Business review and results - Financial year ended 30 September 2017

The year ended 30 September 2017 saw a general continuation of the steel price increases seen in the previous financial year due to cost pressures in steel supply chains. These cost pressures have been caused by negative currency fluctuations, increases in coking coal, iron ore and scrap prices and the sharp rise in the cost of graphite electrodes.
Group turnover for the year increased by 14% to £292.7m. Non UK turnover increased to £30.6m from £24.2m entirely due to a slight increase in stability in the Oil and Gas sector. Gross margin decreased from 32.7% to 29.6% due to price competition in the market.
Operating profit before restructuring costs and foreign currency gains for the year ended 30 September 2017 increased from £5.9m to £8.4m. Profit before tax improved from £4.3m to £5.9m after net interest costs of £1.3m (2016: £2.2m), foreign currency losses of £0.4m (2016: gains of £1.9m), restructuring costs of £0.8m (2016: £1.5m) and profit on the sale of a subsidiary £nil (2016: £0.2m). Restructuring costs relate to redundancy costs and the loss on the sale of the trade and assets of our Strip & Alloys business in Houston.
Stocks at the year end increased from £56.5m to £63.2m. The Group continues to follow the strategy of managing risk by insuring the debtor ledger.
Net Debt level of £39.5m was a slight increase on prior year of £38.9m due to working capital movements, a share buy back (£3.5m) and a dividend (£1.0m) paid in the year. Overall gearing is 77% (2016: 75%).
The Group continues to operate within its fully committed UK bank facilities which expire in August 2021. During the year the Group increased its UK Revolving Credit Facility by £5m to £15m in order to fully repay the US bank facilities. 
Key performance indicators
The following KPI’s form part of the financial tools used by management to monitor business performance.
  2017 2016 Measure
Gross margin % 30% 33% Gross margin/turnover
Underlying operating profit (£000) 8,443 5,871 Operating profit pre restructuring costs and foreign exchange (losses)/gains
Stock turnover 3.3 times 3.1 times Cost of goods sold/stock
Debtor days 58.8 days 59.7 days Countback method using trade debtors and turnover
Net assets per share (£) 15.04 14.20 Net assets/number of shares

Tax Strategy

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