Eggleston Steel Limited - Limited company accounts 23.2

REGISTERED NUMBER: 00797154 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 30 April 2023

for

Eggleston Steel Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Profit and Loss Account

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Financial Statements

12

DIRECTORS:

A W J Hewitt

Mrs A E Hewitt

R J Hewitt

Mrs P E Broadgate

A C Hewitt

Mrs S Hewitt

J A Ready

SECRETARY:

Mrs S Hewitt

REGISTERED OFFICE:

The Mills

Canal Street

Derby

DE1 2RJ

BUSINESS ADDRESS:

Centurion Way Business Park

Alfreton Road

Derby

DE21 4AY

REGISTERED NUMBER:

00797154 (England and Wales)

AUDITORS:

Bates Weston Audit Ltd

Statutory Auditors

Chartered Accountants

The Mills

Canal Street

Derby

DE1 2RJ

The directors present their strategic report for the year ended 30 April 2023.

REVIEW OF BUSINESS

Turnover has increased by 4.7% from £13.0m to £13.6m, due to significant increases in steel prices. The directors' strategy is focusing on high levels of customer service which is continuing to generate repeat business. Profiling income has increased by 11.9% from 2022 (2022: 50.4% increase from 2021). The increase in profiling capabilities continues to attract customers to the company.

The gross profit margin has decreased by 2.6% to 26.4% (2022: 29.0%). The company operates in a highly competitive industry and customers are constantly demanding better prices due to their awareness of changes in the commodity price of steel in the media. The profiling division attracts higher margins; however, this has been partly offset against fluctuating commodity prices.

The company is continually investing in its staff, plant and machinery in order to maintain its efficiencies and competitiveness. During the year, we had encountered numerous technical difficulties with both our flatbed lasers and as a result we suffered long periods with only one functioning machine. Due to the impact this had on our ability to provide the level of service our customers expect, we took the decision to remove both LVD Lasers two years earlier than planned and replace then with two new Trumpf machines. This was the conclusion having considered all options and knowing it would affect our balance sheet.

The directors are satisfied with the year-end financial position in the current economic climate.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the company and the execution of the company's strategy are subject to several risks. The company continues to face challenges from global steel price fluctuations as a result of Brexit and tight margins on sales. Steel prices are monitored by the directors with any necessary action undertaken.

ORGANISATION

The directors continue to monitor the company's organisation and profitability in light of changes within a highly competitive industry. Changes are implemented where deemed appropriate in order to minimise the effects of the risks and uncertainties the company faces in retaining market share and maintaining margins.

FINANCIAL INSTRUMENTS

The company uses basic financial instruments, comprising hire purchase and banking facilities. The main purpose of the financial instruments is to provide working capital and finance for the company's operations and improvements.

KEY PERFORMANCE INDICATORS

Performance is measured by debtor days, sales margins by customer and bank balance. The company also feels it key to monitor costs against income. These costs are monitored through the review of the monthly management accounts.

ON BEHALF OF THE BOARD:

R J Hewitt - Director

8 November 2023

The directors present their report with the financial statements of the company for the year ended 30 April 2023.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of a steel service centre with related processing services.

DIVIDENDS

Interim dividends per share were paid during the year as follows:

A Ordinary £1

-

£32.45614

B Ordinary £1

-

£6.66667

The total distribution of dividends for the year ended 30 April 2023 will be £ 200,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 May 2022 to the date of this report.

A W J Hewitt

Mrs A E Hewitt

R J Hewitt

Mrs P E Broadgate

A C Hewitt

Mrs S Hewitt

J A Ready

DISCLOSURE IN THE STRATEGIC REPORT

The matters required to be disclosed under SI (2008) 410 Sch 7 relating to financial instruments are contained within the Strategic Report as applicable in accordance with s414C(11) of the Companies Act 2006.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

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

ON BEHALF OF THE BOARD:

R J Hewitt - Director

8 November 2023

Opinion

We have audited the financial statements of Eggleston Steel Limited (the 'company') for the year ended 30 April 2023 which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, 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 company's affairs as at 30 April 2023 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

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

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

Other information

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

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

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

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

Based on our understanding of the company and industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to the steel industry and we considered the extent to which non-compliance might have a material effect on the financial statements. 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. Audit procedures performed by the engagement team included:

-

Enquiry of management around actual and potential litigation and claims;

-

Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

-

Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias;

-

Reviewing minutes of meetings of those charged with governance.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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.

Ian Neal FCA CTA (Senior Statutory Auditor)

for and on behalf of Bates Weston Audit Ltd

Statutory Auditors

Chartered Accountants

The Mills

Canal Street

Derby

DE1 2RJ

20 December 2023

TURNOVER

13,606,229

12,996,110

Cost of sales

10,019,512

9,225,936

GROSS PROFIT

3,586,717

3,770,174

Distribution costs

14,337

16,409

Administrative expenses

2,592,512

1,916,468

2,606,849

1,932,877

979,868

1,837,297

Other operating income

801

29,260

OPERATING PROFIT

4

980,669

1,866,557

Interest receivable and similar income

1,657

63

982,326

1,866,620

Interest payable and similar expenses

5

141,978

131,665

PROFIT BEFORE TAXATION

840,348

1,734,955

Tax on profit

6

244,928

334,460

PROFIT FOR THE FINANCIAL YEAR

595,420

1,400,495

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

595,420

1,400,495

FIXED ASSETS

Tangible assets

8

4,354,768

3,380,763

CURRENT ASSETS

Stocks

9

1,113,856

1,452,772

Debtors

10

2,586,076

2,896,027

Cash at bank and in hand

560,173

653,080

4,260,105

5,001,879

CREDITORS

Amounts falling due within one year

11

2,206,378

3,126,837

NET CURRENT ASSETS

2,053,727

1,875,042

TOTAL ASSETS LESS CURRENT LIABILITIES

6,408,495

5,255,805

CREDITORS

Amounts falling due after more than one year

12

(2,232,794

)

(1,721,103

)

PROVISIONS FOR LIABILITIES

16

(569,675

)

(324,096

)

NET ASSETS

3,606,026

3,210,606

CAPITAL AND RESERVES

Called up share capital

17

26,000

26,000

Retained earnings

18

3,580,026

3,184,606

SHAREHOLDERS' FUNDS

3,606,026

3,210,606

The financial statements were approved by the Board of Directors and authorised for issue on 8 November 2023 and were signed on its behalf by:

R J Hewitt - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 May 2021

26,000

2,013,611

2,039,611

Changes in equity

Dividends

-

(229,500

)

(229,500

)

Total comprehensive income

-

1,400,495

1,400,495

Balance at 30 April 2022

26,000

3,184,606

3,210,606

Changes in equity

Dividends

-

(200,000

)

(200,000

)

Total comprehensive income

-

595,420

595,420

Balance at 30 April 2023

26,000

3,580,026

3,606,026

Cash flows from operating activities

Cash generated from operations

20

1,650,380

1,488,080

Interest paid

(61,990

)

(57,054

)

Interest element of hire purchase payments paid

(79,988

)

(74,704

)

Tax paid

(307,433

)

-

Net cash from operating activities

1,200,969

1,356,322

Cash flows from investing activities

Purchase of tangible fixed assets

(498,364

)

(191,305

)

Sale of tangible fixed assets

22,132

19,843

Interest received

1,657

63

Net cash from investing activities

(474,575

)

(171,399

)

Cash flows from financing activities

Loan repayments in year

(42,207

)

(44,402

)

Finance repayments in year

(577,214

)

(186,730

)

Amount introduced by directors

120

243

Equity dividends paid

(200,000

)

(229,500

)

Net cash from financing activities

(819,301

)

(460,389

)

(Decrease)/increase in cash and cash equivalents

(92,907

)

724,534

Cash and cash equivalents at beginning of year

21

653,080

(71,454

)

Cash and cash equivalents at end of year

21

560,173

653,080

1.	STATUTORY INFORMATION

Eggleston Steel 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.

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.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes for the provision of goods and services. Turnover is recognised when the company has transferred the significant risks and rewards of ownership to the buyer and it is probable that the company will receive the previously agreed upon payment. These criteria are considered to be met when the goods and services are delivered to the buyer.

Tangible fixed assets

Tangible fixed assets are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter:

Freehold property

- 2% on cost

Plant and machinery

- 15% on reducing balance

Fixtures and fittings

- 20% on reducing balance

Motor vehicles

- 25% on reducing balance

Computer equipment

- 33% on reducing balance

Freehold land is not depreciated.

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. The depreciation policy for some plant and machinery has been amended in line with the assets revised useful life. This has resulted in a decrease in assets and increase in expenses for the period of £324,907.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 'administrative expenses' in the profit and loss account.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for unsaleable and slow moving items. Cost is determined on a first in first out basis using purchase invoice price. Net realisable value is based on the estimated selling price less further costs expected to be incurred to completion and disposal.

At each reporting date, stock is assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the profit and loss account.

Deferred tax

Deferred tax arises from timing differences that are differences between taxable total profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

A deferred tax asset is recognised only when it is more likely than not that there will be suitable taxable profits from which the future reversal of underlying timing differences and losses can be deducted.

Provision is made at current rates for taxation deferred in respect of all material timing differences.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to the profit and loss account over the relevant period using the effective rate of interest. The capital element of the future payments is treated as a liability.

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

Pension costs and other post-retirement benefits

The company operates defined contribution plans for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payments obligations. The contributions are recognised as an expense when they fall due. Amounts not paid are shown in accruals in the balance sheet. The assets of the plans are held separately from the company in independently administered funds.

Grants

Revenue grants are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate. Capital grants are deferred and recognised over the useful economic lives of the assets affected.

Judgements in applying accounting policies and key sources of estimation uncertainty

In the application of the company's accounting policies the directors are required to make judgement estimates and assumptions about the carrying amounts of the company's assets and liabilities. These are based on historical experience and other factors that are considered relevant and are reviewed on a regular basis and recognised in the period in which the estimate is revised. Actual results may differ from these estimates.

The following are the critical judgements and where relevant the key sources of estimation uncertainty:

Tangible fixed assets are depreciated over their useful economic lives taking into account their residual values where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing the asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual values consider such things as future market conditions, the remaining life of the asset and projected disposal values.

The recoverability of debtors is assessed on the likelihood and circumstances of the particular cost.

The value of stock is assessed for impairment. In reassessing the stock value, factors such as slow movement and saleability are taken into account.

3.	EMPLOYEES AND DIRECTORS

2023

2022

£

£

Wages and salaries

1,749,181

1,510,931

Social security costs

171,464

142,408

Other pension costs

120,683

121,803

2,041,328

1,775,142

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

2023

2022

Directors

7

7

Warehouse

27

26

Drivers

3

4

Administration

15

13

52

50

2023

2022

£

£

Directors' remuneration

118,836

125,894

Directors' pension contributions to money purchase schemes

48,300

56,094

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

Money purchase schemes

4

4

4.	OPERATING PROFIT

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

2023

2022

£

£

Rent operating lease payments

90,000

90,000

Depreciation - owned assets

99,119

78,447

Depreciation - assets on hire purchase contracts

616,460

267,092

(Profit)/loss on disposal of fixed assets

(2,726

)

7,019

Auditors' remuneration

9,500

8,400

Auditors' remuneration for non audit work

15,230

14,984

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2023

2022

£

£

Bank charges and interest

61,990

49,984

Hire purchase interest

75,539

74,704

Other interest

4,449

6,977

141,978

131,665

6.

TAXATION

Analysis of the tax charge

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

2023

2022

£

£

Current tax:

UK corporation tax

-

363,000

Adjustment re prior year

(651

)

-

Total current tax

(651

)

363,000

Deferred tax

245,579

(28,540

)

Tax on profit

244,928

334,460

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:

2023

2022

£

£

Profit before tax

840,348

1,734,955

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2022 - 19%)

159,666

329,641

Effects of:

Expenses not deductible for tax purposes

5,270

1,555

Income not taxable for tax purposes

(152

)

(179

)

Adjustments to tax charge in respect of previous periods

(651

)

-

Other permanent differences

80,795

3,443

Total tax charge

244,928

334,460

7.

DIVIDENDS

2023

2022

£

£

A Ordinary shares of £1 each

Interim

185,000

214,500

B Ordinary shares of £1 each

Interim

15,000

15,000

200,000

229,500

8.	TANGIBLE FIXED ASSETS

Fixtures

Freehold

Plant and

and

property

machinery

fittings

£

£

£

COST

At 1 May 2022

2,138,261

3,082,391

195,629

Additions

288,209

1,215,862

58,043

Disposals

-

(25,000

)

-

At 30 April 2023

2,426,470

4,273,253

253,672

DEPRECIATION

At 1 May 2022

556,546

1,436,793

165,629

Charge for year

38,800

607,835

10,998

Eliminated on disposal

-

(22,861

)

-

At 30 April 2023

595,346

2,021,767

176,627

NET BOOK VALUE

At 30 April 2023

1,831,124

2,251,486

77,045

At 30 April 2022

1,581,715

1,645,598

30,000

Motor

Computer

vehicles

equipment

Totals

£

£

£

COST

At 1 May 2022

129,582

96,147

5,642,010

Additions

146,875

-

1,708,989

Disposals

(21,250

)

-

(46,250

)

At 30 April 2023

255,207

96,147

7,304,749

DEPRECIATION

At 1 May 2022

16,542

85,737

2,261,247

Charge for year

54,511

3,435

715,579

Eliminated on disposal

(3,984

)

-

(26,845

)

At 30 April 2023

67,069

89,172

2,949,981

NET BOOK VALUE

At 30 April 2023

188,138

6,975

4,354,768

At 30 April 2022

113,040

10,410

3,380,763

Included in cost of land and buildings is freehold land of £ 360,000 (2022 - £ 360,000 ) which is not depreciated.

The net book value of tangible fixed assets includes £ 2,024,526 (2022 - £ 1,549,801 ) in respect of assets held under hire purchase contracts.

9.

STOCKS

2023

2022

£

£

Goods for resale

1,113,856

1,452,772