W R Davies (2004) Limited - Limited company accounts 20.1

REGISTERED NUMBER: 05284390 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019

FOR

W R DAVIES (2004) LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Notes to the Financial Statements

11

DIRECTORS:

J R Davies

B R Pritchard

D J Conway

C J D Taylor

SECRETARY:

B R Pritchard

REGISTERED OFFICE:

c/o W.R. Davies

Conwy Road

Llandudno Junction

Gwynedd

LL31 9BA

REGISTERED NUMBER:

05284390 (England and Wales)

AUDITORS:

D.R.E. & Co. (Audit) Limited

Chartered Accountants & Statutory Auditors

6 Claremont Buildings

Claremont Bank

Shrewsbury

Shropshire

SY1 1RJ

The directors present their strategic report for the year ended 31 December 2019.

REVIEW OF BUSINESS

The W R Davies Motor group operates car and commercial dealerships throughout North Wales and the Staffordshire

areas. W R Davies (2004) Limited is a 100% subsidiary of W R Davies (Motors) Limited, the parent company of the

group.

The company currently operates two Nissan dealerships in Stafford and Telford.

Sales in 2019 have been consistent with the 2018 year but gross margin has improved. The directors hope to see strong

performance continue in 2020, although the business will be affected by COVID-19.

Key performance indicators

2019

2018

% change

Turnover

£19,744,079

£19,756,196

(0.06%

)

Gross profit

£938,901

£730,311

28.56%

Shareholders' funds

£507,438

£561,013

(9.55%

)

Gross margin

4.76%

3.70%

PRINCIPAL RISKS AND UNCERTAINTIES

General economic circumstances

The motor trade, by its very nature, is a high fixed cost and low margin sector to operate in. Therefore an economic

downturn could affect adversely the company's profitability. Furthermore, the Bank of England's loose policy with

regards to interest rates could come to an end which could potentially significantly increase the company's interest bill.

Information systems

The company operates and is very reliant on its IT and computerised management systems. The interruption of this

could have an adverse affect on the company's ability to manage its business.

Competition

Motor distribution is a very competitive sector, and as such the business is always at risk from aggressive competitors.

The group believes that its superior customer service will help mitigate this risk.

Franchise agreements

The company holds franchises with Nissan. All of these agreements are subject to termination under certain

circumstances. The loss of any of the franchises held could have a material effect on the business.

Regulatory compliance

The company is regulated by the FCA for sales of insurance products. In 2013 the FCA also took over responsibility for

sale of consumer credit. The Group has to therefore comply with the regulatory regime and failure to do this could result

in fines or even the cessation of some business. This risk is mitigated by the company through close monitoring of

regulatory compliance.

ON BEHALF OF THE BOARD:

B R Pritchard - Secretary

30 June 2020

The directors present their report with the financial statements of the company for the year ended 31 December 2019.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of a motor retailer.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2019.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date of this

report.

J R Davies

B R Pritchard

D J Conway

C J D Taylor

DISCLOSURE IN THE STRATEGIC REPORT

The company has chosen, in accordance with s414C(11) of the Companies Act, to set out in the company's strategic

report information regarding the review of business and a description of the principal risks and uncertainties facing the

company.

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), including Financial Reporting Standard 102 'The

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

AUDITORS

The auditors, D.R.E. & Co. (Audit) Limited, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

B R Pritchard - Secretary

30 June 2020

Opinion

We have audited the financial statements of W R Davies (2004) Limited (the 'company') for the year ended

31 December 2019 which comprise the Income Statement, Other Comprehensive Income, 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 2019 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.

Opinions 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 three, 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.

Aled Davies F.C.C.A. (Senior Statutory Auditor)

for and on behalf of D.R.E. & Co. (Audit) Limited

Chartered Accountants & Statutory Auditors

6 Claremont Buildings

Claremont Bank

Shrewsbury

Shropshire

SY1 1RJ

30 June 2020

TURNOVER

4

19,744,079

19,756,196

Cost of sales

(18,805,178

)

(19,025,885

)

GROSS PROFIT

938,901

730,311

Administrative expenses

(959,173

)

(989,398

)

OPERATING LOSS

6

(20,272

)

(259,087

)

Interest payable and similar expenses

7

(31,359

)

(25,015

)

LOSS BEFORE TAXATION

(51,631

)

(284,102

)

Tax on loss

8

(1,944

)

(7,354

)

LOSS FOR THE FINANCIAL YEAR

(53,575

)

(291,456

)

LOSS FOR THE YEAR

(53,575

)

(291,456

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(53,575

)

(291,456

)

FIXED ASSETS

Tangible assets

9

632,951

695,007

CURRENT ASSETS

Stocks

10

3,457,372

3,752,325

Debtors

11

801,797

1,080,697

Cash in hand

1,063

1,164

4,260,232

4,834,186

CREDITORS

Amounts falling due within one year

12

4,244,161

4,771,961

NET CURRENT ASSETS

16,071

62,225

TOTAL ASSETS LESS CURRENT LIABILITIES

649,022

757,232

CREDITORS

Amounts falling due after more than one year

13

(68,856

)

(125,435

)

PROVISIONS FOR LIABILITIES

17

(72,728

)

(70,784

)

NET ASSETS

507,438

561,013

CAPITAL AND RESERVES

Called up share capital

18

1,025,000

1,025,000

Retained earnings

19

(517,562

)

(463,987

)

SHAREHOLDERS' FUNDS

507,438

561,013

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2020 and were signed on its behalf by:

J R Davies - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2018

1,025,000

(172,531

)

852,469

Changes in equity

Total comprehensive income

-

(291,456

)

(291,456

)

Balance at 31 December 2018

1,025,000

(463,987

)

561,013

Changes in equity

Total comprehensive income

-

(53,575

)

(53,575

)

Balance at 31 December 2019

1,025,000

(517,562

)

507,438

1.	STATUTORY INFORMATION

W R Davies (2004) 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.

The principal place of business is Valley Drive, Stafford ST16 1NZ.

2.	STATEMENT OF COMPLIANCE

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.

3.	ACCOUNTING POLICIES

Accounting convention

The financial statements have been prepared under the historical cost convention.

These financial statements are for the individual entity only.

The financial statements are presented in Sterling (£), rounded to the nearest £1.

At the balance sheet date the company had negative retained earnings of £517,562 (2018: £463,987). The

directors have reviewed the support of group companies and fully expect this to continue for the foreseeable

future. The directors have considered post year end trading and believe that the going concern basis of

preparation is appropriate.

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 4 Statement of Financial Position paragraph 4.12(a)(iv);

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of Section 3 Financial Statement Presentation paragraph 3.17(d);

•

the requirements of Section 11 Financial Instruments paragraphs 11.41(b), 11.41(c), 11.41(e), 11.41(f), 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

•

the requirements of Section 12 Other Financial Instruments paragraphs 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A;

•

the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Significant judgements and estimates

The company makes estimates and assumptions concerning the future. The resulting accounting estimates will,

by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk

of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are

addressed below.

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives

and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They

are amended when necessary to reflect current estimates, economic utilisation and the physical condition of the

assets. See note 9 for the carrying amount of fixed assets and note 3 for the useful economic lives for each class

of asset.

The company is a motor vehicle retailer. As a result it is necessary to consider the recoverability of the cost of

stock and the associated provisioning required. When calculating the stock provision, management considers the

nature and condition of the stock, as well as applying assumptions around anticipated saleability of vehicles. See

note 10 for the net carrying amount of stock.

The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment

of trade and other debtors, management considers factors including the current credit rating of the debtor, the

ageing profile of debtors and historical experience. See note 11 for the net carrying amount of debtors.

Turnover

Turnover represents net invoiced sales of goods, excluding value added tax.

Vehicle sales are recognised at the earlier of the delivery of the vehicle to the customer or the point at which the

customer becomes legally committed to purchasing the vehicle. Bonus income for the sale of vehicles is

recognised in the period to which it relates for general fleet bonuses. Bonus income relating to specific vehicles

is recognised when that vehicle is sold. The sale of parts and servicing is recognised when goods and services

are provided.

Tangible fixed assets

Tangible fixed assets are stated at historic cost less accumulated depreciation. Cost includes the original

purchase price, costs attributable to bringing the asset to its working condition for its intended use, dismantling

and restoration costs and borrowing costs capitalised.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful

life or, if held under a finance lease, over the lease term, whichever is the shorter:

Improvements to leasehold property

- 7.5% straight line

Fixtures and fittings

- varying rates between 15% and 33% straight line

Motor vehicles

- varying rates between 15% ans 33%

Computer equipment

- 15%, 25% and 50% straight line

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow

moving items.

Vehicles held on consignment stock from Nissan are included in the balance sheet, as it is considered that the

company enjoys the benefits and carries the risks of ownership.

Financial instruments

The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

(i) Financial assets

Basic financial assets, including trade and other receivables, amounts owed by group undertakings and cash and

bank balances, are initially recognised at transaction price, 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.

Such assets are subsequently carried at amortised cost using the effective interest method.

At the end of each reporting period financial assets measured at amortised cost are assessed for objective

evidence of impairment. 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 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.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are

settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party,

or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been

transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party

without imposing additional restrictions.

(ii) Financial liabilities

Basic financial liabilities, including trade and other payables, bank and other loans, amounts due to group

companies and finance leases, 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 receipts discounted

at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Fees paid

on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is

probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down

occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down,

the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which

it relates.

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of

business from suppliers. Accounts 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 payables are recognised initially at transaction

price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is

discharged, cancelled or expires.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, 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.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

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.

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.

4.

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:

31.12.19

31.12.18

£

£

Sales of goods

18,801,843

18,924,926

Rendering of services

942,236

831,270

19,744,079

19,756,196

5.	EMPLOYEES AND DIRECTORS

31.12.19

31.12.18

£

£

Wages and salaries

936,547

877,493

Social security costs

107,980

100,701

Other pension costs

24,312

22,608

1,068,839

1,000,802

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

31.12.19

31.12.18

Direct and indirect staff

37

35

None of the directors are remunerated by the company. Details of directors' remuneration are included within the

financial statements of W R Davies (Motors) Limited, a related company.

31.12.19

31.12.18

£

£

Directors' remuneration

-

-

6.	OPERATING LOSS

The operating loss is stated after charging/(crediting):

31.12.19

31.12.18

£

£

Depreciation - owned assets

80,076

72,478

Depreciation - assets on hire purchase contracts

36,416

34,207

(Profit)/loss on disposal of fixed assets

(8,851

)

4,641

Auditors' remuneration

9,900

18,052

Auditors' remuneration for non audit work

3,992

2,320

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

31.12.19

31.12.18

£

£

Other interest

2,119

-

Interest paid to group company

24,000

24,000

Hire purchase

5,240

1,015

31,359

25,015

8.

TAXATION

Analysis of the tax charge

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

31.12.19

31.12.18

£

£

Deferred tax

1,944

7,354

Tax on loss

1,944

7,354

Reconciliation of total tax charge 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:

31.12.19

31.12.18

£

£

Loss before tax

(51,631

)

(284,102

)

Loss multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

(9,810

)

(53,979

)

Effects of:

Expenses not deductible for tax purposes

23

473

Capital allowances in excess of depreciation

-

(11,658

)

Depreciation in excess of capital allowances

8,831

-

Deferred tax

1,944

7,354

Losses surrendered to group companies

956

65,164

Total tax charge

1,944

7,354

9.	TANGIBLE FIXED ASSETS

Improvements

to

Fixtures

leasehold

and

Motor

Computer

property

fittings

vehicles

equipment

Totals

£

£

£

£

£

COST

At 1 January 2019

320,951

515,829

133,850

64,872

1,035,502

Additions

21,688

4,028

97,500

2,902

126,118

Disposals

-

-

(88,850

)

(3,107

)

(91,957

)

At 31 December 2019

342,639

519,857

142,500

64,667

1,069,663

DEPRECIATION

At 1 January 2019

30,932

225,551

28,858

55,154

340,495

Charge for year

23,971

63,787

20,138

8,596

116,492

Eliminated on disposal

-

-

(17,608

)

(2,667

)

(20,275

)

At 31 December 2019

54,903

289,338

31,388

61,083

436,712

NET BOOK VALUE

At 31 December 2019

287,736

230,519

111,112

3,584

632,951

At 31 December 2018

290,019

290,278

104,992

9,718

695,007