Company registration number 01985443 (England and Wales)
SPECIAL QUALITY ALLOYS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2022
SPECIAL QUALITY ALLOYS LIMITED
COMPANY INFORMATION
Directors
A K Beardshaw
S G S Marshall
B J Beardshaw
A C Beardshaw
R Wood
D M Pryce
D J Matthews
J Miller
M J Greensmith
(Appointed 1 August 2022)
Secretary
A C Beardshaw
Company number
01985443
Registered office
Bacon Lane
Sheffield
S9 3NH
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
Bankers
National Westminster Bank plc
42 High Street
Sheffield
S1 2GE
SPECIAL QUALITY ALLOYS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 19
SPECIAL QUALITY ALLOYS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2022
- 1 -
The directors present the strategic report for the year ended 31 May 2022.
Having experienced a full year of trading in the 2020 / 2021 fiscal year, with the associated depressed global economic conditions driven by the ongoing pandemic, there was no significant reasons for the Board to write a plan dictating any dramatic change in financial performance for this new financial year.
Nevertheless, the
company
remain
s
in a strong financial position at the end of the year with shareholders’ funds increasing from £28.3m to £31.1m. Return on capital employed has changed from 9% to 11%. Return on capital employed is calculated as profit before tax divided by opening capital employed.
Consequently, the
company
started the year with modest plans, whilst still targeting profitable performance, although below pre-pandemic levels.
The company is
now well versed in operating with ingrained covid protocols, removing the distractions of the previous year. At the same time, our operational cost base was now correctly aligned with current market demand.
However, two notable external events occurred during the year which we consider had a material impact on overall performance. Firstly, the UK Government announced the removal of most Covid restrictions in England in July 2021, doing so earlier than many other comparable countries. This gave us some optimism that a return to normal demand / trading was possible in the shorter term. Secondly, Russia launched its ‘special military operation’ into Ukraine in February 2022. Energy supply from the East was swiftly weaponised, particularly gas, and this action starkly exposed western Europe’s lack of investment in its own fossil fuel exploration and production and its over reliance on Russia.
Russia’s behaviour, combined with the general decline of the pandemic and associated ramp in global economic activity inevitably lead to a dramatic spike in demand for energy, driving prices to record levels, particularly for gas.
These events impacted our operating costs, whilst simultaneously driving up demand for our products and services as we are heavily focused on serving the global oil & gas market.
For Special Quality Alloys, the business plan mirrored last years performance, and we ran at those numbers for most of the year. However, the events noted above created a dramatic surge in demand from the end of the third quarter onwards and new records for order intake were broken. This resulted in us just exceeding our overall sales plan, but means a large order book was built towards the end of year, the benefits of which will become more evident in the coming year. Our commitment to invest in new hot working equipment has also paid off. Our strategic aim of gaining market share from more traditional EU based competitors began to materialise as the reshoring phenomenon played out, driven by international supply chain disruption. Security of supply became prominent. Although our core market remains energy, work began to identify other industrial sectors that use our alloys and products which will be complementary to our capabilities. Finally, our ongoing commitment to quality and delivery, and the strong international customer relationships built over decades, culminated in us being awarded the Queens Award for Enterprise for International Trade in 2022. The company expects ongoing growth as markets recover and further benefit from the wider market share won in the demand ramp.
A K Beardshaw
Director
16 January 2023
SPECIAL QUALITY ALLOYS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2022
- 2 -
The directors present their annual report and financial statements for the year ended 31 May 2022.
Principal activities
The principal activities of the company continue to be the manufacture and supply of nickel based super-alloys and special steels.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £1,522,274. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A K Beardshaw
S G S Marshall
B J Beardshaw
A C Beardshaw
R Wood
D M Pryce
D J Matthews
J Miller
M J Greensmith
(Appointed 1 August 2022)
Auditor
The auditor, BHP LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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.
SPECIAL QUALITY ALLOYS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 3 -
Statement of disclosure to auditor
So far as the directors are aware, there is no relevant audit information of which the company's auditor are unaware. Additionally, the directors 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 auditors are aware of that information.
On behalf of the board
A K Beardshaw
Director
16 January 2023
SPECIAL QUALITY ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SPECIAL QUALITY ALLOYS LIMITED
- 4 -
Opinion
We have audited the financial statements of Special Quality Alloys Limited (the 'company') for the year ended 31 May 2022 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 May 2022 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'
r
eport 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.
SPECIAL QUALITY ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SPECIAL QUALITY ALLOYS LIMITED
- 5 -
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 identifie
d
material misstatements in the strategic report or the directors'
r
eport
.
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'
r
esponsibilities
s
tatement, 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
.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below
.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
-
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
-
we identified the laws and regulations applicable to the company through discussions with management, and from our commercial knowledge;
-
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environments and health and safety legislation;
-
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
-
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
SPECIAL QUALITY ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SPECIAL QUALITY ALLOYS LIMITED
- 6 -
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
-
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
-
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
To address the risk of fraud through management bias and override of controls, we:
-
performed analytical procedures to identify any unusual or unexpected relationships;
-
tested journal entries to identify unusual transactions;
-
assessed whether judgements and assumptions made in determining accounting estimates were indicative of potential bias;
-
investigated the rationale behind significant or unusual transactions; and
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
-
agreeing financial statement disclosures to underlying supporting documentation;
-
enquiring of management as to actual and potential litigation and claims;
-
reviewing correspondence with HMRC
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing Standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Lisa Leighton
Senior Statutory Auditor
For and on behalf of BHP LLP
17 January 2023
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
SPECIAL QUALITY ALLOYS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2022
- 7 -
2022
2021
Notes
£
£
Turnover
2
28,309,741
30,324,652
Cost of sales
(21,945,551)
(25,325,691)
Gross profit
6,364,190
4,998,961
Distribution costs
(29,578)
(49,807)
Administrative expenses
(2,941,714)
(2,548,179)
Other operating income
113,403
334,975
Operating profit
3
3,506,301
2,735,950
Interest receivable and similar income
6
1,524,073
1,497
Interest payable and similar expenses
7
(2,553)
Profit before taxation
5,030,374
2,734,894
Tax on profit
8
(662,556)
(685,454)
Profit for the financial year
4,367,818
2,049,440
The profit and loss account has been prepared on the basis that all operations are continuing operations.
SPECIAL QUALITY ALLOYS LIMITED
BALANCE SHEET
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
10
4,016,203
4,687,308
Investments
11
1,097,866
1,097,866
5,114,069
5,785,174
Current assets
Stocks
13
15,651,217
15,847,418
Debtors
14
11,253,132
7,010,238
Cash at bank and in hand
8,838,606
6,014,163
35,742,955
28,871,819
Creditors: amounts falling due within one year
15
(8,468,419)
(5,002,231)
Net current assets
27,274,536
23,869,588
Total assets less current liabilities
32,388,605
29,654,762
Provisions for liabilities
Provisions
16
700,697
724,398
Deferred tax liability
17
525,000
613,000
(1,225,697)
(1,337,398)
Net assets
31,162,908
28,317,364
Capital and reserves
Called up share capital
19
100,000
100,000
Profit and loss reserves
31,062,908
28,217,364
Total equity
31,162,908
28,317,364
The financial statements were approved by the board of directors and authorised for issue on 16 January 2023 and are signed on its behalf by:
A K Beardshaw
Director
Company Registration No. 01985443
SPECIAL QUALITY ALLOYS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2022
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 June 2020
100,000
26,817,924
26,917,924
Year ended 31 May 2021:
Profit and total comprehensive income for the year
-
2,049,440
2,049,440
Dividends
9
-
(650,000)
(650,000)
Balance at 31 May 2021
100,000
28,217,364
28,317,364
Year ended 31 May 2022:
Profit and total comprehensive income for the year
-
4,367,818
4,367,818
Dividends
9
-
(1,522,274)
(1,522,274)
Balance at 31 May 2022
100,000
31,062,908
31,162,908
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2022
- 10 -
1
Accounting policies
Company information
Special Quality Alloys Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Bacon Lane, Sheffield, S9 3NH.
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 a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues
:
The
disclosure
requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
-
Section 26 ‘Share based Payment’
:
Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
-
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
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
.
Special Quality Alloys Limited is a wholly owned subsidiary of Special Steel Co. Limited and the results of Special Quality Alloys Limited are included in the consolidated financial statements of Special Steel Co. Limited which are available from Bacon Lane, Sheffield, S9 3NH.
1.2
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.
1.3
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
1
Accounting policies
(Continued)
- 11 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings Leasehold
Over term of lease
Plant and machinery
10% or 20% straight line
Fixtures, fittings & equipment
20% straight line
Computer equipment
20% straight line
Motor vehicles
25% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.4
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.
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
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
).
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
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.
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
1
Accounting policies
(Continued)
- 12 -
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
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.
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
paymen
ts 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. A
m
ounts 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.
1.9
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
1
Accounting policies
(Continued)
- 13 -
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.
Deferred tax
Deferred taxation is provided at appropriate rates on all timing differences using the liability method.
1.11
Provisions
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event, it is probable that the
company
will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in
profit
or
loss
in the period
in which
it arises.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
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 lease
s
asset are consumed.
1.15
Government grants
Grants are credited to deferred revenue. Grants towards capital expenditure are released to the profit and loss account over the expected useful life of the assets. Grants towards revenue expenditure are released to the profit and loss account as the related expenditure is incurred.
Grants received in relation to the government's Coronavirus Job Retention Scheme have been recognised within other operating income. The grant is accounted for on the accruals basis once the related payroll return has been submitted.
1.16
Foreign exchange
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account.
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 14 -
2
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
21,291,161
15,918,226
Other markets
7,018,580
14,406,426
28,309,741
30,324,652
2022
2021
£
£
Other revenue
Interest income
1,799
1,497
Dividends received
1,522,274
-
Grants received
113,403
334,975
3
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(294,207)
(407,147)
Government grants
(113,403)
(334,975)
Fees payable to the company's auditor for the audit of the company's financial statements
12,410
13,358
Depreciation of owned tangible fixed assets
817,523
826,260
Profit on disposal of tangible fixed assets
(42,435)
(7,000)
Operating lease charges
106,000
106,000
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Production
69
82
Admin
18
21
Directors
5
5
Total
92
108
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
4
Employees
(Continued)
- 15 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
2,975,046
3,116,831
Social security costs
305,841
301,978
Pension costs
154,599
161,358
3,435,486
3,580,167
5
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
412,181
342,370
Company pension contributions to defined contribution schemes
44,298
50,318
456,479
392,688
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
106,314
103,665
6
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
1,799
481
Other interest income
1,016
Total interest revenue
1,799
1,497
Income from fixed asset investments
Income from shares in group undertakings
1,522,274
Total income
1,524,073
1,497
7
Interest payable and similar expenses
2022
2021
£
£
Other interest
2,553
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 16 -
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
750,556
570,454
Deferred tax
Origination and reversal of timing differences
(88,000)
115,000
Total tax charge
662,556
685,454
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
5,030,374
2,734,894
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
955,771
519,630
Tax effect of expenses that are not deductible in determining taxable profit
319
Effect of change in corporation tax rate
(20,981)
147,099
Fixed asset differences
17,255
18,837
Deferred tax not recognised
(574)
(112)
Group income
(289,234)
Taxation charge for the year
662,556
685,454
9
Dividends
2022
2021
£
£
Final paid
1,522,274
650,000
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 17 -
10
Tangible fixed assets
Land and buildings Leasehold
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 June 2021
989,915
6,991,389
439,073
338,952
392,313
9,151,642
Additions
4,717
11,986
11,906
117,809
146,418
Disposals
(17,720)
(72,619)
(90,339)
At 31 May 2022
989,915
6,978,386
451,059
350,858
437,503
9,207,721
Depreciation and impairment
At 1 June 2021
697,102
2,884,370
313,016
313,831
256,015
4,464,334
Depreciation charged in the year
98,992
592,480
33,785
13,946
78,320
817,523
Eliminated in respect of disposals
(17,720)
(72,619)
(90,339)
At 31 May 2022
796,094
3,459,130
346,801
327,777
261,716
5,191,518
Carrying amount
At 31 May 2022
193,821
3,519,256
104,258
23,081
175,787
4,016,203
At 31 May 2021
292,813
4,107,019
126,057
25,121
136,298
4,687,308
11
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
12
1,097,866
1,097,866
12
Subsidiaries
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Special Quality Alloys Inc
United States of America
Ordinary
100.00
13
Stocks
2022
2021
£
£
Finished goods and goods for resale
15,651,217
15,847,418
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 18 -
14
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
7,653,377
5,448,450
Corporation tax recoverable
38,421
Amounts owed by group undertakings
3,448,415
1,356,878
Other debtors
4,285
Prepayments and accrued income
147,055
166,489
11,253,132
7,010,238
15
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
5,857,722
3,106,597
Amounts due to group undertakings
536,929
838,083
Corporation tax
438,576
150,530
Other taxation and social security
624,080
240,342
Other creditors
8,470
Accruals and deferred income
1,011,112
658,209
8,468,419
5,002,231
16
Provisions for liabilities
2022
2021
£
£
Other liabilities
700,697
724,398
Deferred tax liabilities
17
525,000
613,000
1,225,697
1,337,398
Movements on provisions apart from retirement benefits and deferred tax liabilities:
Other liabilities
£
At 1 June 2021
724,398
Utilisation of provision
(23,701)
At 31 May 2022
700,697
The other provision relates to customer credit provisions.
SPECIAL QUALITY ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 19 -
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2022
2021
Balances:
£
£
ACAs
562,000
616,000
Other timing differences
(37,000)
(3,000)
525,000
613,000
18
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
154,599
161,358
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.
19
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100,000
100,000
100,000
100,000
20
Ultimate controlling party
The immediate and ultimate parent undertaking and controlling party is Special Steel Co Limited, which prepares group financial statements.
The registered office of Special Steel Co Limited is Bacon Lane, Sheffield, South Yorkshire, S9 3NH.
2022-05-31
2021-06-01
false
CCH Software
CCH Accounts Production 2022.200
A K Beardshaw
S G S Marshall
B J Beardshaw
A C Beardshaw
R Wood
D M Pryce
D J Matthews
J Miller
M J Greensmith
A C Beardshaw
01985443
2021-06-01
2022-05-31
01985443
bus:Director1
2021-06-01
2022-05-31
01985443
bus:Director2
2021-06-01
2022-05-31
01985443
bus:Director3
2021-06-01
2022-05-31
01985443
bus:CompanySecretaryDirector1
2021-06-01
2022-05-31
01985443
bus:Director5
2021-06-01
2022-05-31
01985443
bus:Director6
2021-06-01
2022-05-31
01985443
bus:Director7
2021-06-01
2022-05-31
01985443
bus:Director8
2021-06-01
2022-05-31
01985443
bus:Director9
2021-06-01
2022-05-31
01985443
bus:CompanySecretary1
2021-06-01
2022-05-31
01985443
bus:Director4
2021-06-01
2022-05-31
01985443
bus:RegisteredOffice
2021-06-01
2022-05-31
01985443
bus:Agent1
2021-06-01
2022-05-31
01985443
2022-05-31
01985443
2020-06-01
2021-05-31
01985443
core:RetainedEarningsAccumulatedLosses
2020-06-01
2021-05-31
01985443
core:RetainedEarningsAccumulatedLosses
2021-06-01
2022-05-31
01985443
2021-05-31
01985443
core:LandBuildings
core:LeasedAssetsHeldAsLessee
2022-05-31
01985443
core:PlantMachinery
2022-05-31
01985443
core:FurnitureFittings
2022-05-31
01985443
core:ComputerEquipment
2022-05-31
01985443
core:MotorVehicles
2022-05-31
01985443
core:LandBuildings
core:LeasedAssetsHeldAsLessee
2021-05-31
01985443
core:PlantMachinery
2021-05-31
01985443
core:FurnitureFittings
2021-05-31
01985443
core:ComputerEquipment
2021-05-31
01985443
core:MotorVehicles
2021-05-31
01985443
core:CurrentFinancialInstruments
core:WithinOneYear
2022-05-31
01985443
core:CurrentFinancialInstruments
core:WithinOneYear
2021-05-31
01985443
core:CurrentFinancialInstruments
2022-05-31
01985443
core:CurrentFinancialInstruments
2021-05-31
01985443
core:ShareCapital
2022-05-31
01985443
core:ShareCapital
2021-05-31
01985443
core:RetainedEarningsAccumulatedLosses
2022-05-31
01985443
core:RetainedEarningsAccumulatedLosses
2021-05-31
01985443
core:ShareCapital
2020-05-31
01985443
core:RetainedEarningsAccumulatedLosses
2020-05-31
01985443
2020-05-31
01985443
core:HedgingReserve
core:RestatedAmount
2020-05-31
01985443
core:CapitalRedemptionReserve
core:RestatedAmount
2020-05-31
01985443
core:LandBuildings
core:LongLeaseholdAssets
2021-06-01
2022-05-31
01985443
core:PlantMachinery
2021-06-01
2022-05-31
01985443
core:FurnitureFittings
2021-06-01
2022-05-31
01985443
core:ComputerEquipment
2021-06-01
2022-05-31
01985443
core:MotorVehicles
2021-06-01
2022-05-31
01985443
1
2021-06-01
2022-05-31
01985443
1
2020-06-01
2021-05-31
01985443
core:UKTax
2021-06-01
2022-05-31
01985443
core:UKTax
2020-06-01
2021-05-31
01985443
2
2021-06-01
2022-05-31
01985443
2
2020-06-01
2021-05-31
01985443
3
2021-06-01
2022-05-31
01985443
3
2020-06-01
2021-05-31
01985443
core:LandBuildings
core:LeasedAssetsHeldAsLessee
2021-05-31
01985443
core:PlantMachinery
2021-05-31
01985443
core:FurnitureFittings
2021-05-31
01985443
core:ComputerEquipment
2021-05-31
01985443
core:MotorVehicles
2021-05-31
01985443
2021-05-31
01985443
core:LandBuildings
core:LeasedAssetsHeldAsLessee
2021-06-01
2022-05-31
01985443
core:Non-currentFinancialInstruments
2022-05-31
01985443
core:Non-currentFinancialInstruments
2021-05-31
01985443
core:Subsidiary1
2021-06-01
2022-05-31
01985443
core:Subsidiary1
1
2021-06-01
2022-05-31
01985443
bus:PrivateLimitedCompanyLtd
2021-06-01
2022-05-31
01985443
bus:FRS102
2021-06-01
2022-05-31
01985443
bus:Audited
2021-06-01
2022-05-31
01985443
bus:FullAccounts
2021-06-01
2022-05-31
xbrli:pure
xbrli:shares
iso4217:GBP