financial statements were approved by the Board of Directors and authorised for issue on 10 February 2023 and were signed on its behalf by:

N G Roberts - Director

ASSETS

NON-CURRENT ASSETS

Goodwill

10

986,090

986,090

Owned

Intangible assets

11

-

-

Property, plant and equipment

12

-

7,993

Right-of-use

Investments

13

2,601,575

2,526,375

3,587,665

3,520,458

CURRENT ASSETS

Inventories

14

8,278,560

4,686,194

Trade and other receivables

15

3,846,214

3,522,105

Cash and cash equivalents

16

8,484,385

4,260,856

20,609,159

12,469,155

TOTAL ASSETS

24,196,824

15,989,613

EQUITY

SHAREHOLDERS' EQUITY

Called up share capital

17

100

100

Retained earnings

18

14,570,451

10,555,358

TOTAL EQUITY

14,570,551

10,555,458

LIABILITIES

CURRENT LIABILITIES

Trade and other payables

19

8,835,223

4,924,671

Tax payable

791,050

509,484

9,626,273

5,434,155

TOTAL LIABILITIES

9,626,273

5,434,155

TOTAL EQUITY AND LIABILITIES

24,196,824

15,989,613

The financial statements were approved by the Board of Directors and authorised for issue on 10 February 2023 and were signed on its behalf by:

N G Roberts - Director

Called up

share

Retained

Total

capital

earnings

equity

£   

£   

£   

Balance at 1 November 2020

100

9,462,772

9,462,872

Changes in equity

Dividends

-

(1,500,000

)

(1,500,000

)

Total comprehensive income

-

2,608,588

2,608,588

Balance at 31 October 2021

100

10,571,360

10,571,460

Changes in equity

Dividends

-

(500,000

)

(500,000

)

Total comprehensive income

-

5,343,853

5,343,853

Balance at 31 October 2022

100

15,415,213

15,415,313

Called up

share

Retained

Total

capital

earnings

equity

£   

£   

£   

Balance at 1 November 2020

100

9,910,563

9,910,663

Changes in equity