Company registration number 00208641 (England and Wales)
SPECIAL STEEL CO., LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
SPECIAL STEEL CO., LIMITED
COMPANY INFORMATION
Directors
A K Beardshaw
A C Beardshaw
B J Beardshaw
Secretary
A C Beardshaw
Company number
00208641
Registered office
Bacon Lane
Sheffield
S9 3NH
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
SPECIAL STEEL CO., LIMITED
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5 - 6
Independent auditor's report
7 - 9
Profit and loss account
10
Group statement of comprehensive income
11
Group balance sheet
12 - 13
Company balance sheet
14 - 15
Group statement of changes in equity
16
Company statement of changes in equity
17
Group statement of cash flows
18
Notes to the financial statements
19 - 36
SPECIAL STEEL CO., LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -

The directors present the strategic report for the year ended 31 May 2023.

 

With Covid and Brexit well behind us, the Board targeted a more robust performance for 2022 / 23, based on significant increases in demand for its products and services seen towards the end of the preceding fiscal year.

 

However, in certain areas those increases were unprecedented, but the combined abilities of our Group proved equal to the challenge, allowing the Board to report this record-breaking set of results.

 

Consequently, the Group remain in a strong financial position at the end of the year with shareholders’ funds up from £61,044,401 to £66,446,776. Return on capital employed has changed from 11% to 43%. Return on capital employed is calculated as profit before tax divided by opening capital employed.

 

With a strong focus on suppling the energy (oil & gas) sector, it may seem obvious that a post covid recovery, combined with the fallout from Russia’s attempted, and now ongoing invasion of Ukraine, would be the demand drivers. However, we also consider the actions of Russia only bought into sharp focus the dramatic contraction in fossil fuel energy investment since the oil price crash of 2014 – one of the three largest since WW II. This, combined with several years of a Western / European political narrative against oil & gas leading up to the Russian / Ukrainian war, has left an ‘exploration and production’ void from perceived stable regions that the world is now racing to fill – in the face of ongoing geopolitical risks and uncertainty.

 

So, for Special Quality Alloys Ltd (SQA), they were particularly well placed to service the ramp in demand having been the recipient of large capital investment programmes by the Group over the last several years. The Board wrote an aggressive plan – and executed it. Our historical actions of transforming SQA have exceeded expectations, with turnover increasing 112% over the previous fiscal period.

 

However, raw material prices and availability were a significant challenge, with both the aerospace and defence sectors recording major spikes in demand, leaving SQA fighting for the same mill capacity as used in these competing industries. Again, our long-term relationships with key global suppliers paid dividends, as they appreciated our technical and financial professionalism, rewarding us with critical ‘partnership status’, providing a ‘win win’ scenario for all parties.

 

We also continued to see a focus from some domestic customers on reshoring to provide better protection from international supply chain disruption. Security of supply became more relevant than just a low price.

However, like all our Group businesses, SQA was not immune to cost increases, driven by wage inflation and energy.

 

To offset electricity price rises, and meet demand for growing electricity consumption, the Board took the decision to invest in a major solar project across its entire SQA site, designing and commissioning a 524kWp (Kilowatt Peak) installation that would commence operating towards the end of this fiscal year.

 

As a key supplier to global OEM’s, the Board also acknowledges the need to meet and exceed customer expectation on our carbon footprint and the long-term sustainability of our operations. We consider the solar project will enhance our environmental and financial performance and have a positive impact on the wider community within which we operate.

 

Our efforts to accelerate market diversification beyond oil & gascontinued, and good progress was made in integrating revised business systems to meet specific alternative industry requirements.

 

Finally, having been awarded the Queens Award for Enterprise for International Trade in 2022, we welcomed Professor Dame Hilary Chapman DBE, His Majesty’s Lord-Lieutenant of South Yorkshire to SQA in September to present the award and celebrate the achievement with the entire workforce.

 

To complete this outstanding year, we were particularly fortunate to receive our first Royal visit in March 2023, when, as part of a wider Sheffield visit, we hosted HRH The Princess Royal. Her Royal Highness met many employees and was given a tour of our facility, including a demonstration of our forging and ring rolling operations. A truly memorable day for the company and the entire SQA team.

 

SPECIAL STEEL CO., LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 2 -

Special Steels Ltd (SSL) had an excellent year, with both its subcontract heat treatment services and full supply bar division exceeding plan in turnover and profitability, for similar reasons as outlined above. However, the markets served by SSL are more diversified and with its stringent quality approvals like Nadcap, we were able to capitalise on the higher demands from the aerospace and defence sectors.

 

Having worked hard to reduce the operational cost base during two years of Covid, we were better positioned to face the new headwinds of energy, manpower and consumables inflation, but this took considerable effort from the very lean team we have.

 

Nevertheless, we continued a busy programme of plant maintenance, refurbishments, and upgrades and the company continues to make excellent progress in its quality, technical and operational performance. The board have several ongoing I.T. projects with a specific focus to streamline and unify daily operations across its three sites in a drive to improve efficiencies. Finally, its low-cost service provider, VHT, continues to preform to plan.

 

Whilst still managing to meet its turnover plan, Special Testing Ltd (STL), came in slightly behind profit expectations as it was impacted more than other Group companies by a dramatic rise in manpower and energy costs.

 

Due to historical ‘custom & practice’ pricing methods, the business was not immediately able to respond to these higher operational costs. Consequently, the Board took the necessary steps to reorganise the commercial approach, resulting in a mid-term correction of financial performance more inline with expectations.

 

Further investments were made in state-of-the-art equipment, along with a robust recruitment campaign to ensure the business remains at the forefront of its technical capability along with high levels of customer service. The business is well positioned for profitable growth, benefiting from numerous internationally recognised and third-party OEM specific approvals.

 

Having noted a strengthening market at the end of the previous fiscal year, Special Machined Products Ltd (SMP), were optimistic for continuing growth, and started 2022 / 23 with an aggressive business plan.

 

Subsequently, the Board are pleased to report a strong increase in both turnover and profitability from the pervious year. The company benefited from ongoing investment in new CNC machines, but with a targeted move into 5 axis operations to upscale its technical capabilities.

 

The business continues to expand and diversify its customer base across a wide range of markets whilst remaining key to supporting our overall Group wide product offerings. Emphasis remains on balancing the purely subcontract aspect of the business with a focus on meeting customer demand for a more ‘full supply’ product service.

 

The Board are pleased to report that 2022 / 23 was a record year for the Group, and our well-defined strategy of continued capital investment in key areas, coupled with strong financial discipline allowed us to deliver on our plans. The business outlook remains very positive. However, as always, any plans for future development of the businesses and longer-term financial performance may be subject to unforeseen global economic and political events outside of our control.

 

Irrespective of prevailing market conditions, our goal remains on outperforming the sectors within which we operate.

SPECIAL STEEL CO., LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 3 -
Section 172 statement

In accordance with section 172 of the Companies Act 2006, each of our directors acts in a way they consider, in good faith would promote the success of the Group for the benefit of its shareholders and stakeholders. The directors have taken into consideration, amongst other matters:

 

•    the likely consequences of any decisions in the long-term.

•    the interests of the Group’s employees.

•    the need to foster the Group’s business relationships with suppliers, customers, and others.

•    the impact of the Group’s operations in the community and environment.

•    the absolute need of the Group to maintain a reputation for high standards of business conduct; and

•    the need to act fairly between members of the Group.

 

By considering the Group’s purpose, vision, and values, together with its strategic priorities and having a process in place for decision making the Board aims to make sure that its decisions are consistent with its overriding historical approach to careful and prudent fiscal management which have proved critical to the ongoing sustainability and profitability of the Group.

 

Stakeholder engagement

The Board believe that considering our stakeholders in key business decisions is fundamental to our ability to drive value creation. The Board seeks to understand the respective interest of such stakeholders through various methods, including direct engagement by Board members; receiving of reports and updates from members of management who engage with such groups. The directors consider the following to be the Group’s key stakeholders:

 

Employees

The strength of our business is built on the hard work and dedication of our employees.

Employees are kept informed of performance and strategy through regular presentations and updates from members of the Board. These updates are further supported by management briefings. The directors attend key business meetings throughout the year and receive monthly commercial, operational, and financial reports as well as daily trading updates across all Group companies.

Key focus of the Board includes employee health, safety, and wellbeing, with action taken to increase the number of qualified on-site Mental Health First Aid (MHFA) practitioners. The Board encourages personal development though supported educational programmes and has a prime focus to ‘promote from within’ whenever possible.

 

Customers

The profitability of the business is underpinned by ensuring effective communication with customers to understand their needs and requirements. In recognition of this, a core principle of the business is to be customer focused, building relationships, and engaging at all levels of seniority, providing high levels of service through the expert knowledge of our employees, and ensuring a quality product.

The Board receives regular customer feedback and wider market intelligence through multiple communication channels including personal visits and presentations. Many international customers provide regular score card reports covering critical performance KPI’s which are reviewed by directors and Board members. The insight received is used to inform decision making, understand customer needs and tailor our capital investments and stock profiles to maximise our performance.

 

Suppliers

The Board recognizes that relationships with suppliers are important to the Group’s long-term success and is actively involved in both onsite and external supplier visits and engagements. The Board seeks to balance the benefit of maintaining these strong relationships with the need to evaluate any potential trade off between cost today and ongoing product quality and service for our customers in the longer term. Key areas of focus are product development and quality, including internationally recognised quality approvals and systems, on time delivery and robust financial strength.

SPECIAL STEEL CO., LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 4 -

 

Communities

The Board supports both internal and external (local government) initiatives with regards to reducing the adverse impacts on the environment of our operations. Consequently, the Board has initiated a significant investment in renewable energy across key sites. We maintain globally recognised environmental approvals throughout all our UK businesses. We actively support local charities and healthcare providers and create opportunities to recruit and develop local people.

 

Government and regulations

We engage with the government and regulators through a range of industry forums and meetings to communicate our views to policy makers relevant to our business, included but not limited to, MAKE UK, the AMRC, The Contract Heat Treatment Association (CHTA), The Confederation of British Metalforming (CBM) and our Member of Parliament. We focus on compliance with laws and regulations, health and safety, energy supply and local infrastructure. The Board is updated on legal and regulatory developments and takes these into account when considering future actions.

 

Investors

The Group relies on our shareholders to manage and direct investment funding to support directors in achieving their business objectives and aims to avoid external debt funding wherever possible. Investor involvement in the decision-making process includes representation on the Group Board. Consequently, all operational directors have open dialogue with the main shareholders due to the nature of our ownership structure. This allows for major shareholders to be fully involved in regular meetings, with direct input into a wide range of topics including financial performance, strategy, outlook, and governance.

On behalf of the board

A K Beardshaw
Director
16 November 2023
SPECIAL STEEL CO., LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 5 -

The directors present their annual report and financial statements for the year ended 31 May 2023.

Principal activities

The principal activities of the group are those of hardening, tempering and annealing all types of steel, steel testing, machining, stockholding and forging of special quality alloys and general engineering steels.

Results and dividends

The results for the year are set out on page 10.

Dividends paid during the year are shown in note 11 to the accounts.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

A K Beardshaw
A C Beardshaw
B J Beardshaw
Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Auditor
The auditor, BHP LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Energy and carbon report

As no single entity within the group is classified as large, it is not required to report on its emissions, energy consumption or energy efficiency activities.

SPECIAL STEEL CO., LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 6 -
Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report 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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
A K Beardshaw
Director
16 November 2023
SPECIAL STEEL CO., LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SPECIAL STEEL CO., LIMITED
- 7 -
Opinion

We have audited the financial statements of Special Steel Co. Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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:

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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and 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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:

SPECIAL STEEL CO., LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SPECIAL STEEL CO., LIMITED
- 8 -
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 their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

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

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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 is 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 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 parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's 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 an auditor's report 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.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

SPECIAL STEEL CO., LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SPECIAL STEEL CO., LIMITED
- 9 -

We assessed the susceptibility of the groups financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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 an auditor's report 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.

Lisa Leighton (Senior Statutory Auditor)
For and on behalf of BHP LLP
20 November 2023
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
SPECIAL STEEL CO., LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
88,101,300
47,106,393
Cost of sales
(50,624,122)
(34,143,197)
Gross profit
37,477,178
12,963,196
Distribution costs
(110,370)
(29,578)
Administrative expenses
(11,727,059)
(7,670,749)
Other operating income
384,426
368,918
Operating profit
4
26,024,175
5,631,787
Interest receivable and similar income
8
208,194
322,974
Interest payable and similar expenses
9
(12,300)
-
0
Profit before taxation
26,220,069
5,954,761
Tax on profit
10
(5,376,251)
(1,203,705)
Profit for the financial year
20,843,818
4,751,056
Profit for the financial year is all attributable to the owners of the parent company.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

SPECIAL STEEL CO., LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 11 -
2023
2022
£
£
Profit for the year
20,843,818
4,751,056
Other comprehensive income
Revaluation of intangible assets
-
0
1,250
Currency translation differences
(124,111)
899,322
Other comprehensive income for the year
(124,111)
900,572
Total comprehensive income for the year
20,719,707
5,651,628
Total comprehensive income for the year is all attributable to the owners of the parent company.
SPECIAL STEEL CO., LIMITED
GROUP BALANCE SHEET
AS AT
31 MAY 2023
31 May 2023
- 12 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
12
1,215,927
1,492,990
Other intangible assets
12
281,929
281,929
Total intangible assets
1,497,856
1,774,919
Tangible assets
13
11,854,802
11,936,759
Investment properties
14
438,211
438,211
Investments
46,105
46,105
13,836,974
14,195,994
Current assets
Stocks
16
33,511,660
22,245,808
Debtors
17
25,217,647
13,674,960
Cash at bank and in hand
14,228,111
24,767,229
72,957,418
60,687,997
Creditors: amounts falling due within one year
18
(18,601,729)
(12,190,289)
Net current assets
54,355,689
48,497,708
Total assets less current liabilities
68,192,663
62,693,702
Creditors: amounts falling due after more than one year
19
(63,780)
(66,604)
Provisions for liabilities
Provisions
20
688,700
700,697
Deferred tax liability
21
976,000
882,000
(1,664,700)
(1,582,697)
Net assets
66,464,183
61,044,401
Capital and reserves
Called up share capital
24
31,000
61,000
Revaluation reserve
81,929
81,929
Capital redemption reserve
30,000
-
0
Profit and loss reserves
66,321,254
60,901,472
Total equity
66,464,183
61,044,401
SPECIAL STEEL CO., LIMITED
GROUP BALANCE SHEET (CONTINUED)
AS AT
31 MAY 2023
31 May 2023
- 13 -
The financial statements were approved by the board of directors and authorised for issue on 16 November 2023 and are signed on its behalf by:
16 November 2023
A K Beardshaw
Director
SPECIAL STEEL CO., LIMITED
COMPANY BALANCE SHEET
AS AT 31 MAY 2023
31 May 2023
- 14 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
12
281,929
281,929
Tangible assets
13
5,493,051
5,667,146
Investment properties
14
438,211
438,211
Investments
8,605,469
8,605,469
14,818,660
14,992,755
Current assets
Debtors
17
1,177,500
184,500
Cash at bank and in hand
3,422,205
12,314,633
4,599,705
12,499,133
Creditors: amounts falling due within one year
18
(14,655,570)
(7,422,279)
Net current (liabilities)/assets
(10,055,865)
5,076,854
Total assets less current liabilities
4,762,795
20,069,609
Creditors: amounts falling due after more than one year
19
(63,780)
(66,604)
Provisions for liabilities
Deferred tax liability
21
65,000
126,000
(65,000)
(126,000)
Net assets
4,634,015
19,877,005
Capital and reserves
Called up share capital
24
31,000
61,000
Revaluation reserve
81,929
81,929
Capital redemption reserve
30,000
-
0
Profit and loss reserves
4,491,086
19,734,076
Total equity
4,634,015
19,877,005

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £56,935 (2022 - £899,802 profit).

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

SPECIAL STEEL CO., LIMITED
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 MAY 2023
31 May 2023
- 15 -
The financial statements were approved by the board of directors and authorised for issue on 16 November 2023 and are signed on its behalf by:
16 November 2023
A K Beardshaw
Director
Company Registration No. 00208641
SPECIAL STEEL CO., LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 16 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 June 2021
61,000
80,679
-
0
55,551,094
55,692,773
Year ended 31 May 2022:
Profit for the year
-
-
-
4,751,056
4,751,056
Other comprehensive income:
Revaluation of intangible assets
-
1,250
-
-
1,250
Currency translation differences
-
-
-
899,322
899,322
Total comprehensive income for the year
-
1,250
-
5,650,378
5,651,628
Dividends
11
-
-
-
(300,000)
(300,000)
Balance at 31 May 2022
61,000
81,929
-
0
60,901,472
61,044,401
Year ended 31 May 2023:
Profit for the year
-
-
-
20,843,818
20,843,818
Other comprehensive income:
Currency translation differences
-
-
-
(124,111)
(124,111)
Total comprehensive income for the year
-
-
-
20,719,707
20,719,707
Dividends
11
-
-
-
(3,299,925)
(3,299,925)
Redemption of shares
24
-
-
30,000
-
30,000
Cancellation of shares
24
(30,000)
-
-
-
(30,000)
Purchase of own shares
-
-
-
(12,000,000)
(12,000,000)
Balance at 31 May 2023
31,000
81,929
30,000
66,321,254
66,464,183
SPECIAL STEEL CO., LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 17 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 June 2021
61,000
80,679
-
0
19,134,274
19,275,953
Year ended 31 May 2022:
Profit for the year
-
-
-
899,802
899,802
Other comprehensive income:
Revaluation of intangible assets
-
1,250
-
-
1,250
Total comprehensive income for the year
-
1,250
-
899,802
901,052
Dividends
11
-
-
-
(300,000)
(300,000)
Balance at 31 May 2022
61,000
81,929
-
0
19,734,076
19,877,005
Year ended 31 May 2023:
Profit and total comprehensive income for the year
-
-
-
56,935
56,935
Dividends
11
-
-
-
(3,299,925)
(3,299,925)
Redemption of shares
24
-
-
30,000
-
30,000
Cancellation of shares
24
(30,000)
-
-
-
(30,000)
Purchase of own shares
-
-
-
(12,000,000)
(12,000,000)
Balance at 31 May 2023
31,000
81,929
30,000
4,491,086
4,634,015
SPECIAL STEEL CO., LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2023
- 18 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
11,533,253
8,015,642
Interest paid
(12,300)
-
0
Income taxes paid
(5,733,923)
(870,270)
Net cash inflow from operating activities
5,787,030
7,145,372
Investing activities
Purchase of tangible fixed assets
13
(1,313,199)
(871,843)
Proceeds from disposal of tangible fixed assets
78,499
75,783
Repayment of loans
283
76
Interest received
208,194
6,341
Other income received from investments
-
0
316,633
Net cash used in investing activities
(1,026,223)
(473,010)
Financing activities
Purchase of own shares
(12,000,000)
-
Dividends paid to equity shareholders
11
(3,299,925)
(300,000)
Net cash used in financing activities
(15,299,925)
(300,000)
Net (decrease)/increase in cash and cash equivalents
(10,539,118)
6,372,362
Cash and cash equivalents at beginning of year
24,767,229
18,394,867
Cash and cash equivalents at end of year
14,228,111
24,767,229
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
- 19 -
1
Accounting policies
Company information

Special Steel Co., Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Bacon Lane, Sheffield, S9 3NH.

 

The group consists of Special Steel Co., Limited and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled.

SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 20 -
1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Special Steel Co. Limited together with all entities controlled by the parent company (its subsidiaries).

 

All financial statements are made up to 31 May 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

1.4
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life of 20 years and is amortised on a systematic basis over its expected life.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.7
Intangible fixed assets other than goodwill

Intangible Cryptoassets are recognised at fair value.

 

Where changes in fair value are recognised, intangible Cryptoassets are revalued to this amount through the fair value reserve.

1.8
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 21 -

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Land and buildings Freehold
2% straight line
Land and buildings Leasehold
2% straight line
Plant and machinery
10% to 25% straight line
Fixtures, fittings & equipment
10% to 25% straight line
Computer equipment
10% to 25% straight line
Motor vehicles
20% to 25% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.9
Investment properties

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

1.10
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.11
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

1.12
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 22 -
1.13
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.14
Financial instruments

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 23 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.15
Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

1.16
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

1.17
Provisions

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

1.18
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.19
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.20
Leases
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 24 -

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

1.21
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.22
Foreign exchange
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account.

The accounts of the overseas subsidiary are translated into sterling at the rate of exchange ruling at the balance sheet date.  Exchange adjustments arising from the re-translation of the opening net investment are taken to reserves.
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 25 -
2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Impairment of fixed assets

The group tests goodwill, other intangible assets and tangible fixed assets annually for impairment, or more frequently if there are indications that an impairment may be required.

Useful economic lives of tangible fixed assets

The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values of all asset categories are reviewed on an annual basis to ensure appropriate charges are made for depreciation.

Stock provision

Stocks are stated at the lower of cost and net realisable value. The Directors will assess the requirement for any provision for obsolete stock or value deterioration based on historical transactions, stock utilisation patterns, regular inspection and counting of physical items.

3
Turnover and other revenue

An analysis of the group's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Heat treatment
6,271,383
3,812,746
Testing alloys
1,988,958
1,756,315
Manufacture and supply of alloys
76,110,581
38,445,793
Steel engineering
3,730,378
3,091,539
88,101,300
47,106,393
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
37,603,131
20,809,980
Europe
17,785,479
5,729,353
Other markets
32,712,690
20,567,060
88,101,300
47,106,393
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
3
Turnover and other revenue
(Continued)
- 26 -
2023
2022
£
£
Other revenue
Interest income
208,194
322,974
Grants received
2,824
166,498

No further geographical split of sales is presented as in the opinion of the directors this would be prejudicial to the interests of the entity.

4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange gains
(1,078,051)
(311,884)
Government grants
(2,824)
(166,498)
Depreciation of owned tangible fixed assets
1,390,840
1,251,396
Profit on disposal of tangible fixed assets
(64,831)
(71,141)
Amortisation of intangible assets
277,063
277,063
Operating lease charges
428,202
153,094
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor:
£
£
For audit services
Audit of the financial statements of the group and company
5,106
4,600
Audit of the financial statements of the company's subsidiaries
58,061
45,380
63,167
49,980
For other services
Taxation compliance services
4,940
4,450
All other non-audit services
12,183
1,300
17,123
5,750
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 27 -
6
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Production
150
149
-
-
Admin
62
56
1
1
Directors
13
15
3
3
Total
225
220
4
4

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
12,169,356
8,422,083
3,262,977
999,237
Social security costs
1,304,028
840,135
445,838
134,151
Pension costs
311,659
297,428
-
0
-
0
13,785,043
9,559,646
3,708,815
1,133,388
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
2,264,424
799,237
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
966,839
466,907

Remuneration of key management personnel in the year is £4,418,456 (2022: £2,006,258)

8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
208,194
6,341
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 28 -
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
12,300
-
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
5,231,434
1,177,705
Adjustments in respect of prior periods
(6,183)
-
0
Total current tax
5,225,251
1,177,705
Deferred tax
Origination and reversal of timing differences
151,000
26,000
Total tax charge
5,376,251
1,203,705

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
26,220,069
5,954,761
Expected tax charge based on the standard rate of corporation tax in the UK of 20.00% (2022: 19.00%)
5,244,014
1,131,405
Tax effect of expenses that are not deductible in determining taxable profit
23,061
3,115
Income not taxable for tax purposes
(565)
(917)
Adjustments in respect of prior years
(6,183)
-
0
Effect of change in corporation tax rate
16,743
6,513
Amortisation on assets not qualifying for tax allowances
55,496
52,642
Other permanent differences
-
0
4,520
Effect of overseas tax rates
58,604
-
0
Fixed asset differences
(17,696)
7,563
Deferred tax not recognised
2,777
(1,136)
Taxation charge
5,376,251
1,203,705
11
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Interim paid
3,299,925
300,000
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 29 -
12
Intangible fixed assets
Group
Goodwill
Cryptoassets
Total
£
£
£
Cost
At 1 June 2022
5,692,098
281,929
5,974,027
Disposals
(50,000)
-
0
(50,000)
At 31 May 2023
5,642,098
281,929
5,924,027
Amortisation and impairment
At 1 June 2022
4,199,108
-
0
4,199,108
Amortisation charged for the year
277,063
-
0
277,063
Disposals
(50,000)
-
0
(50,000)
At 31 May 2023
4,426,171
-
0
4,426,171
Carrying amount
At 31 May 2023
1,215,927
281,929
1,497,856
At 31 May 2022
1,492,990
281,929
1,774,919
Company
Cryptoassets
£
Cost
At 1 June 2022 and 31 May 2023
281,929
Amortisation and impairment
At 1 June 2022 and 31 May 2023
-
0
Carrying amount
At 31 May 2023
281,929
At 31 May 2022
281,929
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 30 -
13
Tangible fixed assets
Group
Land and buildings Freehold
Land and buildings Leasehold
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 June 2022
7,525,072
1,877,067
17,419,185
1,094,804
350,858
1,052,840
29,319,826
Additions
14,034
315,232
467,341
44,337
9,417
462,838
1,313,199
Disposals
-
0
-
0
-
0
-
0
-
0
(199,760)
(199,760)
Exchange adjustments
10,031
-
0
12,886
-
0
-
0
3,540
26,457
At 31 May 2023
7,549,137
2,192,299
17,899,412
1,139,141
360,275
1,319,458
30,459,722
Depreciation and impairment
At 1 June 2022
2,107,646
1,119,299
12,412,550
889,094
327,777
526,701
17,383,067
Depreciation charged in the year
150,262
114,863
891,272
71,103
9,884
153,456
1,390,840
Eliminated in respect of disposals
-
0
-
0
-
0
-
0
-
0
(186,092)
(186,092)
Exchange adjustments
4,140
-
0
13,220
-
0
-
0
(255)
17,105
At 31 May 2023
2,262,048
1,234,162
13,317,042
960,197
337,661
493,810
18,604,920
Carrying amount
At 31 May 2023
5,287,089
958,137
4,582,370
178,944
22,614
825,648
11,854,802
At 31 May 2022
5,417,426
757,768
5,006,635
205,710
23,081
526,139
11,936,759
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 31 -
Company
Land and buildings Freehold
Land and buildings Leasehold
Plant and machinery
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 June 2022 and 31 May 2023
6,944,896
887,152
13,217
74,960
7,920,225
Depreciation and impairment
At 1 June 2022
1,868,245
323,205
13,217
48,412
2,253,079
Depreciation charged in the year
137,581
17,774
-
0
18,740
174,095
At 31 May 2023
2,005,826
340,979
13,217
67,152
2,427,174
Carrying amount
At 31 May 2023
4,939,070
546,173
-
0
7,808
5,493,051
At 31 May 2022
5,076,651
563,947
-
0
26,548
5,667,146
14
Investment property
Group
Company
2023
2023
£
£
Fair value
At 1 June 2022 and 31 May 2023
438,211
438,211

Investment property has been valued at fair value by the Directors.

 

15
Subsidiaries

Details of the company's subsidiaries at 31 May 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Special Machined Products Limited
UK
Ordinary
100.00
-
Special Quality Alloys Inc
USA
Ordinary
-
100.00
Special Quality Alloys Limited
UK
Ordinary
100.00
-
Special Steels Limited
UK
Ordinary
100.00
-
Special Testing Limited
UK
Ordinary
100.00
-
Value Heat Treat Limited
UK
Ordinary
-
100.00
Sheffield Special Steels Limited
UK
Ordinary
50.00
-

 

SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 32 -
16
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
86,260
211,592
-
-
Finished goods and goods for resale
33,425,400
22,034,216
-
0
-
0
33,511,660
22,245,808
-
-
17
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
21,195,980
12,843,719
-
0
-
0
Corporation tax recoverable
129,411
-
0
-
0
-
0
Other debtors
1,192,478
134,705
1,177,500
127,500
Prepayments and accrued income
2,699,778
639,536
-
0
-
0
25,217,647
13,617,960
1,177,500
127,500
Amounts falling due after one year:
Deferred tax asset (note 21)
-
0
57,000
-
0
57,000
Total debtors
25,217,647
13,674,960
1,177,500
184,500
18
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade creditors
10,424,895
7,901,536
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
11,489,668
6,821,467
Corporation tax payable
129,529
508,790
5,064
-
0
Other taxation and social security
1,176,465
993,698
14,345
14,700
Other creditors
56,283
25,838
-
0
-
0
Accruals and deferred income
6,814,557
2,760,427
3,146,493
586,112
18,601,729
12,190,289
14,655,570
7,422,279
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 33 -
19
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Government grants
22
63,780
66,604
63,780
66,604
20
Provisions for liabilities
Group
Company
2023
2022
2023
2022
£
£
£
£
Deferred tax liabilities
21
976,000
882,000
65,000
126,000
Other liabilities
688,700
700,697
-
-
1,664,700
1,582,697
65,000
126,000
Movements on provisions apart from deferred tax liabilities and retirement benefits:
Group
£
At 1 June 2022
724,398
Utilisation of provision
(23,701)
At 31 May 2023
688,700
21
Deferred taxation

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
ACAs
976,000
882,000
-
-
Tax losses
-
-
-
57,000
976,000
882,000
-
57,000
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
21
Deferred taxation
(Continued)
- 34 -
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Company
£
£
£
£
ACAs
65,000
126,000
-
-
Tax losses
-
-
-
57,000
65,000
126,000
-
57,000
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 June 2022
825,000
69,000
Charge/(credit) to profit or loss
151,000
(4,000)
Liability at 31 May 2023
976,000
65,000
22
Government grants
Group
Company
2023
2022
2023
2022
£
£
£
£
Arising from government grants
63,780
66,604
63,780
66,604
23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
311,659
297,428

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

24
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
31,000
61,000
31,000
61,000

On 27 January 2023, Special Steel Co Limited repurchased 30,000 Ordinary shares of £1 each for consideration of £12,000,000.

SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
24
Share capital
(Continued)
- 35 -
25
Capital commitments

Amounts contracted for but not provided in the financial statements:

Group
Company
2023
2022
2023
2022
£
£
£
£
Acquisition of tangible fixed assets
905,192
-
-
-
26
Related party transactions

The group has taken advantage of the exemption provided by FRS 102 from the requirement to report transactions with other group companies that are 100% subsidiaries of Special Steel Co. Limited.

 

Special Steel Co. Limited received management charges of £24,000 (2022: £24,000) from S.T.W (Non-Destructive) Limited which is a company controlled by the directors.

 

Special Steel Co. Limited made loans of £1,100,000 (2022: £nil) to Jam Developers LLP, in which A K Beardshaw is a designated member.

 

Dividends paid to shareholders are outlined in note 11.

27
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
20,843,818
4,751,056
Adjustments for:
Taxation charged
5,376,251
1,203,705
Finance costs
12,300
-
0
Investment income
(208,194)
(322,974)
Gain on disposal of tangible fixed assets
(64,831)
(71,141)
Amortisation and impairment of intangible assets
277,063
277,063
Depreciation and impairment of tangible fixed assets
1,390,840
1,396,774
Foreign exchange gains/(losses) on cash equivalents
(133,463)
711,883
Decrease in provisions
(11,997)
(23,701)
Movements in working capital:
Increase in stocks
(11,265,852)
(1,587,324)
Increase in debtors
(11,470,559)
(3,298,657)
Increase in creditors
6,790,701
4,981,782
Decrease in deferred income
(2,824)
(2,824)
Cash generated from operations
11,533,253
8,015,642
SPECIAL STEEL CO., LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 36 -
28
Analysis of changes in net funds - group
1 June 2022
Cash flows
31 May 2023
£
£
£
Cash at bank and in hand
24,767,229
(10,539,118)
14,228,111
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