Annual Review of 2008

Tomrods Ltd / All Steels Trading Ltd

2008 was a very busy year as prices went up and then down with unexpected speed. It is fair to say that we have torn up the old tried and tested steel trading rule book and started reacting to ever changing circumstances. During the first 8 months of 2008 we were experiencing increasing prices and profitability was exceptional, but this was followed by a dramatic fall in prices which left everyone with high priced stocks which had to be sold at a loss. The economic recession also hit volumes and although normal levels were achieved in September and October, we experienced 25% falls in November and December.

Results as follows;

 2007          Tomrods Ltd          All Steels Trading  Group

Turnover

(millions £)  £15.7m (£14.1m)  £26.8m (£16.7m)   £42.5m(£30.8m)      

Prices

We monitor Tomrods' selling prices on a monthly basis and you can get more detail from our standard monthly review. However it is interesting to note that although prices peaked in July (plus about 70% above December 07) before falling back, prices generally are still about 10% higher in December 2008 than in December 2007. At the time of writing this article in January, prices are relatively stable but are being kept static by the decline in the value of the £ against the $ and Euro. The role of China in the steel market had been welcomed, especially by traders and stockists who initially could not see any end to the upward escalation of prices, however everyone forgot that "what goes up must come down" and the rapid increases in prices was matched by a more rapid decrease, which caught everyone out. We will keep monitoring prices regularly and keep you informed.

Profitablilty

Group pre tax profits will show that 2008 was a good year. These profits will be retained in the businesses so that we can safeguard our position during this recession and so that we can take advantage of opportunities which wil arise over the coming months.

Demand

Certain industrial sectors have been very hard hit by the recession, one of which is steel. However although there has been a recent 40% drop in demand overall, some sectors are in better shape than others. The forthcoming Olympics along with the prospects of goverment spending on the basic infrastructure (schools, hospitals and prisons) should mean that there is still a significant amount of steel needed. So although we acknowledge that 2009 will ve a very tough trading year we believe by careful management we can continue trading at a profit and at similar levels to 2008.

General

2008 saw Bradley Steels (www.bradleysteels.co.uk) become a sister company, trading in general steel products in the West Midlands and we are already seeing benefits through the larger purchasing power. Legg Brothers, rerollers of small sections (www.legg-brothers.co.uk) continued to prosper and to export to all continents of the world. All Steels has now established itself as an important wholesale source of steel for all UK stockists and our format is now being copied by other traders. We relish the competition as it keeps us on our toes and we are continually looking for new and better ways to service the market. Tomrods Ltd continued to invest in the future, a new local wagon, a fourth cutting line, a new 15,000 sq ft warehouse all helped us improve our service to customers. In addition Stuart Pettitt and Jacek Przybyl became dads for the first time and yours truly and Julie became grandparetns, Paul Cowgill won the Tomrods Golf Trophy and we managed to donate over £2500 to local charaties. A very busy and successful year and we look forward to 2009.

We would like to thank all our customers for the terrific support that they have given us through 2008 and we hope we can continue providing a total service and provide some much needed stability in this volatile market.

Thank you for reading this and if you have any comments about Tomrods Ltd or our website please email the undersigned at johnt@tomrods.co.uk

John Thompson
Managing Director -