Sinclair Garages (Cardiff) Limited - Limited company accounts 18.2

REGISTERED NUMBER: 06731125 (England and Wales)

Sinclair Garages (Cardiff) Limited

Strategic Report, Report of the Directors and

Audited Financial Statements for the Year Ended 31 December 2018

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Profit and loss

7

Balance Sheet

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

Directors:

Mr G S Sinclair

Mr A J Sinclair

Mr J M Sinclair

Registered office:

Sinclair Group

Old Field Road

Pencoed

Bridgend

CF35 5LJ

Registered number:

06731125 (England and Wales)

Auditors:

Haines Watts Wales LLP, Statutory Auditors

7 Neptune Court

Vanguard Way

Cardiff

CF24 5PJ

Solicitors:

Acuity Legal

3 Assembly Square

Britannia Quay

Cardiff Bay

Cardiff

CF10 4PL

The directors present their strategic report for the year ended 31 December 2018.

Sinclair Garages (Cardiff) Limited has core functions of retailing new cars, used cars, commercial vehicles, servicing

(including repairs), bodyshop repairs, parts sales and fuel sales.

Review of business

31/12/2018

31/12/2017

31/12/2016

31/12/2015

Turnover

£81,391,600

£77,285,061

£76,872,047

£60,087,984

(Loss) before tax

(£403,180)

(£567,324)

(£536,168)

(£203,053)

Shareholders funds

(£2,616,765)

(£2,213,585)

(£1,647,229)

(£1,118,600)

Turnover for the 12 months to 31 December 2018 saw a substantial increase compared with last year's performance.

Trading conditions have been challenging again this year with major roadworks affecting access to the business. These

are now complete and the first quarter of 2019 shows that the potential of the company now being realised.

Loss before tax for the 12 months was £164,144 lower than last year's performance despite the continued pressure on

margins in the ever competitive customer driven environment. We recognise that to be competitive in the market today

we need to differentiate ourselves from our competition. We believe that by maintaining a high level of customer

satisfaction and our high levels of customer care will put the Sinclair name above its competitors and retain the local

market share.

Shareholders' deficits have increased to (£2,616,765) which reflects the losses reported during the period.

Principal risks and uncertainties

Sinclair Garages (Cardiff) Ltd benefits from the close commercial relationships with a number of key suppliers and

customers. The loss of any of these of key suppliers and customers or a significant worsening in commercial terms

could have a material impact on the results.

Sinclair Garages (Cardiff) Ltd devotes significant resources to supporting these relationships to ensure that they

continue to operate as well in the future. From time to time the group undertakes surveys of customer satisfaction,

which are reviewed by the board. The directors realise the importance of excellent customer service to remain ahead

of competition.

Price Risk:

The company operates in highly competitive markets. Significant product innovations, technical advances or the

intensification of price competition could adversely affect the results for the company. Sinclair Garages (Cardiff)

Limited invests in significant training of its staff to ensure that the company is well placed to provide a choice for

customers, to ensure that they are aware of their options and are satisfied with the level of service we provide. The

company also continually works to streamline its cost base to ensure that it remains competitive.

Credit Risk:

The company has well established policies and procedures that require appropriate credit checks on potential

customers before sales are made. The amount of exposure to any individual customer is subject to a limit which is

reassessed annually by the company.

Liquidity Risk:

Effective management of cash and working capital is a key ongoing priority. The company has an intercompany facility

in place that is sufficient to ensure available funds for its operations.

Employment of disabled persons

It is the policy that disabled persons shall be considered for employment, career development and promotion on the

basis of their aptitude and abilities in common with all employees.

Employee involvement

The Directors recognise the importance of good communications and relations with employees and management is

encouraged to adopt employee consultations.

On behalf of the board:

Mr A J Sinclair - Director

9 May 2019

The directors present their report with the financial statements of the company for the year ended 31 December 2018.

Principal activity

The principal activity of the company in the year under review was that of the retailing of motor vehicles and related

activities in the motor trade.

The company is to continue investing in training all staff for the purpose of meeting its long term goal of growth

through the provision of excellent customer service.

Dividends

No dividends will be distributed for the year ended 31 December 2018.

Directors

The directors shown below have held office during the whole of the period from 1 January 2018 to the date of this

report.

Mr G S Sinclair

Mr A J Sinclair

Mr J M Sinclair

Statement of directors' responsibilities

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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.

Statement as to disclosure of information to auditors

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies

Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to

have taken as a director in order to make himself aware of any relevant audit information and to establish that the

company's auditors are aware of that information.

On behalf of the board:

Mr A J Sinclair - Director

9 May 2019

Opinion

We have audited the financial statements of Sinclair Garages (Cardiff) Limited (the 'company') for the year ended

31 December 2018 which comprise the Profit and loss, Balance Sheet, Statement of Changes in Equity and Notes to

the Financial Statements, including a summary of significant accounting policies. The financial reporting framework

that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including

Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'

(United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2018 and of its loss 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the

Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the

Auditors thereon.

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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or

apparent material misstatements, we are required to determine whether there is a material misstatement in the

financial statements or a material misstatement of the other information. 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.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

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 Report of the Directors.

We have nothing to report in respect of the following matters where 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 directors' 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 Statement of Directors' Responsibilities set out on page four, 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 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.

Auditors' 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 a Report of the Auditors 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 for the audit of the financial statements is located on the Financial Reporting

Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our 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 a Report of the Auditors 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.

Clive Edwards (Senior Statutory Auditor)

for and on behalf of Haines Watts Wales LLP, Statutory Auditors

7 Neptune Court

Vanguard Way

Cardiff

CF24 5PJ

9 May 2019

Turnover

3

81,391,600

77,285,061

Cost of sales

(75,119,853

)

(71,772,340

)

Gross profit

6,271,747

5,512,721

Administrative expenses

(6,509,904

)

(5,881,619

)

Operating loss

5

(238,157

)

(368,898

)

Interest payable and similar expenses

6

(165,023

)

(198,426

)

Loss before taxation

(403,180

)

(567,324

)

Tax on loss

7

-

968

Loss for the financial year

(403,180

)

(566,356

)

Other comprehensive income

-

-

Total comprehensive income for the year

(403,180

)

(566,356

)

Fixed assets

Tangible assets

8

430,967

386,357

Current assets

Stocks

9

13,041,409

12,474,606

Debtors

10

5,057,080

5,270,372

Cash at bank and in hand

1,230,185

160,308

19,328,674

17,905,286

Creditors

Amounts falling due within one year

11

(22,376,406

)

(20,505,228

)

Net current liabilities

(3,047,732

)

(2,599,942

)

Total assets less current liabilities

(2,616,765

)

(2,213,585

)

Capital and reserves

Called up share capital

15

1

1

Retained earnings

16

(2,616,766

)

(2,213,586

)

Shareholders' funds

(2,616,765

)

(2,213,585

)

The financial statements were approved by the Board of Directors on 9 May 2019 and were signed on its behalf by:

Mr A J Sinclair - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2017

1

(1,647,230

)

(1,647,229

)

Changes in equity

Total comprehensive income

-

(566,356

)

(566,356

)

Balance at 31 December 2017

1

(2,213,586

)

(2,213,585

)

Changes in equity

Total comprehensive income

-

(403,180

)

(403,180

)

Balance at 31 December 2018

1

(2,616,766

)

(2,616,765

)

1.	Statutory information

Sinclair Garages (Cardiff) Limited is a private company, limited by shares , registered in England and Wales.

The company's registered number and registered office address can be found on the Company Information

page.

2.	Accounting policies

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The Group and Company have adopted Amendments to Financial Reporting Standard 102 - Triennial Review

2017 in these financial statements.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial

statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of

Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Turnover

Turnover represents amounts chargeable, net of value added tax, in respect of the sale and repair of motor

vehicles, associated bonuses and commissions and the sale of vehicle parts.

Turnover from the sale of vehicles is recognised when the significant risks and rewards of ownership are

transferred to the buyer. In most cases, the transfer of the risks and rewards of ownership coincides with the

transfer of the legal title or the passing of the possession to the buyer.

Turnover from the sale of services is recognised by reference to the stage of completion of the transaction.

Turnover from commissions and bonuses are recognised on an accrual basis in accordance with the substance

of the relevant agreement.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Plant and machinery

-

10% on cost

Fixtures and fittings

-

10% on cost

Motor vehicles

-

20% on cost

Computer equipment

-

20% on cost

Stocks

Stock and work in progress are valued at the lower of cost and net realisable value, after due regard for

obsolete and slow moving stocks. Net realisable value is based on selling price less anticipated costs to

completion and selling costs.

The ownership of consignment stock passes from the manufacturer to the company when full payment for

vehicles is made.

The value of consignment stock is shown separately in the notes to the balance sheet as both current assets

and as creditors due within one year.

Taxation

Taxation for the year comprises deferred tax. Tax is recognised in the Profit and loss, except to the extent that it

relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the

balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different

from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and

laws that have been enacted or substantively enacted by the year end and that are expected to apply to the

reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those

held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance

leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital

element of the future payments is treated as a liability.

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's

pension scheme are charged to profit or loss in the period to which they relate.

Going concern

As at 31 December 2018 the company had net liabilities and overdrawn shareholders funds of £2,616,765

(2017: £2,213,585).

Ongoing group support has been confirmed by the directors of the ultimate parent company of Sinclair Garages

(Cardiff) Limited, Sinclair Motor Holdings Limited.

Based on this confirmation of support these financial statements have been prepared on a going concern basis.

3.

Turnover

The turnover and loss before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2018

2017

£

£

New sales

39,269,091

43,702,878

Used sales

30,667,266

23,052,045

Parts, servicing and fuel sale

11,455,243

10,530,138

81,391,600

77,285,061

4.	Employees and directors

2018

2017

£

£

Wages and salaries

4,508,717

4,269,931

Social security costs

390,815

348,478

Other pension costs

52,575

33,763

4,952,107

4,652,172

The average number of employees during the year was as follows:

2018

2017

Service

65

61

Administration

17

15

Sales

50

53

Parts

7

7

139

136

Key management remuneration is disclosed in the consolidated financial statements of the parent entity,

Sinclair Motor Holdings Limited (incorporated in England and Wales).

2018

2017

£

£

Directors' remuneration

-

-

5.	Operating loss

The operating loss is stated after charging:

2018

2017

£

£

Hire of plant and machinery

46,458

57,768

Other operating leases

566,745

565,724

Depreciation - owned assets

98,564

103,678

Loss on disposal of fixed assets

-

21,998

Auditors' remuneration

5,000

5,000

Auditors' remuneration for non audit work

2,000

2,000

6.

Interest payable and similar expenses

2018

2017

£

£

Bank interest

3,138

6,311

Stocking interest

161,885

192,115

165,023

198,426

7.

Taxation

Analysis of the tax credit

The tax credit on the loss for the year was as follows:

2018

2017

£

£

Deferred tax

-

(968

)

Tax on loss

-

(968

)

Reconciliation of total tax credit included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is

explained below:

2018

2017

£

£

Loss before tax

(403,180

)

(567,324

)

Loss multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 19%)

(76,604

)

(107,792

)

Effects of:

Expenses not deductible for tax purposes

3,482

3,475

Capital allowances in excess of depreciation

(2,674

)

(9,624

)

Loss on disposal

-

4,180

Deferred tax

-

(968

)

Losses surrendered to group

75,796

109,630

Change in tax rate

-

131

Total tax credit

-

(968

)

8.	Tangible fixed assets

Fixtures

Plant and

and

Motor

Computer

machinery

fittings

vehicles

equipment

Totals

£

£

£

£

£

Cost

At 1 January 2018

443,619

36,123

123,817

225,388

828,947

Additions

81,551

49,185

-

12,438

143,174

At 31 December 2018

525,170

85,308

123,817

237,826

972,121

Depreciation

At 1 January 2018

218,903

15,133

11,099

197,455

442,590

Charge for year

46,553

6,831

24,763

20,417

98,564

At 31 December 2018

265,456

21,964

35,862

217,872

541,154

Net book value

At 31 December 2018

259,714

63,344

87,955

19,954

430,967

At 31 December 2017

224,716

20,990

112,718

27,933

386,357

9.

Stocks

2018

2017

£

£

Fully paid new vehicles

493,805

1,116,660

New vehicles on consignment

6,447,677

4,682,941

Used vehicles

5,728,621

6,310,572

Oil, fuel and spares

371,306

364,433

13,041,409

12,474,606

10.

Debtors: amounts falling due within one year

2018

2017

£

£

Trade debtors

1,172,088

1,257,149

Amounts owed by group undertakings

2,129,772

2,479,971

Amounts owed by participating interests

4,266

-

Other debtors

1,483,140

1,273,970

Prepayments

267,814

259,282

5,057,080

5,270,372

11.

Creditors: amounts falling due within one year

2018

2017

£

£

Bank loans and overdrafts (see note 12)

-

585,275

Trade creditors

7,854,793

8,798,596

Due in respect of new vehicles

6,447,677

4,682,941

Amounts owed to group undertakings

7,632,212

6,034,432

Amounts owed to participating interests

-

26,756

VAT

182,401

223,787

Accruals and deferred income

259,323

153,441

22,376,406

20,505,228

12.

Loans

An analysis of the maturity of loans is given below:

2018

2017

£

£

Amounts falling due within one year or on demand:

Bank overdrafts

-

585,275

13.	Leasing agreements

Minimum lease payments under non-cancellable operating leases fall due as follows:

2018

2017

£

£

Within one year

486,003

486,003

Between one and five years

1,994,012

1,944,012

In more than five years

-

486,003

2,480,015

2,916,018