K Steels Limited - Limited company accounts 23.2

REGISTERED NUMBER: 02284684 (England and Wales)

K STEELS LIMITED

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2023

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

9

Statement of Financial Position

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTORS:

S Kay

J D Sudworth

P A Clark

L Kewley

R J Howarth

REGISTERED OFFICE:

Jubilee Works

Holme Lane

Rawtenstall

Rossendale

Lancashire

BB4 6JF

REGISTERED NUMBER:

02284684 (England and Wales)

AUDITORS:

DJH Mitten Clarke Audit Limited

Accountants

Statutory Auditors

The Exchange

5 Bank Street

Bury

BL9 0DN

BANKERS:

Barclays Bank plc

St James' Street

Burnley

Lancashire

BB11 1NH

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

REVIEW OF BUSINESS

The year to 30 September 2023 has seen K Steels Limited maintain its position as one of the main independent steel stockholders in the North of England.

Turnover for the year to 30 September 2023 decreased £2.7m (17%) to £13m in comparison to 2022.

Gross profit for 2023 decreased £1.2m (31%) to £2.6m in comparison to 2022.

Overhead expenditure is monitored, and savings are obtained wherever possible. In the period, administrative overheads decreased by £178k (6.8%) in comparison to 2022, to £2.4m.

Bad debts for 2023 decreased £9,896 to £9,196 in comparison to the previous year and credit control is strictly monitored.

The business has continued to invest in new steel processing and handling equipment with addition of a HD Plasma cutter and guillotine, along with additional saws and forklift trucks. This investment along with continued staff training and development is having a positive impact on the efficiency and range of services that the business can offer.

All the matters mentioned above have resulted in the profit on ordinary activities before taxation of £241,771 for the financial year.

PRINCIPAL RISKS AND UNCERTAINTIES

Management believes that the principal risks and uncertainties for K Steels Limited continue to be the fluctuation in commodity prices and bad debt exposure. The uncertainty in steel and oil prices particularly affect the company as energy costs form a large proportion of steel production costs.

Despite such risks and uncertainty, the directors consider the company to be adequately financed with net assets of c.£4.2 million including cash balance of c.£2.9 million and no debt finance. The directors believe they have sufficient resources to sustain the level of trading activity in a stable economic environment for the foreseeable future. The financial statements have therefore been prepared on a going concern basis.

KEY PERFORMANCE INDICATORS

Key financial indicators for senior management include sales levels, gross profit, net profit and bad debt occurrence together with working capital levels, cash flow and cash balances, the results of which are noted above and can be obtained from the financial statements.

ON BEHALF OF THE BOARD:

R J Howarth - Director

13 June 2024

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

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 30 September 2023 was £61,468.

DIRECTORS

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

S Kay

J D Sudworth

P A Clark

L Kewley

R J Howarth

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

DJH Mitten Clarke Audit Limited has indicated its willingness to be reappointed for another term and appropriate arrangements are being made for it to be deemed reappointed as auditor in the absence of an Annual General Meeting.

ON BEHALF OF THE BOARD:

R J Howarth - Director

13 June 2024

Opinion

We have audited the financial statements of K Steels Limited (the 'company') for the year ended 30 September 2023 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity 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 September 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:

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:

As part of our planning process:

-

We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.

-

We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, the Companies Act 2006, health and safety legislation and Control of Substances Hazardous to Health 2002.

-

We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.

Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

-

Identifying and testing journal entries, in particular those that were significant and unusual

-

Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.

-

Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to depreciation, impairment of inventory and provision for bad debts.

-

Assessing the extent of compliance, or lack of, with the relevant laws and regulations.

-

Testing key revenue lines, in particular cut-off and including cash sales, for evidence of management bias and irregularities.

-

Performing a physical verification of key assets, including inventory.

-

Obtaining third-party confirmation of material bank balances.

-

Documenting and verifying all significant related party balances and transactions.

-

Reviewing documentation such as the company board minutes for discussions of irregularities including fraud.

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.

Richard Bell (Senior Statutory Auditor)

for and on behalf of DJH Mitten Clarke Audit Limited

Accountants

Statutory Auditors

The Exchange

5 Bank Street

Bury

BL9 0DN

19 June 2024

REVENUE

3

13,040,906

15,760,998

Cost of sales

(10,442,530

)

(11,974,602

)

GROSS PROFIT

2,598,376

3,786,396

Administrative expenses

(2,444,366

)

(2,622,536

)

154,010

1,163,860

Other operating income

4

30,806

26,491

OPERATING PROFIT

6

184,816

1,190,351

Interest receivable and similar income

7

56,955

20,237

PROFIT BEFORE TAXATION

241,771

1,210,588

Tax on profit

8

(42,732

)

(271,073

)

PROFIT FOR THE FINANCIAL YEAR

199,039

939,515

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

199,039

939,515

FIXED ASSETS

Property, plant and equipment

10

794,004

618,231

CURRENT ASSETS

Inventories

11

1,939,582

2,597,007

Debtors

12

1,892,553

2,517,534

Cash at bank and in hand

2,863,246

3,272,938

6,695,381

8,387,479

CREDITORS

Amounts falling due within one year

13

(3,071,762

)

(4,761,804

)

NET CURRENT ASSETS

3,623,619

3,625,675

TOTAL ASSETS LESS CURRENT LIABILITIES

4,417,623

4,243,906

PROVISIONS FOR LIABILITIES

15

(206,984

)

(170,838

)

NET ASSETS

4,210,639

4,073,068

CAPITAL AND RESERVES

Called up share capital

16

2

2

Retained earnings

17

4,210,637

4,073,066

SHAREHOLDERS' FUNDS

4,210,639

4,073,068

The financial statements were approved by the Board of Directors and authorised for issue on 13 June 2024 and were signed on its behalf by:

R J Howarth - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 October 2021

2

3,440,891

3,440,893

Changes in equity

Dividends

-

(307,340

)

(307,340

)

Total comprehensive income

-

939,515

939,515

Balance at 30 September 2022

2

4,073,066

4,073,068

Changes in equity

Dividends

-

(61,468

)

(61,468

)

Total comprehensive income

-

199,039

199,039

Balance at 30 September 2023

2

4,210,637

4,210,639

1.	STATUTORY INFORMATION

K Steels Limited is a private company, limited by shares, registered in England and Wales. The company's registered number is 02284684 and its registered office address is Jubilee Works, Holme Lane, Rawtenstall, Rossendale, Lancashire, BB4 6JF.

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 directors have considered the impact of volatility in the steel market on the company and recognise that the future cannot be predicted with certainty. However, the directors expect that the company will continue trading.

The potential effects on steel supply and prices due to the war in Ukraine have been taken into consideration and the company has assessed its supplier options in order to reduce the risk of interruption. Sale prices are frequently reviewed to maintain profit margins in the context of volatile global prices.

The company had net assets of £4.2m (2022: £4.1m) and cash reserves of £2.9m (2022: £3.3m) at the year end and has generated profits post year end. The directors believe that the company is well placed to manage the risks at these challenging times and therefore continue to adopt a going concern basis of accounting in preparing these financial statements.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 33.7.

Revenue

Revenue represents the aggregate of the fair value of the sale of goods, net of value added tax, rebates and discounts.

Revenues from sales of goods are recognised when the company has supplied/delivered products to the customer, the customer has accepted the goods and collection of the related receivables is anticipated.

Property, plant and equipment

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant and machinery

-

15% on reducing balance

Fixtures and fittings

-

10% on reducing balance

Motor vehicles

-

25% on reducing balance

Computer equipment

-

33% on reducing balance

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each statement of financial position date. The effects of any revision are recognised in the income statement when the change arises.

Inventories

Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost is the actual value of goods purchased. Net realisable value is estimated selling price less costs to complete and sell.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, 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 statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position 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.

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.

Leasing commitments

Rentals paid under operating leases are charged to the income statement as incurred.

Financial instruments

The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from third parties and loans to related parties.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the income statement.

Basic financial liabilities are initially measured at transaction price and subsequently measured at amortised cost.

Critical accounting estimates and judgements

In the application of the company's accounting policies, the directors are required to make estimates and judgements. The estimates are based on historical experience and other relevant factors. Actual results may differ from these estimates.

The estimates are continually evaluated. Revisions to accounting estimates are recognised in the period in which the estimate is revised.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Estimating the useful economic life of an asset and the anticipated residual value are considered key judgements in calculating an appropriate depreciation charge.

Making judgement based on historical experience on the level of provision required for impairment of inventories. Further information received after the statement of financial position date may impact on the level of provision required.

Making judgement based on historical experience on the level of provision required for bad debts. Further information received after the statement of financial position date may impact on the level of provision required.

Dividends

Equity dividends are recognised when they become payable and are no longer at the discretion of the company.

3.

REVENUE

The revenue and profit before taxation are attributable to the one principal activity of the company.

All revenue is generated in the United Kingdom.

4.	OTHER OPERATING INCOME

2023

2022

£

£

Other income

30,806

25,761

Government grants

-

730

30,806

26,491

5.	EMPLOYEES AND DIRECTORS

2023

2022

£

£

Wages and salaries

1,011,235

1,251,834

Social security costs

86,964

129,984

Other pension costs

99,967

38,666

1,198,166

1,420,484

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

2023

2022

Management and administration

13

13

Warehousing and drivers

26

24

39

37

2023

2022

£

£

Directors' remuneration

162,313

375,093

Directors' pension contributions to money purchase schemes

71,892

13,223

6.	OPERATING PROFIT

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

2023

2022

£

£

Depreciation - owned assets

147,453

121,284

Profit on disposal of fixed assets

(216

)

(2,096

)

Auditors' remuneration

12,000

12,000

Operating lease rentals

282,110

332,086

7.

INTEREST RECEIVABLE AND SIMILAR INCOME

2023

2022

£

£

Deposit account interest

56,955

20,237

8.

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

6,586

208,866

Under/(over) provision

-

(155

)

Total current tax

6,586

208,711

Deferred tax:

Accelerated capital allowances

36,146

62,362

Tax on profit

42,732

271,073

UK corporation tax was charged at 19%) in 2022.

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2023

2022

£

£

Profit before tax

241,771

1,210,588

Profit multiplied by the standard rate of corporation tax in the UK of 25% (2022 - 19%)

60,443

230,012

Effects of:

Expenses not deductible for tax purposes

(3,538

)

3,732

Capital allowances in excess of depreciation

(12,496

)

-

Depreciation in excess of capital allowances

-

37,484

Adjustments to tax charge in respect of previous periods

-

(155

)

Change in tax rate

(1,677

)

-

Total tax charge

42,732

271,073

For financial years beginning after 1 April 2023, the corporation tax rate increased to 25% for profits over £250,000. A small profits rate (SPR) was introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by marginal relief. The directors are not aware of any other factors that will materially affect the future tax charge.

9.

DIVIDENDS

2023

2022

£

£

Ordinary shares of £1 each

Interim

61,468

307,340

10.	PROPERTY, PLANT AND EQUIPMENT

Fixtures

Plant and

and

Motor

Computer

machinery

fittings

vehicles

equipment

Totals

£

£

£

£

£

COST

At 1 October 2022

461,980

247,861

823,858

194,339

1,728,038

Additions

257,585

72,361

-

1,263

331,209

Disposals

(21,000

)

-

(102,003

)

-

(123,003

)

At 30 September 2023

698,565

320,222

721,855

195,602

1,936,244

DEPRECIATION

At 1 October 2022

294,620

142,595

496,242

176,350

1,109,807

Charge for year

45,164

16,478

79,569

6,242

147,453

Eliminated on disposal

(20,727

)

-

(94,293

)

-

(115,020

)

At 30 September 2023

319,057

159,073

481,518

182,592

1,142,240

NET BOOK VALUE

At 30 September 2023

379,508

161,149

240,337

13,010

794,004

At 30 September 2022

167,360

105,266

327,616

17,989

618,231

11.	INVENTORIES

2023

2022

£

£

Goods for resale and consumables

1,939,582

2,597,007

12.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2023

2022

£

£

Trade debtors

1,805,593

2,434,639

Other debtors

200

1,100

Prepayments and accrued income

86,760

81,795

1,892,553

2,517,534

13.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2023

2022

£

£

Trade creditors

2,486,650

3,691,620

Corporation tax

6,586

208,866

Social security and other taxes

189,337

177,797

Other creditors

693

-

Amounts owed to parent undertaking

732

732

Accruals and deferred income

387,764

682,789

3,071,762

4,761,804