REGISTERED NUMBER: 12939220 (England and Wales) |
Group Strategic Report, Report of the Directors and |
Consolidated Financial Statements |
for the Year Ended 31 December 2023 |
for |
Embrace Steel Group Ltd |
REGISTERED NUMBER: 12939220 (England and Wales) |
Group Strategic Report, Report of the Directors and |
Consolidated Financial Statements |
for the Year Ended 31 December 2023 |
for |
Embrace Steel Group Ltd |
Embrace Steel Group Ltd (Registered number: 12939220) |
Contents of the Consolidated Financial Statements |
for the year ended 31 December 2023 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Directors | 4 |
Report of the Independent Auditors | 5 |
Consolidated Income Statement | 8 |
Consolidated Other Comprehensive Income | 9 |
Consolidated Balance Sheet | 10 |
Company Balance Sheet | 11 |
Consolidated Statement of Changes in Equity | 12 |
Company Statement of Changes in Equity | 13 |
Consolidated Cash Flow Statement | 14 |
Notes to the Consolidated Cash Flow Statement | 15 |
Notes to the Consolidated Financial Statements | 16 |
Embrace Steel Group Ltd |
Company Information |
for the year ended 31 December 2023 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditors and |
Chartered Accountants |
Cawley House |
149-155 Canal Street |
Nottingham |
Nottinghamshire |
NG1 7HR |
Embrace Steel Group Ltd (Registered number: 12939220) |
Group Strategic Report |
for the year ended 31 December 2023 |
The directors present their strategic report of the company and the group for the year ended 31 December 2023. |
REVIEW OF BUSINESS |
Turnover for the group in the year totalled £26,238,894 in with a gross profit of £5,414,646. The group received other income of £158,363, administrative expenses and overheads totalled £4,289,300 with finance costs of £299,437 and asset depreciation charged totalled £423,855. |
The group made a pre-tax profit for the year of £1,013,017 in 2023. |
The net assets of the group on 31 December 2023 were £2,112,159 (2022 - £1,437,724), with net current assets of £718,182 (2022 - net current liabilities £1,610,827). |
PRINCIPAL RISKS AND UNCERTAINTIES |
The directors consider that the principal risk to the operations of the group to be exposures arising from working on substantial contracts and the fluctuations in the timing of cash flows relating to these contracts. Care is taken during the negotiation of contract payment terms to alleviate working capital pressures as much as possible and minimises the use of the available financing facilities. |
A further risk is the exposure to fluctuations in steel prices, particularly given many of the contracts are on a fixed price basis. Where possible pre-agreed prices and terms are negotiated with the main steel suppliers for contracted work. |
There is a credit risk arising from exposure to customers defaulting on trade debts. The risk is minimised through tight credit control procedures, only dealing with reputable clients and in the use of Credit Insurance facilities. |
These risks have been continued through 2023 due to the impact of the continuing Ukraine conflict on the UK and world economies and additional pressures of similar nature. |
The group's forecasts and projections, taking account of reasonable potential changes in trading performance, show that the group should be able to operate within its current facilities for the foreseeable future. The directors are not aware of any reason why the working capital position would change in the coming 12 months. |
Embrace Steel Group Ltd (Registered number: 12939220) |
Group Strategic Report |
for the year ended 31 December 2023 |
BUSINESS ACQUISITION |
The directors are delighted to announce the recent, post balance sheet date, acquisition of Shufflebottom Ltd, a move that signifies a strategic expansion of our capabilities and offerings within the structural steel fabrication industry. This acquisition represents a pivotal step forward in our growth strategy and reinforces our commitment to delivering unparalleled value to our clients and stakeholders. |
Shufflebottom Ltd brings a wealth of expertise, specialized technologies, and a proven track record in structural steel fabrication that perfectly complements our existing group operations. By integrating their strengths with ours, we are poised to enhance our service offerings, broaden our market presence, and solidify our position in the industry. |
This strategic alignment not only expands our portfolio but also enhances our ability to deliver comprehensive solutions to our clients. The synergies created through this acquisition will enable us to offer a more diverse range of products and services, catering to the evolving needs of our customers while maintaining the highest standards of quality and reliability. |
Furthermore, the acquisition of Shufflebottom Ltd strengthens our production capabilities, enabling us to undertake larger and more complex projects with increased efficiency and precision. This enhanced capacity not only positions us for sustainable growth but also reinforces our reputation as a trusted partner for clients seeking innovative and reliable structural steel solutions. |
As we move forward, we are committed to a seamless integration process that prioritizes collaboration, transparency, and shared success. By leveraging the collective expertise and resources of group entities, we are confident in our ability to maximize the benefits of this acquisition and drive long-term value for our stakeholders. |
ON BEHALF OF THE BOARD: |
Embrace Steel Group Ltd (Registered number: 12939220) |
Report of the Directors |
for the year ended 31 December 2023 |
The directors present their report with the financial statements of the company and the group for the year ended 31 December 2023. |
DIVIDENDS |
The total distribution of dividends for the year ended 31 December 2023 will be £ 70,500 . |
FUTURE DEVELOPMENTS |
The group continues to work on improving profitability and efficiency within the company and the group. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report. |
FINANCIAL INSTRUMENT RISK |
The details of the financial instrument risks are provided in the Strategic Report. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information. |
AUDITORS |
The auditors, Clayton & Brewill, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
Embrace Steel Group Ltd |
Opinion |
We have audited the financial statements of Embrace Steel Group Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the group's and of the parent company affairs as at 31 December 2023 and of the group's 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 group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. |
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
Report of the Independent Auditors to the Members of |
Embrace Steel Group Ltd |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the parent company financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
- Enquiry of management and those charged with governance around actual and potential litigation and |
claims; |
- Reviewing financial statement disclosures and testing to supporting documentation to assess |
compliance with applicable laws and regulations; |
- Performing audit work over the risk of management override of controls, including testing of journal |
entries and other adjustments for appropriateness, evaluating the business rationale of significant |
transactions outside the normal course of business and reviewing accounting estimates for bias; |
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. |
Report of the Independent Auditors to the Members of |
Embrace Steel Group Ltd |
Use of our report |
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Statutory Auditors and |
Chartered Accountants |
Cawley House |
149-155 Canal Street |
Nottingham |
Nottinghamshire |
NG1 7HR |
Embrace Steel Group Ltd (Registered number: 12939220) |
Consolidated |
Income Statement |
for the year ended 31 December 2023 |
31/12/23 | 31/12/22 |
as | restated |
Notes | £ | £ |
TURNOVER | 4 | 26,238,894 | 7,555,173 |
Cost of sales | 20,824,248 | 5,482,417 |
GROSS PROFIT | 5,414,646 | 2,072,756 |
Administrative expenses | 4,289,300 | 1,449,037 |
1,125,346 | 623,719 |
Other operating income | 158,363 | 346,586 |
OPERATING PROFIT | 6 | 1,283,709 | 970,305 |
Interest receivable and similar income | 28,745 | 1,440 |
1,312,454 | 971,745 |
Interest payable and similar expenses | 7 | 299,437 | 122,549 |
PROFIT BEFORE TAXATION | 1,013,017 | 849,196 |
Tax on profit | 8 | 268,082 | 156,304 |
PROFIT FOR THE FINANCIAL YEAR |
Profit attributable to: |
Owners of the parent | 581,729 | 692,892 |
Non-controlling interests | 163,206 | - |
744,935 | 692,892 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Consolidated |
Other Comprehensive Income |
for the year ended 31 December 2023 |
31/12/23 | 31/12/22 |
as | restated |
Notes | £ | £ |
PROFIT FOR THE YEAR | 744,935 | 692,892 |
OTHER COMPREHENSIVE INCOME |
Property revaluation | - | 528,750 |
Income tax relating to other comprehensive income |
- |
(103,917 |
) |
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX |
- |
424,833 |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
744,935 |
1,117,725 |
Total comprehensive income attributable to: |
Owners of the parent | 744,935 | 1,117,725 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Consolidated Balance Sheet |
31 December 2023 |
31/12/23 | 31/12/22 |
as restated |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 12 | 1,662,322 | 1,702,517 |
Tangible assets | 13 | 2,188,855 | 2,269,640 |
Investments | 14 | - | - |
Investment property | 15 | 2,120,000 | 2,120,000 |
5,971,177 | 6,092,157 |
CURRENT ASSETS |
Stocks | 16 | 139,464 | 180,413 |
Debtors | 17 | 6,430,387 | 2,621,948 |
Cash at bank | 3,725,219 | 872,762 |
10,295,070 | 3,675,123 |
CREDITORS |
Amounts falling due within one year | 18 | 9,576,888 | 5,285,950 |
NET CURRENT ASSETS/(LIABILITIES) | 718,182 | (1,610,827 | ) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
6,689,359 |
4,481,330 |
CREDITORS |
Amounts falling due after more than one year |
19 |
(4,134,283 |
) |
(2,632,015 |
) |
PROVISIONS FOR LIABILITIES | 22 | (442,917 | ) | (411,591 | ) |
NET ASSETS | 2,112,159 | 1,437,724 |
CAPITAL AND RESERVES |
Called up share capital | 23 | 8 | 8 |
Share premium | 24 | 319,991 | 319,991 |
Revaluation reserve | 24 | 433,383 | 424,833 |
Fair value reserve | 24 | 178,423 | 178,423 |
Retained earnings | 24 | 1,017,148 | 514,469 |
SHAREHOLDERS' FUNDS | 1,948,953 | 1,437,724 |
NON-CONTROLLING INTERESTS | 163,206 | - |
TOTAL EQUITY | 2,112,159 | 1,437,724 |
The financial statements were approved by the Board of Directors and authorised for issue on 20 August 2024 and were signed on its behalf by: |
C M Bartholomew - Director |
Embrace Steel Group Ltd (Registered number: 12939220) |
Company Balance Sheet |
31 December 2023 |
31/12/23 | 31/12/22 |
as restated |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 12 |
Tangible assets | 13 |
Investments | 14 |
Investment property | 15 |
CURRENT ASSETS |
Debtors | 17 |
CREDITORS |
Amounts falling due within one year | 18 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year |
19 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 23 |
Share premium |
SHAREHOLDERS' FUNDS |
Company's profit for the financial year | - | - |
The financial statements were approved by the Board of Directors and authorised for issue on |
Embrace Steel Group Ltd (Registered number: 12939220) |
Consolidated Statement of Changes in Equity |
for the year ended 31 December 2023 |
Called up |
share | Retained | Share | Revaluation |
capital | earnings | premium | reserve |
£ | £ | £ | £ |
Changes in equity |
Issue of share capital | 8 | - | 319,991 | - |
Total comprehensive income | - | 514,469 | - | 424,833 |
Balance at 31 December 2022 | 8 | 514,469 | 319,991 | 424,833 |
Changes in equity |
Dividends | - | (70,500 | ) | - | - |
Total comprehensive income | - | 573,179 | - | 8,550 |
8 | 1,017,148 | 319,991 | 433,383 |
Non-controlling interest arising on business combination |
- |
- |
- |
- |
Balance at 31 December 2023 | 8 | 1,017,148 | 319,991 | 433,383 |
Fair |
value | Non-controlling | Total |
reserve | Total | interests | equity |
£ | £ | £ | £ |
Changes in equity |
Issue of share capital | - | 319,999 | - | 319,999 |
Total comprehensive income | 178,423 | 1,117,725 | - | 1,117,725 |
Balance at 31 December 2022 | 178,423 | 1,437,724 | - | 1,437,724 |
Changes in equity |
Dividends | - | (70,500 | ) | - | (70,500 | ) |
Total comprehensive income | - | 581,729 | - | 581,729 |
178,423 | 1,948,953 | - | 1,948,953 |
Non-controlling interest arising on business combination |
- |
- |
163,206 |
163,206 |
Balance at 31 December 2023 | 178,423 | 1,948,953 | 163,206 | 2,112,159 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Company Statement of Changes in Equity |
for the year ended 31 December 2023 |
Called up |
share | Retained | Share | Total |
capital | earnings | premium | equity |
£ | £ | £ | £ |
Changes in equity |
Issue of share capital | - |
Balance at 31 December 2022 |
Changes in equity |
Balance at 31 December 2023 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Consolidated Cash Flow Statement |
for the year ended 31 December 2023 |
31/12/23 | 31/12/22 |
as | restated |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 1 | (154,510 | ) | 1,854,966 |
Interest paid | (292,454 | ) | (117,602 | ) |
Interest element of hire purchase payments paid |
(6,983 |
) |
(4,947 |
) |
Tax paid | (98,380 | ) | 10,000 |
Net cash from operating activities | (552,327 | ) | 1,742,417 |
Cash flows from investing activities |
Purchase of intangible fixed assets | - | (1,325,751 | ) |
Purchase of tangible fixed assets | (104,456 | ) | (203,741 | ) |
Sale of tangible fixed assets | - | 5,000 |
Cash inflow on acquisition | - | 339,158 |
Interest received | 28,745 | 1,440 |
Net cash from investing activities | (75,711 | ) | (1,183,894 | ) |
Cash flows from financing activities |
New loans in year | 3,741,860 | 1,500,000 |
Loan repayments in year | (143,573 | ) | (1,286,330 | ) |
Capital repayments in year | (47,292 | ) | 100,569 |
Equity dividends paid | (70,500 | ) | - |
Net cash from financing activities | 3,480,495 | 314,239 |
Increase in cash and cash equivalents | 2,852,457 | 872,762 |
Cash and cash equivalents at beginning of year |
2 |
872,762 |
- |
Cash and cash equivalents at end of year |
2 |
3,725,219 |
872,762 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Cash Flow Statement |
for the year ended 31 December 2023 |
1. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Profit before taxation | 1,013,017 | 849,196 |
Depreciation charges | 452,655 | 171,949 |
Loss on disposal of fixed assets | 43,647 | 54,976 |
Gain on revaluation of fixed assets | - | (295,000 | ) |
Finance costs | 299,437 | 122,549 |
Finance income | (28,745 | ) | (1,440 | ) |
1,780,011 | 902,230 |
Decrease in stocks | 40,949 | 1,214,935 |
Increase in trade and other debtors | (3,808,459 | ) | (524,225 | ) |
Increase in trade and other creditors | 1,832,989 | 262,026 |
Cash generated from operations | (154,510 | ) | 1,854,966 |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Year ended 31 December 2023 |
31/12/23 | 1/1/23 |
£ | £ |
Cash and cash equivalents | 3,725,219 | 872,762 |
Year ended 31 December 2022 |
31/12/22 | 1/1/22 |
as restated |
£ | £ |
Cash and cash equivalents | 872,762 | - |
3. | ANALYSIS OF CHANGES IN NET DEBT |
At 1/1/23 | Cash flow | At 31/12/23 |
£ | £ | £ |
Net cash |
Cash at bank | 872,762 | 2,852,457 | 3,725,219 |
872,762 | 2,852,457 | 3,725,219 |
Debt |
Finance leases | (100,569 | ) | 47,292 | (53,277 | ) |
Debts falling due within 1 year | (134,440 | ) | (2,064,841 | ) | (2,199,281 | ) |
Debts falling due after 1 year | (1,292,931 | ) | (1,533,444 | ) | (2,826,375 | ) |
(1,527,940 | ) | (3,550,993 | ) | (5,078,933 | ) |
Total | (655,178 | ) | (698,536 | ) | (1,353,714 | ) |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements |
for the year ended 31 December 2023 |
1. | STATUTORY INFORMATION |
Embrace Steel Group Ltd is a |
2. | STATEMENT OF COMPLIANCE |
The consolidated financial statements have been prepared under the historical cost convention and in accordance with United Kingdom Accounting Standards including Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS102") and the requirements of the Companies Act 2006. |
3. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Basis of consolidation |
The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings. |
The consolidation of the financial statements has been accounted for using the merger accounting method. As required by FRS102.19.30 the results and cash flows of all of the combining entities have been brought into the consolidated financial statements. |
The consolidated financial statements present the results and cash flows of the group for the year ended 31 December 2023. The unconsolidated results of the company, where presented, are for the year ended 31 December 2023 and the comparatives present the results for the year ended 31 December 2022. |
Intra group transactions and profits are eliminated fully on consolidation. |
The company has taken advantage of section 408 of the Companies Act 2006 and does not publish a separate profit and loss account. The company's post tax profit for the year was £nil (2022 £nil). |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
3. | ACCOUNTING POLICIES - continued |
Critical accounting 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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. |
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below. |
i) Carrying value of property, plant and equipment and investment property (note 11 and 12) |
The carrying value of property, plant and equipment and investment property as at 31 December 2023 was £4,308,855. Additions in the year totalled £104,456 and the depreciation charge was £177,091. Estimated useful economic lives of property, plant and equipment are based on management's judgements and experience. When management identifies that actual useful lives differ materially from the estimates used to calculate depreciation, that charge is adjusted. Due to the significance of capital investment, variations between actual and estimated useful lives could impact operating results both positively and negatively. Asset values are reviewed annually and historically changes to remaining estimates of useful lives have not been material.. |
(ii) Amounts recoverable on long term contracts (Note 15) |
The carrying value of amounts recoverable under long term contracts as at 31 December 2023 was £5,256,142. These are calculated by reference to the stage of completion of a contract. The stage of completion of a contract is measured by comparing the costs incurred for work performed to date to the total estimated contract costs. The nature of construction contracts is such that disputes can occur over the valuation and recoverability of contract income at a particular point in time, particularly where there have been variations made contracts as they progress. In calculating the amounts recoverable under long term contracts the management have used their judgement and experience in calculating and assessing the valuation and recoverability of contract amounts |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable, net of discounts and value added taxes. Turnover includes revenue earned from the sale of goods and from the rendering of services. |
Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have transferred to the buyer. |
Turnover from the rendering of services is recognised by reference to the stage of completion of the contract. The stage of completion of a contract is measured by comparing the costs incurred for work performed to date to the total estimated contract costs. Amounts recoverable on contracts are included within debtors and represent turnover recognised in excess of payments on account. Payments on account in excess of amounts recognised as turnover are included within creditors. |
Goodwill |
Intangible assets |
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
3. | ACCOUNTING POLICIES - continued |
Tangible fixed assets |
Freehold property | - |
Plant and machinery | - |
Fixtures and fittings | - |
Investment property |
Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in fair value is recognised in profit or loss. |
Stocks |
Stocks are measured at the lower of cost and estimated selling price less costs to complete and |
sell. Cost is determined using the first in first out method. The carrying amount of stock sold is |
recognised as an expense in the period in which the related revenue is recognised. |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Foreign currencies |
Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date |
of the transaction. |
At the end of each reporting period foreign currency monetary items are translated at the closing |
rate of exchange. Non-monetary items that are measured at historical cost are translated at the |
rate ruling at the date of the transaction. All differences are charged to profit or loss. |
Pension costs and other post-retirement benefits |
The group operates a defined contribution pension scheme. Contributions are charged to the |
profit and loss account as they become payable in accordance with the rules of the scheme. |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
3. | ACCOUNTING POLICIES - continued |
Construction contracts |
Where the outcome of a construction contract can be estimated reliably, revenue and costs are |
recognised by reference to the stage of completion of the contract activity at the balance sheet |
date. This is normally measured by the proportion that contract costs incurred for work performed |
to date bear to the estimated total contract costs, except where this would not be representative of |
the stage of completion. Variations in contract work, claims and incentive payments are included |
to the extent that the amount can be measured reliably and its receipt is considered probable. |
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is |
recognised to the extent of contract costs incurred where it is probable they will be recoverable. |
Contract costs are recognised as expenses in the period in which they are incurred. When costs |
incurred in securing a contract are recognised as an expense in the period in which they are |
incurred, they are not included in contract costs if the contract is obtained in a subsequent period. |
When it is probable that total contract costs will exceed total contract revenue, the expected loss is |
recognised as an expense immediately. |
4. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the group. |
An analysis of turnover by class of business is given below: |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Construction contracts | 26,152,699 | 7,495,659 |
Sale of stock and material | 86,195 | 59,514 |
26,238,894 | 7,555,173 |
5. | EMPLOYEES AND DIRECTORS |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Wages and salaries | 1,207,511 | 1,117,955 |
Social security costs | 13,882 | 35,969 |
Other pension costs | 15,108 | 33,722 |
1,236,501 | 1,187,646 |
The average number of employees during the year was as follows: |
31/12/23 | 31/12/22 |
as | restated |
Administration | 5 | 9 |
Manufacturing | 23 | 36 |
The average number of employees by undertakings that were proportionately consolidated during the year was 28 (2022 - 45 ) . |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
5. | EMPLOYEES AND DIRECTORS - continued |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Directors' remuneration | - | - |
6. | OPERATING PROFIT |
The operating profit is stated after charging: |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Depreciation - owned assets | 177,091 | 158,026 |
Loss on disposal of fixed assets | 43,647 | 54,976 |
Goodwill amortisation | 158,924 | 95,790 |
Patents and licences amortisation | 116,640 | 17,302 |
Auditors' remuneration | 23,250 | 15,917 |
Foreign exchange differences | - | 125 |
7. | INTEREST PAYABLE AND SIMILAR EXPENSES |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Bank interest | 107,634 | 39,723 |
Bank loan interest | 92,773 | 10,121 |
Loan interest | 92,047 | 67,758 |
Hire purchase | 6,983 | 4,947 |
299,437 | 122,549 |
8. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Current tax: |
UK corporation tax | 236,756 | 76,549 |
Corporation tax prior year | - | (33,298 | ) |
Total current tax | 236,756 | 43,251 |
Deferred tax | 31,326 | 113,053 |
Tax on profit | 268,082 | 156,304 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
8. | TAXATION - continued |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Profit before tax | 1,013,017 | 849,196 |
Profit multiplied by the standard rate of corporation tax in the UK of 25 % (2022 - 19 %) |
253,254 |
161,347 |
Effects of: |
Expenses not deductible for tax purposes | 15,141 | 10,445 |
Income not taxable for tax purposes | - | (56,050 | ) |
Depreciation in excess of capital allowances | 34,300 | 11,853 |
Adjustments to tax charge in respect of previous periods | - | (70,143 | ) |
Change in tax rate | (14,962 | ) | - |
Pre acquisition adjustment | - | (14,201 | ) |
Utlisation of losses | (50,977 | ) | - |
Deferred tax movement | 31,326 | 113,053 |
Total tax charge | 268,082 | 156,304 |
Tax effects relating to effects of other comprehensive income |
There were no tax effects for the year ended 31 December 2023. |
31/12/22 |
Gross | Tax | Net |
£ | £ | £ |
Property revaluation | 528,750 | (103,917 | ) | 424,833 |
9. | INDIVIDUAL INCOME STATEMENT |
As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements. |
10. | DIVIDENDS |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
shares of each |
Final | 70,500 | - |
11. | PRIOR YEAR ADJUSTMENT |
The 2022 balance sheet has been restated to include loan note liabilities of £265,088 redeemable in 2027. |
The 2022 balance sheet has been restated to included preference shares issued after date in relation to the acquisition of Hambleton Steel Group Limited. The preference shares hold a redeemable value of £1,020,495. |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
12. | INTANGIBLE FIXED ASSETS |
Group |
Patents |
and |
Goodwill | licences | Totals |
£ | £ | £ |
COST |
At 1 January 2023 | 1,669,239 | 226,370 | 1,895,609 |
Additions | - | 270,864 | 270,864 |
Disposals | - | (41,220 | ) | (41,220 | ) |
At 31 December 2023 | 1,669,239 | 456,014 | 2,125,253 |
AMORTISATION |
At 1 January 2023 | 175,790 | 17,302 | 193,092 |
Amortisation for year | 158,924 | 116,640 | 275,564 |
Eliminated on disposal | - | (5,725 | ) | (5,725 | ) |
At 31 December 2023 | 334,714 | 128,217 | 462,931 |
NET BOOK VALUE |
At 31 December 2023 | 1,334,525 | 327,797 | 1,662,322 |
At 31 December 2022 | 1,493,449 | 209,068 | 1,702,517 |
13. | TANGIBLE FIXED ASSETS |
Group |
Fixtures |
Freehold | Plant and | and |
property | machinery | fittings | Totals |
£ | £ | £ | £ |
COST OR VALUATION |
At 1 January 2023 | 1,991,962 | 956,363 | 133,618 | 3,081,943 |
Additions | 33,391 | 16,331 | 54,734 | 104,456 |
Disposals | (1,600 | ) | (17,661 | ) | (31,238 | ) | (50,499 | ) |
At 31 December 2023 | 2,023,753 | 955,033 | 157,114 | 3,135,900 |
DEPRECIATION |
At 1 January 2023 | 247,621 | 502,357 | 62,325 | 812,303 |
Charge for year | 84,093 | 69,308 | 23,690 | 177,091 |
Eliminated on disposal | (836 | ) | (13,801 | ) | (27,712 | ) | (42,349 | ) |
At 31 December 2023 | 330,878 | 557,864 | 58,303 | 947,045 |
NET BOOK VALUE |
At 31 December 2023 | 1,692,875 | 397,169 | 98,811 | 2,188,855 |
At 31 December 2022 | 1,744,341 | 454,006 | 71,293 | 2,269,640 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
13. | TANGIBLE FIXED ASSETS - continued |
Group |
Cost or valuation at 31 December 2023 is represented by: |
Fixtures |
Freehold | Plant and | and |
property | machinery | fittings | Totals |
£ | £ | £ | £ |
Valuation in 2022 | 427,500 | - | - | 427,500 |
Cost | 1,596,253 | 955,033 | 157,114 | 2,708,400 |
2,023,753 | 955,033 | 157,114 | 3,135,900 |
If freehold property had not been revalued they would have been included at the following historical cost: |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Cost | 1,564,462 | 1,564,462 |
Aggregate depreciation | 348,871 | 348,871 |
Freehold property were valued on an open market basis on 5 January 2023 by Eddisons Chartered Surveyors . |
14. | FIXED ASSET INVESTMENTS |
Company |
Other |
investments |
£ |
COST |
At 1 January 2023 |
and 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
The group or the company's investments at the Balance Sheet date in the share capital of companies include the following: |
Subsidiaries |
Registered office: Gatherley Road, Brompton on Swale, Richmond, North Yorkshire, DL10 5SF |
Nature of business: |
% |
Class of shares: | holding |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
14. | FIXED ASSET INVESTMENTS - continued |
Registered office: Gatherley Road, Brompton on Swale, Richmond, North Yorkshire, DL10 5SF |
Nature of business: |
% |
Class of shares: | holding |
Registered office: Gatherley Road, Brompton on Swale, Richmond, North Yorkshire, DL10 5SF |
Nature of business: |
% |
Class of shares: | holding |
Registered office: Gatherley Road, Brompton on Swale, Richmond, North Yorkshire, DL10 5SF |
Nature of business: |
% |
Class of shares: | holding |
Registered office: Gatherley Road, Brompton on Swale, Richmond, North Yorkshire, DL10 5SF |
Nature of business: |
% |
Class of shares: | holding |
Registered office: 71-75 Shelton Street, Covent Garden, London, United Kingdom, WC2H 9JQ |
Nature of business: |
% |
Class of shares: | holding |
All subsidiaries have been included in the consolidation. |
15. | INVESTMENT PROPERTY |
Group |
Total |
£ |
FAIR VALUE |
At 1 January 2023 |
and 31 December 2023 | 2,120,000 |
NET BOOK VALUE |
At 31 December 2023 | 2,120,000 |
At 31 December 2022 | 2,120,000 |
The investment property was valued by Eddisons Real Estate Valuers on 5th January |
2023 in accordance with RICS Valuation - Global Standards incorporating IVSC International |
Valuation Standards. |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
15. | INVESTMENT PROPERTY - continued |
Group |
Fair value at 31 December 2023 is represented by: |
£ |
Valuation in 2022 | 295,000 |
Cost | 1,825,000 |
2,120,000 |
If investment property had not been revalued it would have been included at the following historical cost: |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Cost | 1,325,158 | 1,325,158 |
Investment property was valued on an open market basis on 5 January 2023 by Eddisons Chartered Surveyors . |
16. | STOCKS |
Group |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Stocks | 139,464 | 180,413 |
17. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
31/12/23 | 31/12/22 | 31/12/23 | 31/12/22 |
as restated |
as restated |
£ | £ | £ | £ |
Trade debtors | 35,735 | 479,350 |
Amounts owed by group undertakings | - | 18 |
Amounts recoverable on contract | 5,256,142 | 1,801,550 |
Other debtors | 866,389 | 126,450 |
Called up share capital not paid | 3 | 3 |
Prepayments and accrued income | 272,118 | 214,577 |
6,430,387 | 2,621,948 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
18. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
31/12/23 | 31/12/22 | 31/12/23 | 31/12/22 |
as restated |
as restated |
£ | £ | £ | £ |
Bank loans and overdrafts (see note 20) | 55,180 |
- |
Other loans (see note 20) | 2,144,101 | 134,440 |
Hire purchase contracts (see note 21) | 30,952 | 47,068 |
Trade creditors | 5,006,000 | 1,245,272 |
Amounts owed to group undertakings | 652,145 | 3,277,613 |
Tax | 245,304 | 106,928 |
Social security and other taxes | 30,996 | 31,693 |
VAT | 7,963 | 7,963 | - | - |
Other creditors | 870,148 | 363,152 |
Accruals and deferred income | 534,099 | 62,360 |
Accrued expenses | - | 9,461 |
9,576,888 | 5,285,950 |
19. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
Group | Company |
31/12/23 | 31/12/22 | 31/12/23 | 31/12/22 |
as restated |
as restated |
£ | £ | £ | £ |
Bank loans (see note 20) | 2,443,106 | - |
Other loans (see note 20) | 383,269 | 1,292,931 |
Hire purchase contracts (see note 21) | 22,325 | 53,501 |
Other creditors | 1,285,583 | 1,285,583 |
4,134,283 | 2,632,015 |
Other creditors falling due after more than one year include preference shares valued at £1,020,495 that are redeemable after 31 December 2024. |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
20. | LOANS |
An analysis of the maturity of loans is given below: |
Group |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Amounts falling due within one year or | on demand: |
Bank loans | 55,180 | - |
Other loans | 2,144,101 | 134,440 |
2,199,281 | 134,440 |
Amounts falling due between one and | two years: |
Bank loans - 1-2 years | 39,822 | - |
Other loans - 1-2 years | 383,269 | 1,292,931 |
423,091 | 1,292,931 |
Amounts falling due between two and | five years: |
Bank loans - 2-5 years | 138,568 | - |
Amounts falling due in more than five | years: |
Repayable by instalments |
Bank loans more 5 yr by instal | 2,264,716 | - |
21. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Group |
Hire purchase contracts |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Net obligations repayable: |
Within one year | 30,952 | 47,068 |
Between one and five years | 22,325 | 53,501 |
53,277 | 100,569 |
22. | PROVISIONS FOR LIABILITIES |
Group |
31/12/23 | 31/12/22 |
as | restated |
£ | £ |
Deferred tax | 442,917 | 411,591 |
Embrace Steel Group Ltd (Registered number: 12939220) |
Notes to the Consolidated Financial Statements - continued |
for the year ended 31 December 2023 |
22. | PROVISIONS FOR LIABILITIES - continued |
Group |
Deferred |
tax |
£ |
Balance at 1 January 2023 | 411,591 |
Provided during year | 970 |
Change of tax rates | 30,356 |
Balance at 31 December 2023 | 442,917 |
23. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31/12/23 | 31/12/22 |
value: | as restated |
£ | £ |
Ordinary | 0.001 | 8 | 8 |
24. | RESERVES |
Group |
Fair |
Retained | Share | Revaluation | value |
earnings | premium | reserve | reserve | Totals |
£ | £ | £ | £ | £ |
At 1 January 2023 | 514,469 | 319,991 | 424,833 | 178,423 | 1,437,716 |
Profit for the year | 581,729 | 581,729 |
Dividends | (70,500 | ) | (70,500 | ) |
Reserves transfer | (8,550 | ) | - | 8,550 | - | - |
At 31 December 2023 | 1,017,148 | 319,991 | 433,383 | 178,423 | 1,948,945 |
25. | CONTINGENT LIABILITIES |
2023 | 2022 |
£ | £ |
Warranty bonds | 2,000,000 | 750,000 |
Warranty bonds require the company to make payments to third parties in the event that the company does not perform what is expected of it under the terms of certain construction contracts. |
26. | ULTIMATE CONTROLLING PARTY |
The company is controlled by its ultimate parent company, Catalyst Ventures Ltd, a |
company incorporated in England and Wales (company number 06692629). This is by virtue of its |
holding 60% of the issued share capital in the company. |
The ultimate controlling party is J Hacker by virtue of his majority shareholding in the ultimate |
parent company, Catalyst Ventures Ltd. A copy of the consolidated accounts can be obtained from |
the registered office. |