Eggleston Steel Limited - Limited company accounts 17.3

REGISTERED NUMBER: 00797154 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 30 April 2017

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

7

Balance Sheet

8

Statement of Changes in Equity

9

Cash Flow Statement

10

Notes to the Financial Statements

11

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 2017.

REVIEW OF BUSINESS

Turnover has increased by 4.2% from £7.45m to £7.77m, due to a recovery in the price of steel.

The company had expanded its profiling division in 2012 by locating a new profiling machine in the old

leasehold premises. Profiling income has increased by 16.9% from 2016 (2016 - 5.2% from 2015). The

increase in profiling capabilities continues to attract new customers to the company, resulting in ancillary

sales. During the year the profiling division was relocated to new leasehold premises in order to improve

efficiencies.

The gross profit margin has remained consistent at 26.9% (2016 - 26.8%). 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 in 2016 and 2017.

The management and directors are continually monitoring overheads. Lorry operating lease costs have

decreased by 70.0% (2016 - 21.8%) due to a number of lorry operating leases ending during the year. These

lorries have been replaced with purchased assets.

The company is continually investing in its staff and plant and machinery in order to maintain its efficiencies

and competitiveness.

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:

Mrs S Hewitt - Secretary

2 November 2017

The directors present their report with the financial statements of the company for the year ended 30 April 2017.

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

-

£22.59649

- 1 May 2016

B Ordinary £1

-

£6.66666

- 1 May 2016

The total distribution of dividends for the year ended 30 April 2017 will be £ 143,800 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 May 2016 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

Other changes in directors holding office are as follows:

J A Ready - appointed 6 March 2017

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:

Mrs S Hewitt - Secretary

2 November 2017

Opinion

We have audited the financial statements of Eggleston Steel Limited (the 'company') for the year ended

30 April 2017 on pages seven to nineteen. 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 2017 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to

report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

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 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, 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.

Opinion 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.

Our 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.

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.

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

13 November 2017

TURNOVER

7,766,341

7,451,207

Cost of sales

5,679,791

5,452,748

GROSS PROFIT

2,086,550

1,998,459

Distribution costs

7,966

9,857

Administrative expenses

1,864,714

1,662,625

1,872,680

1,672,482

213,870

325,977

Other operating income

12,334

13,782

OPERATING PROFIT

4

226,204

339,759

Interest payable and similar expenses

5

94,521

94,386

PROFIT BEFORE TAXATION

131,683

245,373

Tax on profit

6

24,100

63,086

PROFIT FOR THE FINANCIAL YEAR

107,583

182,287

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

107,583

182,287

FIXED ASSETS

Tangible assets

8

3,384,161

3,162,675

CURRENT ASSETS

Stocks

9

714,175

669,791

Debtors

10

1,662,959

1,685,449

Cash in hand

3,165

3,705

2,380,299

2,358,945

CREDITORS

Amounts falling due within one year

11

1,986,835

2,088,401

NET CURRENT ASSETS

393,464

270,544

TOTAL ASSETS LESS CURRENT LIABILITIES

3,777,625

3,433,219

CREDITORS

Amounts falling due after more than one year

12

(1,618,337

)

(1,225,848

)

PROVISIONS FOR LIABILITIES

16

(214,134

)

(226,000

)

NET ASSETS

1,945,154

1,981,371

CAPITAL AND RESERVES

Called up share capital

17

26,000

26,000

Retained earnings

18

1,919,154

1,955,371

SHAREHOLDERS' FUNDS

1,945,154

1,981,371

The financial statements were approved by the Board of Directors on 2 November 2017 and were signed on its behalf by:

R J Hewitt - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 May 2015

26,000

1,900,204

1,926,204

Changes in equity

Dividends

-

(127,120

)

(127,120

)

Total comprehensive income

-

182,287

182,287

Balance at 30 April 2016

26,000

1,955,371

1,981,371

Changes in equity

Dividends

-

(143,800

)

(143,800

)

Total comprehensive income

-

107,583

107,583

Balance at 30 April 2017

26,000

1,919,154

1,945,154

Cash flows from operating activities

Cash generated from operations

21

460,147

662,784

Interest paid

(57,567

)

(49,290

)

Interest element of hire purchase payments paid

(40,950

)

(44,634

)

Tax paid

-

(6,778

)

Tax refunded

1,362

-

Net cash from operating activities

362,992

562,082

Cash flows from investing activities

Purchase of tangible fixed assets

(293,970

)

(175,474

)

Sale of tangible fixed assets

25,700

97,000

Net cash from investing activities

(268,270

)

(78,474

)

Cash flows from financing activities

Loan advances in year

381,368

-

Loan repayments in year

(18,000

)

(55,940

)

Finance advances in year

297,665

-

Finance repayments in year

(632,167

)

(308,021

)

Amount introduced by directors

128,800

112,120

Amount withdrawn by directors

(128,849

)

(113,070

)

Government grant received

-

5,000

Equity dividends paid

(143,800

)

(127,120

)

Net cash from financing activities

(114,983

)

(487,031

)

Decrease in cash and cash equivalents

(20,261

)

(3,423

)

Cash and cash equivalents at beginning of year

22

(558,857

)

(555,434

)

Cash and cash equivalents at end of year

22

(579,118

)

(558,857

)

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.

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.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

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

2017

2016

£

£

Wages and salaries

1,404,666

1,336,682

Social security costs

125,703

123,040

Other pension costs

90,976

80,204

1,621,345

1,539,926

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

2017

2016

Directors

6

6

Warehouse

31

29

Drivers

6

6

Administration

14

14

57

55

2017

2016

£

£

Directors' remuneration

59,092

60,124

Directors' pension contributions to money purchase schemes

23,554

27,100

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

Money purchase schemes

4

3

4.	OPERATING PROFIT

The operating profit is stated after charging:

2017

2016

£

£

Operating lease payments

95,762

97,583

Depreciation - owned assets

135,066

94,052

Depreciation - assets on hire purchase contracts

203,848

168,699

Loss on disposal of fixed assets

5,535

14,700

Auditors' remuneration

6,685

6,367

Auditors' remuneration for non audit work

15,248

15,893

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Bank charges and interest

47,786

44,865

Hire purchase interest

40,950

44,634

Other interest

5,785

4,887

94,521

94,386

6.

TAXATION

Analysis of the tax charge

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

2017

2016

£

£

Current tax:

UK corporation tax

35,000

(2,328

)

Adjustment re prior year

966

2,534

Total current tax

35,966

206

Deferred tax

(11,866

)

62,880

Tax on profit

24,100

63,086

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:

2017

2016

£

£

Profit before tax

131,683

245,373

Profit multiplied by the standard rate of corporation tax in the UK of 19.918% (2016 - 20%)

26,229

49,075

Effects of:

Expenses not deductible for tax purposes

5,247

4,071

Income not taxable for tax purposes

(2,457

)

(2,756

)

Adjustments to tax charge in respect of previous periods

966

2,534

Other permanent differences

(5,885

)

10,162

Total tax charge

24,100

63,086