Company registration number 10904143 (England and Wales)
HOWAT GROUP PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2024
HOWAT GROUP PLC
COMPANY INFORMATION
Directors
D J Eastcroft
M N Howat
S R Craig
Secretary
S R Craig
Company number
10904143
Registered office
2 Cortonwood Drive
Dearne Valley
South Yorkshire
S73 0UF
Auditor
Azets Audit Services
Titanium 1
Kings Inch Place
Renfrew
United Kingdom
PA4 8WF
HOWAT GROUP PLC
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 24
HOWAT GROUP PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2024
- 1 -
The directors present the strategic report for the year ended 31 August 2024.
Business review
Howat Group Plc has demonstrated robust growth during the financial year, solidifying our position in the specialised steel stockholding, processing, and distribution sector. By strategically leveraging relationships with key mill suppliers, we continue to enhance our status as a primary conduit for specialised metals, ensuring a reliable supply chain to meet increasing market demand.
In the year under review, turnover rose to £24,524,337, a significant increase from £17,412,465 in the prior year. This growth reflects strong customer relationships and effective supply chain management.
Our profit before tax stood at £2,170,157, and EBITDA reached £2,245,738, reflecting stable margins despite navigating a challenging operating environment.
Market Conditions
The business performance over the year was shaped by several external factors:
Commodity Prices & Inflation – Steel pricing exhibited considerable volatility, affected by shifts in global supply and demand along with inflationary pressures on energy and logistics.
Supply Chain Stability – While we have seen some normalisation in global logistics, fluctuations in transportation and procurement costs necessitated ongoing strategic management.
Interest Rates & Economic Conditions – The rise in interest rates impacted customers' purchasing behaviours, underscoring the critical importance of robust credit control and a diverse customer base.
Energy Costs & Sustainability – Ongoing industry challenges continue to shape our long-term procurement strategies and customer alignment.
In responding positively to these challenges, demand for our products remains strong. We remain focused on strengthening mill partnerships and improving operational efficiencies to reinforce our market position.
Howat Group Plc maintains a steadfast commitment to collaborating closely with customers, employees, and suppliers to foster sustainable growth.
Principal risks and uncertainties
The key risks and uncertainties identified remain consistent with previous evaluations:
Commodity Prices – Volatility in steel prices influenced by global demand and macroeconomic trends.
Supply Chain Stability – Active monitoring of supplier relationships and forward purchasing strategies remains essential for mitigating risk.
Currency Risk – Potential exposure to USD and EUR exchange rate fluctuations, with hedging measures implemented.
Environmental Compliance – We prioritise ongoing investment in sustainability practices and regulatory adherence.
Health and Safety – Ongoing improvements in workplace safety initiatives and training programmes.
Commercial Risks – Maintaining strong relationships with customers and suppliers, alongside proactive credit management.
Political and Regulatory Risks – Ongoing monitoring of regulatory changes, particularly trade tariffs that may impact supply costs.
The board remains proactive in managing these risks to ensure the company’s ongoing stability and capacity for growth.
HOWAT GROUP PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 2 -
Financial key performance indicators
We continue to prioritise key financial performance metrics:
Revenue: £24,524,337 (2023: £17,412,465)
EBITDA: £2,245,738 (2023: £3,262,035)
Profit Before Tax: £2,170,157 (2023: £2,463,263)
Director's statements of compliance with duty to promote success of the Company
The Directors of Howat Group Plc reaffirm our commitment under Section 172 of the Companies Act 2006, ensuring that our business decisions align with the long-term success of the company.
Our considerations encompass:
The long-term implications of strategic decisions.
Prioritising employee interests and fostering a development-oriented workplace.
Building and maintaining strong relationships with suppliers, customers, and stakeholders.
Understanding the environmental and social impacts of our operations.
Upholding high standards of ethical business conduct.
Ensuring fair treatment of shareholders.
Our sole member, Howat Capital Limited, continues to receive regular financial updates and strategic reports to ensure alignment with the company’s long-term objectives and vision.
S R Craig
Director
27 February 2025
HOWAT GROUP PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2024
- 3 -
The directors present their annual report and financial statements for the year ended 31 August 2024.
Results and dividends
The results for the year are set out on page 8.
No dividend has been recommended in the current year (2023 - £Nil).
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
D J Eastcroft
M N Howat
S R Craig
Future developments
The Directors will take advantage of commercial opportunities in the Company's key markets to continue the profitable growth of the company.
Auditor
In accordance with the company's articles, a resolution proposing that Azets Audit Services be reappointed as auditor of the company will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Matters covered in the Strategic report
Principal activities, a review of the business, principal risks and uncertainties and financial key performance is given in the Strategic report on pages 1 to 2.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
HOWAT GROUP PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 4 -
On behalf of the board
S R Craig
Director
27 February 2025
HOWAT GROUP PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HOWAT GROUP PLC
- 5 -
Opinion
We have audited the financial statements of Howat Group Plc (the 'company') for the year ended 31 August 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 August 2024 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
HOWAT GROUP PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HOWAT GROUP PLC
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
HOWAT GROUP PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HOWAT GROUP PLC
- 7 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
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 bias and 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 indicators of potential bias.
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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Jennifer Alexander
Senior Statutory Auditor
For and on behalf of Azets Audit Services
27 February 2025
Chartered Accountants
Statutory Auditor
Titanium 1
Kings Inch Place
Renfrew
United Kingdom
PA4 8WF
HOWAT GROUP PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
24,524,337
17,412,465
Cost of sales
(19,407,813)
(11,817,074)
Gross profit
5,116,524
5,595,391
Administrative expenses
(2,815,775)
(3,081,088)
Operating profit
4
2,300,749
2,514,303
Interest payable and similar expenses
7
(130,592)
(51,040)
Profit before taxation
2,170,157
2,463,263
Tax on profit
8
(292,953)
194,443
Profit for the financial year
1,877,204
2,657,706
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HOWAT GROUP PLC
BALANCE SHEET
AS AT
31 AUGUST 2024
31 August 2024
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Goodwill
10
674,297
794,305
Tangible assets
11
709,159
804,019
Investments
12
4
4
1,383,460
1,598,328
Current assets
Stocks
14
15,195,806
12,255,688
Debtors
15
4,836,348
4,120,292
Cash at bank and in hand
2,305,996
2,183,637
22,338,150
18,559,617
Creditors: amounts falling due within one year
16
(4,342,763)
(4,117,683)
Net current assets
17,995,387
14,441,934
Total assets less current liabilities
19,378,847
16,040,262
Creditors: amounts falling due after more than one year
17
(4,963,467)
(3,600,596)
Provisions for liabilities
Deferred tax liability
19
98,510
(98,510)
-
Net assets
14,316,870
12,439,666
Capital and reserves
Called up share capital
21
80,000
80,000
Share premium account
22
8,000,000
8,000,000
Profit and loss reserves
23
6,236,870
4,359,666
Total equity
14,316,870
12,439,666
The financial statements were approved by the board of directors and authorised for issue on 27 February 2025 and are signed on its behalf by:
S R Craig
Director
Company Registration No. 10904143
HOWAT GROUP PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2024
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 September 2022
80,000
8,000,000
1,701,960
9,781,960
Year ended 31 August 2023:
Profit and total comprehensive income for the year
-
-
2,657,706
2,657,706
Balance at 31 August 2023
80,000
8,000,000
4,359,666
12,439,666
Year ended 31 August 2024:
Profit and total comprehensive income for the year
-
-
1,877,204
1,877,204
Balance at 31 August 2024
80,000
8,000,000
6,236,870
14,316,870
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2024
- 11 -
1
Accounting policies
Company information
Howat Group Plc is a public company limited by shares incorporated in England and Wales. The registered office is 2 Cortonwood Drive, Dearne Valley, South Yorkshire, S73 0UF.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Howat Group Plc is a wholly owned subsidiary of Howat Capital Limited and the results of Howat Group Plc are included in the consolidated financial statements of Howat Capital Limited which are available from Companies House, Crown Way, Cardiff, CF14 3UZ
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 12 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Property improvement
7 years
Plant and machinery
3 to 15 years
Fixtures and fittings
4 years
Office equipment
4 years
Motor vehicles
4 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 13 -
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company 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 debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 14 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 15 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
Foreign exchange
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Nonmonetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 16 -
1.17
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of any transaction costs and are measured subsequently at amortised cost using the effective interest method, less any impairment.
1.18
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs and are measured subsequently at amortised cost using the effective interest method.
2
Judgements and key sources of estimation uncertainty
In the application of the Company's accounting policies, which are described above, the directors are required to make judgements, estimated 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 estimated 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.
In the opinion of the Directors, the key judgement and sources of estimation uncertainty involved in the preparation of the financial statements relate to consideration of the value of the goodwill. The Directors prepare discounted cash flows to ascertain a value of the goodwill, and review market conditions on a regular basis to ensure their analysis is up to date. This assists in their consideration of penitential impairment of the goodwill.
3
Turnover
2024
2023
£
£
Turnover analysed by class of business
Sale of special steels
24,524,337
17,412,465
Information relating to the supply of goods to different geographical markets in the current and prior year has not been disclosed in the financial statements. The directors are of the opinion that it would seriously prejudice the company's interests if this information is disclosed.
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(316,019)
(122,530)
Depreciation of owned tangible fixed assets
141,000
140,955
Amortisation of intangible assets
120,008
191,826
Impairment of intangible assets
537,481
Operating lease charges
339,945
341,676
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 17 -
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
23,000
22,530
The company has taken advantage of the exemption not to disclose amounts paid for non audit services as these are disclosed in the group accounts of the parent company.
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Administration and production staff
52
46
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
1,791,050
1,519,270
Social security costs
177,734
149,097
Pension costs
70,734
59,578
2,039,518
1,727,945
7
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest payable to group undertakings
130,592
51,040
8
Taxation
2024
2023
£
£
Deferred tax
Origination and reversal of timing differences
(3,693)
(194,443)
Previously unrecognised tax loss, tax credit or timing difference
296,646
Total deferred tax
292,953
(194,443)
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
8
Taxation
(Continued)
- 18 -
The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
Profit before taxation
2,170,157
2,463,263
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 21.52%)
542,539
530,094
Tax effect of expenses that are not deductible in determining taxable profit
13,164
2,731
Group relief
(591,312)
(694,113)
Deferred tax adjustments in respect of prior years
296,646
Fixed asset differences
2,828
3,927
Remeasurement of deferred tax for changes in tax rates
(24,868)
Movement in deferred tax not recognised
29,089
(16,921)
Other
(1)
4,707
Taxation charge/(credit) for the year
292,953
(194,443)
9
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2024
2023
Notes
£
£
In respect of:
Goodwill
10
537,481
Recognised in:
Administrative expenses
-
537,481
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 19 -
10
Intangible fixed assets
Goodwill
£
Cost
At 1 September 2023 and 31 August 2024
1,986,642
Amortisation and impairment
At 1 September 2023
1,192,337
Amortisation charged for the year
120,008
At 31 August 2024
1,312,345
Carrying amount
At 31 August 2024
674,297
At 31 August 2023
794,305
11
Tangible fixed assets
Property improvement
Plant and machinery
Fixtures and fittings
Office equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 September 2023
317,066
983,770
32,105
167,532
35,278
1,535,751
Additions
2,475
5,581
969
48,808
57,833
Disposals
(5,934)
(28,824)
(121,244)
(25,320)
(181,322)
At 31 August 2024
319,541
983,417
4,250
95,096
9,958
1,412,262
Depreciation
At 1 September 2023
215,415
327,690
29,198
135,495
23,934
731,732
Depreciation charged in the year
45,620
65,437
1,356
20,823
7,764
141,000
Eliminated in respect of disposals
(1,095)
(28,746)
(117,633)
(22,155)
(169,629)
At 31 August 2024
261,035
392,032
1,808
38,685
9,543
703,103
Carrying amount
At 31 August 2024
58,506
591,385
2,442
56,411
415
709,159
At 31 August 2023
101,651
656,080
2,907
32,037
11,344
804,019
Tangible assets with a carrying amount of £709,159 (2023 - £804,019) have been pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 20 -
12
Fixed asset investments
2024
2023
Notes
£
£
Investments in subsidiaries
13
4
4
13
Subsidiaries
Details of the company's subsidiaries at 31 August 2024 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Ancon Special Alloy Steels Limited
2 Cortonwood Drive, Dearne Valley, South Yorkshire, S73 0UF
Ordinary
100.00
Engineering Special Steels Limited
As above
Ordinary
100.00
ESS Steels Group Limited
As above
Ordinary
100.00
Barpoint Limited
As above
Ordinary
100.00
The aggregate of the share capital and reserves as at 31 August 2024 for all companies was £Nil (2023 - £Nil), and the companies were dormant during the current and prior years.
14
Stocks
2024
2023
£
£
Raw materials and consumables
14,019,620
10,071,699
Work in progress
1,176,186
2,183,989
15,195,806
12,255,688
15
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
4,712,490
3,731,011
Amounts owed by group undertakings
61,169
Other debtors
3,018
Prepayments and accrued income
120,840
133,669
4,836,348
3,925,849
Deferred tax asset (note 19)
194,443
4,836,348
4,120,292
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 21 -
16
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
3,797,590
3,367,183
Amounts due to related parties
31,083
315,707
Taxation and social security
410,792
354,916
Other creditors
16,380
14,722
Accruals and deferred income
86,918
65,155
4,342,763
4,117,683
17
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Amounts due to related parties
18
4,963,467
3,600,596
18
Loans and overdrafts
2024
2023
£
£
Loans from group undertakings
4,963,467
3,600,596
Payable after one year
4,963,467
3,600,596
At the balance sheet date amounts owed to group undertakings were due on 1 September 2025, with interest charged at a rate 3% per annum.
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2024
2023
2024
2023
Balances:
£
£
£
£
Accelerated capital allowances
98,510
-
-
194,443
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
19
Deferred taxation
(Continued)
- 22 -
2024
Movements in the year:
£
Asset at 1 September 2023
(194,443)
Credit to profit or loss
(3,693)
Charge to equity
296,646
Liability at 31 August 2024
98,510
20
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
70,734
59,578
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. At the year end, contributions of £12,446 (2023 - £10,789) were payable to the pension scheme and are disclosed as an other creditor.
21
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
80,000
80,000
80,000
80,000
The share capital has full voting and capital distribution rights.
22
Share premium account
The reserve records the amount above the nominal value received for shares sold, less transaction costs.
23
Profit and loss reserves
The profit and loss account includes the current and prior periods' retained profit.
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 23 -
24
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
284,220
298,071
Between two and five years
791,315
960,000
In over five years
42,082
1,075,535
1,300,153
HOWAT GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 24 -
25
Related party transactions
As a wholly owned subsidiary of Howat Capital Limited, the company has taken advantage of the exemption provided by FRS 102 s33.1A whereby disclosures need not be given of transactions entered into between two or more members of a group provided that any subsidiary which is party to the transaction is wholly owned by such a member.
In both the current and prior year the directors' received no emoluments for work in respect to the company. Directors are considered to be the key management personnel.
26
Ultimate controlling party
The company's immediate parent undertaking is Howat Capital Limited, a company registered in Scotland. The company's ultimate parent undertaking is Howat Capital Partners Ltd, a company incorporated in the Cayman Islands. The smallest and largest group of undertakings for which group financial statements have been drawn up is that headed by Howat Capital Limited. Copies of the group financial statements are available to the public from companies house, Crown Way, Cardiff, CF14 3UZ.
In the opinion of the directors, M N Howat is the company's controlling party by virtue of his shareholding in Howat Capital Partners Ltd.
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