Registered number:
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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EVOLUTION CASTINGS GROUP LIMITED
COMPANY INFORMATION
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EVOLUTION CASTINGS GROUP LIMITED
CONTENTS
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EVOLUTION CASTINGS GROUP LIMITED
CHAIRMAN AND CHIEF EXECUTIVE’S STATEMENT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The Chairman and Chief Executive present their statement for the period.
Evolution Castings Group Limited was created in 2023 as a vehicle to acquire the Grainger and Worrall group of companies. We are delighted with the progress that the Group has made; on time delivery has been restored to all customers, quality performance has been transformed, and productivity increased by 85%. The progress is also evident in our first set of published accounts. Over the 15 months of trading to 30 September 2024 the Group delivered adjusted EBITDA c.£11million. Operating Profit was £4.2million after £3.2million of restructuring expenses which will not recur in subsequent years. The Group invested £3.2million in Capital Equipment which has been significant factor in the operational turnaround and establishes capability for growth.
It has given the Board particular joy to provide all our employees with the opportunity to take an ownership stake in the business as Partners (through ECG Partner Share Scheme Limited). Initiatives to develop our Partners, improve safety and enhance sustainability are a critical part of our role as a responsible business in society. We have been pleased with the reaction from our customers and others to our first ESG report which was published in April 2024. We were delighted to receive the Institute for Turnaround “Turnaround of the Year” award in 2024. We pay tribute to our Partners, our customers and all those who have contributed to the transformation of the business. The stage is set for the business to reach its full potential and regain its position the world’s pre-eminent aluminium sand casting business for highly complex, challenging applications.
DS Eldridge
Chief Executive
Date27 January 2025
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EVOLUTION CASTINGS GROUP LIMITED
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The Directors present their report and the financial statements for the 18-month period ended 30 September 2024.
The parent company, Evolution Castings Group Limited was incorporated on 7 April 2023 and the accounts include the 18 month results of the Company from that date. The accounts include the results of the Group and have been consolidated on the acquisition accounting basis. Accordingly the results of the Group are included as though they have been acquired during the period by the Company. GWL, GWM and GWI were acquired on 29 June 2023 and the consolidated results represent the 15 months of trading from that date.
Evolution Castings Group Limited (the “Company”) was formed on 7 April 2023 for the specific purpose of becoming the holding entity for the Grainger and Worrall business (“G&W”) which comprises Grainger & Worrall Limited (“GWL”), Grainger and Worrall Machining Limited (“GWM”) and Grainger & Worrall Incorporated (“GWI”) (together the “Group”).
The principal activity of the Group is that of being a leading provider of complex, high-quality aluminium casting solutions. It is a high-performance specialist engineering group that is involved with its customers from concept design through to production to ensure optimisation of the cast products’ performance. It uses robust manufacturing methods which optimise product and material performance, adding value to customers’ supply chains with a niche volume manufacturing offering. Primarily the Group’s capabilities are engineering, complex sand-casting, giga casting, design for manufacturing, machining, material science and inspection & certification. These capabilities provide prototype parts and low volume production (sub 20,000 castings per annum) for customers in the following markets: motorsport, automotive, aerospace, defence & infrastructure. The Group operates in a global market with a brand customer base across Europe, Asia and North America. Whilst historically the Group’s revenue has been predominantly in the UK and Europe this has widened in recent years to expanding its market share in North America and Asia. Whilst the Group does not specifically target certain geographies it has the capabilities to collaborate with any customer driving innovation, regardless of their location. Strategic vision The strategic vision of the Group is: “To support our customers world-wide, achieve success by helping them bring great ideas to life with outstanding engineering sand cast aluminium solutions.” To support this vision, the Group has set several short- and medium-term goals, these being: • To grow the Group successfully and profitably by optimising the engineering capabilities and expertise; • To instil the Group’s values and ensure that they are embraced by the workforce; • To continue to value the Group’s workforce with a culture of continual improvement and learning which is designed to empower and develop the workforce;
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EVOLUTION CASTINGS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
• To develop and implement a market leading ESG strategy and in doing so positively impact the Group and the communities that it is part of; • To grow revenue profitably to £100 million in the financial year ending 31 October 2027; • To seek to expand the Group’s operations into the US either organically or by acquisition; • To continue to maintain a strong presence in the automotive and motorsport sectors as a provider of niche volume and low-rate initiate production components; • To continue to serve prototyping markets, irrespective of sector and specifically in automotive; • To maintain its position as a world leading provider of automotive giga castings; and • To grow its market share in the aerospace, defence, marine and infrastructure sectors. Key attributes The successful performance of the Group is underpinned by: • A market leading provider of high quality and complex engineering in aluminium castings with a particular expertise in sand cast aluminium giga-structures. • Deep industry experience with the know-how to produce accurate and reliable solutions for customers leveraging the Group’s ability to produce with market leading manufacturing tolerances and design-for- manufacture competencies. • A collaborative-orientated approach to design, feasibility and simulation delivered by a team of expert engineers who work iteratively with blue-chip customers to develop robust manufacturing methods that optimise structure properties before the first mould is poured. • Operational expertise and scale of the production facilities meaning the Group has the largest independently owned prototyping facility in the market space in which it operates. • An innovative approach to materials science, leveraging in-house expertise coupled with external partnerships allowing the Group to optimise the use of alloys within its components and products. This is demonstrated by the development of proprietary aluminium alloys that allow for enhanced performance and durability, particularly in developing areas such as hydrogen driven powertrains. • Strong, well-established relationships with a large portfolio of sector leading global brands.
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EVOLUTION CASTINGS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The principal risks facing the Group are summarised in the following table alongside mitigations identified and implemented.
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EVOLUTION CASTINGS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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EVOLUTION CASTINGS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Policies
During the period the Group undertook a comprehensive overhaul of its policies and procedures and continue to be reviewed regularly to ensure that they are up to date. The key policies in place in the Group now include: • Anti-bribery and corruption • Code of conduct • Environmental, social and governance • Equality, Diversity and inclusion • Fair pay and gender pay gap • Gift and corporate hospitality • Human rights • Modern slavery • Privacy & data protection statement • Safety, health and environmental • Security of employment and recruitment • Suppliers and third parties • Training and development Review of the reporting period Prior to its acquisition, G&W significantly underperformed due to a combination of internal and external factors. On 29 June 2023, the Company acquired G&W. At the time of the transaction the business entered into a funding agreement with several key customers in the business who injected £12.9 million of funding into the Group. This funding was and continues to remain unsecured. Most of these funds were used by the Group to support the restoration of the Group’s working capital profile and invest in much needed plant and equipment. For the remainder of 2023 the Group undertook a very comprehensive and intensive turnaround, the results of which were reflected in the financial results reported in the trading entities GWL and GWM in the financial year ending 31 October 2023 and now included in the reported results for the Group set out herein. The efforts of the Partners, management, stakeholders and advisers involved in the turnaround of G&W was recognised by the Institute for Turnaround (the “IFT”) and the business was awarded the mid-market turnaround of the year 2024. The focus of the Group and the stakeholders is now to optimise the resilience of the business.
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EVOLUTION CASTINGS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
In May 2023 the Group achieved a milestone of producing over 2,000 castings in one week and since then the Group has been focused on driving productivity further. Productivity, defined as Series castings per head increased by circa 85 per cent. between 2023 and 2024. As an unfortunate consequence of the massive strides in productivity in the business and changes to reporting lines, it was necessary to reduce the size of the workforce in the summer of 2024. Whilst a difficult period for workforce, Management sought to be as sensitive and empathetic as possible in the period. The result of all these operational changes has led to a leaner, more focused team driving continuous improvement and with a relentless focus on quality. Consequently, the Group is fulfilling customer orders, particularly in prototyping from specifications to parts more efficiently than it has done in recent history. In February 2024 G&W passed its annual IATF. Management believe that this reflects the relentless focus of the business on quality. Further a commercial team was established in the United States of America and a reset of the commercial team in Europe undertaken. A Group Chief Commercial Officer was also appointed in Q4 2024. As at the date of these accounts the Group’s pipeline of opportunities now exceeds £400 million. As reported in these financial statements the adjusted EBITDA for the period is £10,957,165 and with net debt, including Customer Group funding, of £23,784,612 this represented a leverage ratio of 2.17x.
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EVOLUTION CASTINGS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The Group has financial key performance indicators (“KPIs”) as follows:
Adjusted EBITDA is calculated as follows:
The Group uses a suite of targeted non-financial key performance indicators to monitor and measure performance on a daily, weekly and monthly basis which covers the whole business operating spectrum reflecting the changing needs of the Group.
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EVOLUTION CASTINGS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Under section 172(1) of the Companies Act 2006, the Directors of a company have a duty to promote the success of the Group for the benefit of its members, and in doing so have regard (amongst other matters) to:
• the likely consequences of any decision in the long-term; • the interest of the Group’s Partners; • the need to foster the Group’s business relationships with suppliers, customers, and others; • the impact of the Group’s operations on the community and environment; • the desirability of the company maintaining a reputation for high standards of business conduct; and • the need to act fairly between members of the Group. During the reporting period the directors believe that there were several key decisions taken, for all of which the Group’s stakeholders were considered. These were: • improving the involvement of the Group’s Partners, including but not limited to putting in place regular briefings with the workforce, embedding new values in the Group forming Employee Community Groups • increasing the contribution made to the communities in which the Group operates; • putting a greater focus on the environment, social and governance objectives of the Group and a reset of the Group medium term objectives. • proactively investing significant time in improving the relationships and level of transparency with all stakeholders of the Group, internally and externally; • creating a share scheme giving all eligible employees the ability to participate in the future success of the Group. • completing the intense turnaround of the business in 2024 and focussing on the resilience of the Group; • actively diversifying the focus of the business to increasingly create a balance portfolio of customers across the automotive, prototyping, giga casting, defence, aerospace, infrastructure and marine markets worldwide; and • the exit from producing iron castings and the transition to managing iron casting production contracts for customers and the significant expansion of the Group’s giga casting capability that now enables the business to produce in the region of 16 giga castings a week which is believed to be the one of the largest, if not the largest capability globally.
This report was approved by the board and signed on its behalf.
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EVOLUTION CASTINGS GROUP LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The directors present their report and the financial statements for the period ended 30 September 2024.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to 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.
The profit for the period, after taxation, amounted to £292,225.
During the period the Group declared dividends of £Nil. Since the acquisition of the G&W business the Group has, and will continue to maintain, a policy of there being no dividends, preferring to reinvest its profits into the business and in reduced the indebtedness of the business.
Accordingly, the profit before exceptional items and taxation amounted to £3,683,477.
The directors who served during the period were:
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EVOLUTION CASTINGS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
In 2024, Management undertook a comprehensive review the business and its market focus.
The result of this review was confirmation that the Group was well placed to capitalise on its reputation as a provider of complex aluminium sand-casting engineering solutions. The Group has longstanding and world-renowned expertise in castings for internal combustion engines and transmissions. Over the past five years it has become equally well known for expertise in drive unit housings, giga castings and other products for electric vehicles. Management also acknowledged that despite the Group’s capabilities for electric vehicles and traditional propulsion the automotive sector faces challenges and uncertainty in forthcoming years as consumers transition from internal combustion engines. Management recognised the ongoing importance of the automotive sector to the Group as a core market and that the changes in the sector were most likely to be positive given the increasing need for niche & low volume production, prototyping and giga casting complex casting work. However, it was also confirmed that the Group’s market share in other industrial markets such as aerospace, defence, infrastructure and marine was significantly below its full potential. As such investment was made in the commercial function of the Group to grow sales in these segments. Consequently, the focus in FY25 and beyond will be to continue to serve the automotive sector whilst in parallel effecting a market diversification strategy. It is expected that this will underpin the Group’s market leading position and provide further resilience to the business with a wider sector portfolio. Given the increasing growth of the Group’s activities in the United States of America, together with the increasing demand for its services in Europe the Directors will continue to proactively search for potential acquisition targets in the US to enable a physical manufacturing footprint to be established in the USA in addition to the existing facilities in the UK. Employee ("Partner") engagement During the period the Group prioritised employee engagement and the Directors took proactive steps to strengthen that engagement. This included: • the creation of a partner share scheme enabling all employees to be awarded a share in Evolution Castings Group Partner Share Scheme Limited (“ECGPSSL”), which in turn now owns 5.25 per cent. of the Company. The intention is that the shares held by the Partners should attract value if the Group is sold or seeks a listing on the Alternative Investment Market (the “AIM”), or equivalent, in the future. Partner eligibility is subject to three simple conditions: i. that the Partner has continual service for more than 12 months; ii. has no active warnings on their personnel file; and iii. is not serving their notice period. In addition, a further 1.65 per cent of the issued share capital in the Company was allocated to ECGPSSL. Under the articles of association of that company, the directors are entitled to allocate any value attributed to those shares at their discretion to any employees with the intention that any Partner who meets criteria (ii) and (iii) but has between one month but less than 12 months continual service may also receive a distribution.
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EVOLUTION CASTINGS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
• the formation of employee relationship groups (the “ERGs”) to encourage greater interaction throughout the business. These include Evolution Embrace, Evolution World and Evolution Women. In addition, an Employee Forum and a Management Forum were established. The ERGs are encouraged to meet regularly and to highlight areas of success and improvement across the Group. • increasing the level of engagement with the local community. The Group is one of the largest privately owned businesses in Shropshire, and is the largest employer in Bridgnorth, the town in which the Group operates. The Directors strongly believe that the Group therefore has a responsibility to play an active role in the local community. As a result, the business supports local charities and sponsors key local events such as the annual Bridgnorth Walk and the Italian Auto Moto Festival. • Strengthening the learning and development capability within the Group. Significant efforts are being made to create learning and development opportunities for all of the Partners and foster a culture where the business can provide learning opportunities for Partners to be able to access training and progress their careers.
Shareholders
Historically the shareholder base solely comprised the Grainger family. Following the acquisition on 29 June 2023 the shareholder base changed substantially. Whilst the family retained a majority shareholding in the business, the shares held by the family and the management team became non voting. The Group is now controlled by the statutory directors of the Company with all main decisions being carried with a majority vote decision. The Group Chairman has the casting vote. Information is shared in an internal newsletter (“Evolution News”) which is circulated to all Partners. This is augmented with Employee and Management Forum meetings. The Group’s Supervisory Board also meets monthly and this includes a representative for the Grainger family. Whilst respecting the heritage of the business as a long-standing family owned operation the Directors’ priorities are now focused on the financial resilience of the Group, maintaining a safe, well invested, working environment, investing in the workforce and delivering outstanding results for our customers. Partners The Group has made a concerted effort to increase its investment in Partner training, development, well being and inclusion within the business. The Group engages with Partners regularly and the senior management team adopt an “open door policy”. Views, ideas, suggestions and issues are encouraged to be raised by Partners at all levels in order that the business has try to be as good as it can be. The employee community groups that were formed in 2023 were also an important step in the Group’s development as it seeks to become an employer with greater diversity within the workforce.
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EVOLUTION CASTINGS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Customers
The close working relationship with the Group’s customers has been essential in effecting the turnaround of the business. During the reporting period the business adopted a position of much greater clarity and transparency with its key customers. The ethos within the business is to ensure that there is always absolute alignment with customers and to jointly celebrate successes and communicate early, and comprehensively, should issues arise. The Group has also significantly enhanced its commercial team which supports this strategy and it now has the objective of participating in all relevant engineering solutions and prototyping projects of the nature being sought by the business in the sectors in which the Group chooses to operate. Suppliers The Group has a broad range of suppliers, ranging from the provision of materials for design, development and production to suppliers of IT, software and facilities. We seek to work fairly with our suppliers which helps us reaffirm our reputation for upholding high ethical standards and assists with reducing the risk in our supply chain whilst benefiting from costs efficiencies. We also maintain our awareness of environment consequences when making sourcing decisions in line with the expectations laid out in our Group ESG strategy. Community The Group recognises that as a major employer in the local area, it should proactively contribute to the local community. This is in line with the ethos of the Directors, shareholders and is aligned with the Group’s ESG strategy. As well as the creation and maintenance of employment in the local area, the business actively sponsor local charitable events, the local foodbank and annually the Partners choose the Group’s nominated charity. In 2023 this was Severn Hospice and in 2024 the chosen charity is Balls to Cancer. Partners have chosen Severn Hospice as the charity for 2025. Events are also held regularly to raise the awareness of STEM and engineering. The Director’s hope is that further efforts will be successful during 2025 as more is done to promote this important topic. Equal opportunities employer The Group is an Equal Opportunity Employer. It will not unlawfully discriminate against any of the protected characteristics as identified by the Equality Act 10 of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race (including colour, nationality, and ethnic or national origin), region or belief, sex (gender) and sexual orientation. Applications for employment by disabled persons are always fully considered, considering the aptitudes of the applicant concerned and the safety requirements of the role being applied for. In the event of Partners becoming disabled every effort is made to ensure that their employment with the Group continues and that appropriate training and support is arranged. It is the policy of the Company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other Partners. Qualifying third party indemnity provisions The Group maintained qualifying third-party indemnity insurance in respect of the directors and offers against any such liabilities referred to in Section 234 of the Companies Act 2006.
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EVOLUTION CASTINGS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
During the reporting period the Group has significantly invested in strengthening its ESG policies.
The Group also recognises the importance of all the 17 United Nations Sustainable Development Goals (“SDGs”). As a result of the Group wide materiality assessment undertaken in around September 2023 based on the Global Reporting Initiative (“GRI”) six of the SDGs were identified as those which could be most directly influenced. These were: • SDG 3: Good Health and Wellbeing • SDG 4: Quality Education • SDG 5: Gender Equality • SDG 7: Affordable and Clean Energy • SDG 8: Decent Work and Economic Growth • SDG 9: Industry, Innovation and Infrastructure. Strategic targets for the Group have been set against these SDGs together with short- and medium-term objectives. These will be reported on annually in the future in the Group’s ESG report.
Energy and Greenhouse Gas ("GHG") emissions
In the reporting period the Group’s emissions were 111 tonnes per million £ of revenue.
Waste
The Group also monitors all its waste streams against their respective waste classification codes. WIR is the calculation of tonnes of waste produced per million £ of revenue. In the reporting report, 10,937 tonnes of waste sand was produced along with 4,172 tonnes of refining material and 1,020 tonnes of general waste. Recycle rates continue to exceed 99%. Environmental matters The Directors can confirm that there were no environmental incidents of significance during the financial year and the Group continues to maintain a low-risk scope on the Pollution, Prevention and Control (“PPC”) permit. The testing frequency against the PPC permit is biannual.
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EVOLUTION CASTINGS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Health and Safety Health and safety is a priority across the Group. Continual monitoring is undertaken against two metrics, these being: • Accident Frequency Rate (“AFR”): the measure of accident per 10,000 hours worked; and • Accident Severity Rate (“ASR”): the measure of days lost per 10,000 hours worked. The results for the reporting period were as follows: • The AFR rate was 0.47. • The ASR was 1.26. Since June 2023 the company has invested in new equipment and extraction systems to reduce safety risks, it has undertaken continual safety training and launched its “STAR” initiative to promote involvement in safety improvement across the organisation.
The Directors have undertaken an exercise to review the appropriateness of the continued use of the Going Concern basis that underpins the preparation of the financial statements. This review considers the likely performance of the Company, with reference to the forecasts for the period to 31 January 2026 and our 3 year plan.
The key assumptions in the cash flow forecasts considered by the Directors are as follows: • volumes, which are based on historical levels, together with current and potential orders based on confirmed purchase orders, indicative volumes and discussions with customers; • sales prices, which are estimates based on the latest contract negotiations with customers and prices quoted in prototyping requests for quotes (“RFQs”); and • continued and sustained improvements to productivity in the Group. The Group’s plan is to continue to strengthen the business and maintain a programme of continual improvement. The Directors are satisfied with the rate of progress. The Directors have also considered and applied the “reasonably severe but plausible” downside sensitivity of delays in orders from its key customers. The Directors also believe that the funding structure put in place at the time of the acquisition with a customer group made up of several of its customers (the “Customer Group”), together with the stronger financial performance of the business is sufficient to meet the Group’s obligations under the reasonably severe but plausible downside scenario. The Group’s funders, National Westminster Bank plc and UK Export Finance have provided a letter of comfort covering the period to 31 January 2026. Similarly, the Customer Group have provided a letter of comfort covering the period to 31 July 2026. Therefore, the Directors conclude that it is appropriate to continue to adopt the going concern principle in preparing the financial statements.
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EVOLUTION CASTINGS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
There have been no significant events affecting the Group since the year end.
The auditors, WR Partners, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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EVOLUTION CASTINGS GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EVOLUTION CASTINGS GROUP LIMITED
We have audited the financial statements of Evolution Castings Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 30 September 2024, which comprise the Consolidated statement of comprehensive income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, 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).
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 United Kingdom, including the Financial Reporting Council'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.
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 or 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.
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EVOLUTION CASTINGS GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EVOLUTION CASTINGS GROUP LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
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 Directors' report.
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EVOLUTION CASTINGS GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EVOLUTION CASTINGS GROUP LIMITED (CONTINUED)
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 Auditors' 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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
The audit team obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework (FRS102 and the Companies Act 2006), the relevant tax compliance regulations, employment law, Health and Safety Regulations and the EU General Data Protection Regulation (GDPR). We understood how the Company is complying with these frameworks by making enquiries of management and those responsible for legal and compliance procedures. We also reviewed board minutes to identify any recorded instances of irregularity or non compliance that might have a material impact on the financial statements. We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur by meeting with key management to understand where they considered there was susceptibility to fraud. Based on our understanding our procedures involved enquiries of management and those charged with governance, manual journal entry testing, cashbook reviews for large and unusual items and the challenge of significant accounting estimates used in preparing the financial statements.
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EVOLUTION CASTINGS GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EVOLUTION CASTINGS GROUP LIMITED (CONTINUED)
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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 Auditors' 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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
Belmont House
Shrewsbury Business Park
Shropshire
SY2 6LG
Date:
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EVOLUTION CASTINGS GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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EVOLUTION CASTINGS GROUP LIMITED
REGISTERED NUMBER: 14786291
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 January 2025.
The notes on pages 28 to 51 form part of these financial statements.
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EVOLUTION CASTINGS GROUP LIMITED
REGISTERED NUMBER: 14786291
COMPANY BALANCE SHEET
AS AT 30 SEPTEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 28 to 51 form part of these financial statements.
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EVOLUTION CASTINGS GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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EVOLUTION CASTINGS GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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EVOLUTION CASTINGS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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EVOLUTION CASTINGS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Evolution Castings Group Limited is a private company, limited by shares, incorporated and domiciled in England and Wales with its registered office and principal place of business at Building 7 Stanmore Industrial Estate, Bridgnorth, Shropshire, England, WV15 5HP.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 07 April 2023.
Evolution Castings Group Limited (the “Company”) was formed on 7 April 2023 for the specific purpose of becoming the holding entity for the Grainger and Worrall business (“G&W”) which comprises Grainger & Worrall Limited, Grainger and Worrall Machining Limited and Grainger & Worrall Incorporated. The reporting dates for Grainger & Worrall Limited, Grainger and Worrall Machining Limited and Grainger & Worrall Incorporated are 31 October 2024.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
The Directors have undertaken an exercise to review the appropriateness of the continued use of the Going Concern basis that underpins the preparation of the financial statements. This review considers the likely performance of the Group, with reference to the forecasts for the period to 31 January 2026 and our 3 year plan.
The Group’s plan is to continue to strengthen the business and maintain a programme of continual improvement. The directors are satisfied with the rate of progress. The Directors have also considered and applied the “reasonably severe but plausible” downside sensitivity of delays in orders from its key customers. The Directors also believe that the funding structure put in place at the time of the acquisition with a customer group made up of several of its customers (the “Customer Group”), together with the stronger financial performance of the business is sufficient to meet the Group’s obligations under the reasonably severe but plausible downside scenario. The Group’s funders, National Westminster Bank plc and UK Export Finance have provided a letter of comfort covering the period to 31 January 2026. Similarly, the Customer Group have provided a letter of comfort covering the period to 31 July 2026. Therefore, the Directors conclude that it is appropriate to continue to adopt the going concern principle in preparing the financial statements.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” 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, with 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 trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
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 the deduction of all its liabilities.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates, will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below: Tangible fixed assets are held under the revaluation model which has resulted in a gain on revaluation of £378,200. Fixed assets have been assessed for their fair value as the balance sheet date.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The whole of the turnover is attributable to the principal activity of the Group.
Analysis of turnover by country of destination:
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Page 38
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Page 39
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
12.Taxation (continued)
There were no factors that may affect future tax charges.
Page 40
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Page 41
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Page 42
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Page 43
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Fixed asset investments (continued)
Page 44
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Page 45
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
All loans are secured by fixed and floating charges over the assets of the Group. Obligations under finance lease and hire purchase contracts are secured upon the assets to which they relate.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Page 47
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Page 48
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
During the following share issues were made:
- 6500 Ordinary A shares at a nominal value of £0.01 4 Ordinary B shares at a nominal value of £0.01 3500 Ordinary C shares at a nominal value of £0.01 225 Ordinary C shares were cancelled at a nominal value of £0.01 on the 25 July 2024
Revaluation reserve
Capital redemption reserve
Profit and loss account
Page 49
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group of £704,956 to the fund and amounted to. Contributions totalling £89,233 were payable to the fund at the balance sheet date and are included in creditors.
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EVOLUTION CASTINGS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
There is no ultimate controlling party.
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