Steelstrip Holdings Limited - Limited company accounts 23.2

REGISTERED NUMBER: 13892530 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD

3RD FEBRUARY 2022 TO 31ST MARCH 2023

FOR

STEELSTRIP HOLDINGS LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

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 Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

Mr D Macready

Mrs S J Ostins

Mr S J Dickens

Mr R W Burton

REGISTERED OFFICE:

Pensnett Road

Dudley

United Kingdom

DY1 2HA

REGISTERED NUMBER:

13892530 (England and Wales)

AUDITORS:

Stanton Ralph & Co Limited

Chartered Accountants

Statutory Auditor

The Old Police Station

Whitburn Street

Bridgnorth

Shropshire

WV16 4QP

The directors present their strategic report of the company and the group for the period 3rd February 2022 to 31st March 2023.

REVIEW OF BUSINESS

On 7 April 2022 the company acquired the entire share capital of Servosteel Holdings Limited, and in doing so acquired 100% of the voting rights of Steelstrip Services Limited, a company owned by Servosteel Holdings Limited.The business combination has been accounted for under the acquisition method and the results presented in the financial statements reflect the consolidated performance of the group subsequent to the acquisition date.

Subsequent to the acquisition there have been no significant changes to the trade of Steelstrip Services Limited and the directors consider the impact of the first 7 days of Steelstrip Services Limited's trade to be immaterial. As a result the business review below compares the amounts recorded in these financial statements, to amounts presented in the consolidated financial statements of Servosteel Holdings Limited in the previous year.

The financial year started positively and continued the trend of improved financial performance which the business had seen during the prior year to 31st March 2022.

The demand for the core Toll area of the business remained consistent throughout the financial year and work continued to both strengthen and secure Gross Profitability, particularly within this area by addressing price points which were out of line with current market rates and focusing attentions on reducing unnecessary expenditure. This saw an increase in Gross Margin from 51.5% for the prior financial year to 55.2% during the current year.

During the first quarter of the financial year, steel prices, which had been rising continually throughout the prior year, began to reduce significantly. Due to this, the Steel Sales area of the business started to see weakened demand for call-off orders and, in some instances, meant that back-to-back customers stretched out existing call-off orders over longer periods than usual. This resulted in a reduction of turnover to £9,348,705 when compared to the prior financial year value of £15,390,689, however increasing Gross Profitability by 1.5%.

The Laser division remained steady and continued to develop it's customer base, maintaining turnover compared with the prior year (2023: £2,597,567, 2022: - £2,597,977).

Whilst the UK economy continued to experience significant cost increases with inflation reaching 8.9% by the end of the financial year, and with world steel prices continuing to fall, the work undertaken to strengthen and maintain Gross Profitability of the core of the business activity has ensured that the company continues to perform steadily, in line with targets set for the first quarter in financial year 2024.

KEY PERFORMANCE INDICATORS

In line with the business review above, key performance indicators have been compared to those per the consolidated financial statements of Servosteel Holdings Limited in the prior year. The directors believe this to be a reasonable comparison as there have been no significant changes to the group since the acquisition date.

The group processed 187,751 tonnes (2022: 190,310 tonnes) and sold 8,841 tonnes (2022: 15,446 tonnes).

Return on capital employed for the year was 55.1% (2022: 47.8%) after accounting for the adjustments required by Financial Reporting Standard 102. Return on capital is calculated as profit on ordinary activities before taxation divided by capital employed, which constitutes total assets less current liabilities, less cash plus overdraft and loans.

ON BEHALF OF THE BOARD:

Mrs S J Ostins - Director

19th December 2023

The directors present their report with the financial statements of the company and the group for the period 3rd February 2022 to 31st March 2023.

INCORPORATION

The group was incorporated on 3rd February 2022 and commenced trading on the same date.

DIVIDENDS

During the period dividends amounting to £322,384 were paid to the shareholders of the company.

DIRECTORS

The directors who have held office during the period from 3rd February 2022 to the date of this report are as follows:

Mr D Macready - appointed 3rd February 2022

Mrs S J Ostins - appointed 3rd February 2022

Mr S J Dickens - appointed 3rd February 2022

Mr R W Burton - appointed 3rd February 2022

All the directors who are eligible offer themselves for election at the forthcoming first Annual General Meeting.

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, Stanton Ralph & Co Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mrs S J Ostins - Director

19th December 2023

Opinion

We have audited the financial statements of Steelstrip Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31st March 2023 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 Consolidated 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 group's and of the parent company affairs as at 31st March 2023 and of the group's profit for the period 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.

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 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:

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures include the following:

- Enquiring of the directors and senior management.

- Discussing among the engagement team, including the tax team, how and where fraud might occur in

the financial statements.

- Obtaining an understanding of the legal and statutory framework that the company operates in. The key

laws and regulations we considered in this context include the Companies Act 2006, Tax Legislation

and Environmental and Health and Safety legislation.

Audit response to risks identified

As a result of performing the above we identified the occurrence of revenue as a significant risk at the assertion level.

In addition to the above, our procedures to respond to risks identified included the following:

- Reviewing the financial statement disclosures and testing to supporting documentation to assess

compliance with relevant laws and regulations as detailed above.

- Enquiring of management and the directors and external legal advisors concerning actual and potential

litigation and claims.

- Performing analytical procedures to identify any unusual or unexpected relationships that may indicate

risks of material misstatement due to fraud.

- Completing focused testing on revenue via a detailed review of a sample of documents supporting

revenue recorded during the year.

- In addressing the risk of fraud through management override of controls, reviewing the appropriateness

of journal entries and other adjustments, assessing whether the judgements made in making accounting

estimates are indicative of a potential bias and evaluating the business rationale of any significant

transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

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.

Darren Foot FCA (Senior Statutory Auditor)

for and on behalf of Stanton Ralph & Co Limited

Chartered Accountants

Statutory Auditor

The Old Police Station

Whitburn Street

Bridgnorth

Shropshire

WV16 4QP

19th December 2023

TURNOVER

3

20,074,335

Cost of sales

14,572,384

GROSS PROFIT

5,501,951

Administrative expenses

3,589,563

1,912,388

Other operating income

10,108

OPERATING PROFIT

5

1,922,496

Interest receivable and similar income

85

1,922,581

Interest payable and similar expenses

6

222,867

PROFIT BEFORE TAXATION

1,699,714

Tax on profit

7

347,985

PROFIT FOR THE FINANCIAL PERIOD

1,351,729

Profit attributable to:

Owners of the parent

1,351,729

PROFIT FOR THE PERIOD

1,351,729

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

1,351,729

Total comprehensive income attributable to:

Owners of the parent

1,351,729

FIXED ASSETS

Intangible assets

10

378,466

Tangible assets

11

2,024,186

Investments

12

-

2,402,652

CURRENT ASSETS

Stocks

13

675,911

Debtors

14

5,135,280

Cash at bank and in hand

9,555

5,820,746

CREDITORS

Amounts falling due within one year

15

5,568,125

NET CURRENT ASSETS

252,621

TOTAL ASSETS LESS CURRENT LIABILITIES

2,655,273

CREDITORS

Amounts falling due after more than one year

16

(1,353,275

)

PROVISIONS FOR LIABILITIES

20

(195,446

)

ACCRUALS AND DEFERRED INCOME

21

(2,743

)

NET ASSETS

1,103,809

CAPITAL AND RESERVES

Called up share capital

22

4

Share premium

74,460

Retained earnings

1,029,345

SHAREHOLDERS' FUNDS

1,103,809

The financial statements were approved by the Board of Directors and authorised for issue on 19th December 2023 and were signed on its behalf by:

Mr D Macready - Director

Mrs S J Ostins - Director

Mr S J Dickens - Director

Mr R W Burton - Director

FIXED ASSETS

Intangible assets

10

-

Tangible assets

11

-

Investments

12

2,410,301

2,410,301

CURRENT ASSETS

Debtors

14

654,562

Cash at bank

1,531

656,093

CREDITORS

Amounts falling due within one year

15

39,581

NET CURRENT ASSETS

616,512

TOTAL ASSETS LESS CURRENT LIABILITIES

3,026,813

CREDITORS

Amounts falling due after more than one year

16

2,310,856

NET ASSETS

715,957

CAPITAL AND RESERVES

Called up share capital

22

4

Share premium

74,460

Retained earnings

641,493

SHAREHOLDERS' FUNDS

715,957

Company's profit for the financial year

963,877

The financial statements were approved by the Board of Directors and authorised for issue on 19th December 2023 and were signed on its behalf by:

Mrs S J Ostins - Director

Mr D Macready - Director

Mr S J Dickens - Director

Mr R W Burton - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Changes in equity

Issue of share capital

4

-

74,460

74,464

Dividends

-

(322,384

)

-

(322,384

)

Total comprehensive income

-

1,351,729

-

1,351,729

Balance at 31st March 2023

4

1,029,345

74,460

1,103,809

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Changes in equity

Issue of share capital

4

-

74,460

74,464

Dividends

-

(322,384

)

-

(322,384

)

Total comprehensive income

-

963,877

-

963,877

Balance at 31st March 2023

4

641,493

74,460

715,957

Cash flows from operating activities

Cash generated from operations

1

4,337,041

Interest paid

(27,525

)

Interest element of hire purchase payments paid

(5,245

)

Tax paid

(1,141

)

Net cash from operating activities

4,303,130

Cash flows from investing activities

Purchase of tangible fixed assets

(856,772

)

Business combination

(1,668,395

)

Interest received

85

Net cash from investing activities

(2,525,082

)

Cash flows from financing activities

New loans in year

1,164,000

Loan repayments in year

(588,363

)

Net (repayment)/increase invoice factor

(1,941,750

)

Hire purchase repayments

(104,788

)

Proceeds from shares issued

74,464

Bank loan interest paid

(100,635

)

Invoice financing interest paid

(89,462

)

Shareholder loans issued

140,425

Equity dividends paid

(322,384

)

Net cash from financing activities

(1,768,493

)

Increase in cash and cash equivalents

9,555

Cash and cash equivalents at beginning of period

2

-

Cash and cash equivalents at end of period

2

9,555

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

£

Profit before taxation

1,699,714

Depreciation charges

599,677

Government grants

(674

)

Finance costs

222,867

Finance income

(85

)

2,521,499

Decrease in stocks

2,070,401

Decrease in trade and other debtors

1,109,201

Decrease in trade and other creditors

(1,364,060

)

Cash generated from operations

4,337,041

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:

Period ended 31st March 2023

31.3.23

3.2.22

£

£

Cash and cash equivalents

9,555

-

3.	ANALYSIS OF CHANGES IN NET DEBT

At 3.2.22

Cash flow

At 31.3.23

£

£

£

Net cash

Cash at bank and in hand

-

9,555

9,555

-

9,555

9,555

Debt

Finance leases

-

(40,488

)

(40,488

)

Debts falling due within 1 year

-

(468,959

)

(468,959

)

Debts falling due after 1 year

-

(1,353,275

)

(1,353,275

)

-

(1,862,722

)

(1,862,722

)

Total

-

(1,853,167

)

(1,853,167

)

1.	STATUTORY INFORMATION

Steelstrip Holdings 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 General 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.

The presentation currency of the financial statements is the Pound Sterling (£), rounded to the nearest £1.

Basis of consolidation

The group financial statements have been prepared under the provision of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and applicable accounting standards.

The consolidated financial statements incorporate the financial statements of the company and entities that continue to be controlled by the Group (its subsidiaries). Control exists where the Group has the power to govern the financial and operating policies of the entity; generally conferred by holding a majority of voting rights.

All intra-group balances, transactions, income and expenses are eliminated on consolidation. The consolidated accounts are prepared using uniform accounting policies.

Business combinations in the year have been accounted for using acquisition accounting in line with note 25.

Turnover

Turnover comprises revenue recognised by the group in respect of goods and services supplied, exclusive of Value Added Tax and trade discounts. Processed steel sales are recognised when the steel has been fully processed and completed. Direct steel sales are recognised on the date of despatch.

Other operating income

Other operating income includes rental income received which are recognised in the Income Statement over the period in which they are earned.

Financing transactions

Basic financial instruments are initially measured at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Under FRS 102, long term intercompany loans are recorded at present value using a market rate for a similar instrument.

Intangible fixed assets and amortisation

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.

Goodwill arising on consolidation is a result of the acquisition of a subsidiary undertaking at the start of the year. Negative goodwill in excess of the fair values of the non-monetary assets acquired has been recognised in the profit and loss account in the periods expected to be benefited.

Positive goodwill is the difference between amounts paid on the acquisition of a business and the fair value of the identifiable assets and liabilities. It has been amortised to the profit and loss account over its estimated useful life of ten years.

Tangible fixed assets

Tangible fixed assets are stated at cost less depreciation. Deprecation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases:

Improvements to leasehold property 10% straight line

Plant and machinery 10% - 33.3% straight line

Impairment of assets

At each reporting date fixed assets are reviewed to determine whether there is any indication that those assets 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 the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in the income statement.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in the prior years. A reversal of an impairment loss is recognised immediately in the income statement.

The directors have carried out an impairment review of the carrying value of the company's investment in its subsidiary undertaking at the year end and consider that the recoverable amount remains in excess of the carrying value.

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.

Grants of a revenue nature are recognised in the Statement of income and retained earnings in the same period as the related expenditure.

Stocks

Stocks are valued at the lower of cost, and net realisable value after making due allowances for obsolete and slow-moving stocks.

Cost is determined by reference to the purchase invoice cost. Net realisable value is based on estimated selling price, less further costs of realisation.

Taxation

Current tax represents the amount of tax payable or receivable in respect of the taxable profit (or loss) for the current or past reporting periods. It is measured at the amount expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax represents the future tax consequences of transactions and events recognised in the financial statements of current and previous periods. It is recognised in respect of all timing differences, with certain exceptions. Timing differences are differences between taxable profits and total comprehensive income as stated in the financial statements that arise from the inclusion of income and expense in tax assessments in periods different from those in which they are recognised in the financial statements. 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 is measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply to the reversal of timing differences.

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 period 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.

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 profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

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.

Operating leases

Rentals under leases are charged to the profit and loss account on a straight line basis over the lease term.

Group relief

The benefit of group relief is accounted for within the tax charge of the profit making undertaking. No payment is made for group relief between group undertakings.

Debtors and creditors receivable/payable within one year

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the income statement.

Loans and borrowings

Loans and borrowing are initially recognised at transaction price including transaction costs. Subsequently they are measured at amortised cost using the effective rate of interest method, less impairment. If an arrangement constitutes a financial transaction it is measured at present value.

3.

TURNOVER

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

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

£

Steel processing

8,253,462

Steel and other goods

11,820,873

20,074,335

4.	EMPLOYEES AND DIRECTORS

£

Wages and salaries

3,467,351

Social security costs

331,713

Other pension costs

120,240

3,919,304

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

Production

74

Administrative

19

Directors and management

6

99

£

Directors' remuneration

100,384

Directors' pension contributions to money purchase schemes

32,000

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

Money purchase schemes

4

5.	OPERATING PROFIT

The operating profit is stated after charging:

£

Depreciation - owned assets

501,429

Depreciation - assets on hire purchase contracts

56,196

Goodwill amortisation

42,052

Auditors' remuneration

28,018

Operating lease - rent

717,116

Operating lease - plant and machinery

26,096

Foreign exchange gain

2,867

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

£

Interest on discounting

89,462

Bank loan interest

100,635

Bank and discounting charges

27,525

Hire purchase

5,245

222,867