Park's (Ayr) Limited - Limited company accounts 20.1

REGISTERED NUMBER: SC135015 (Scotland)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2020

FOR

PARK'S (AYR) LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Income Statement

9

Other Comprehensive Income

10

Statement of Financial Position

11

Statement of Changes in Equity

12

Statement of Cash Flows

13

Notes to the Statement of Cash Flows

14

Notes to the Financial Statements

15

DIRECTORS:

D I Park

I B Mackay

W Cumming

R W Park

A S Bryce

G T Park

A G Noble

R B Hare

SECRETARY:

A G Noble

REGISTERED OFFICE:

Park House

14 Bothwell Road

Hamilton

ML3 0AY

REGISTERED NUMBER:

SC135015 (Scotland)

AUDITORS:

Thomas Barrie & Co LLP

Statutory Auditor

Chartered Accountants

Atlantic House

1a Cadogan Street

Glasgow

G2 6QE

BANKERS:

HSBC

1 Centenary Square

Birmingham

B1 1HQ

SOLICITORS:

Brodies LLP

110 Queen Street

Glasgow

G1 3BX

REVIEW OF BUSINESS

We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.

The company is in the motor trade and operates Volvo, Jaguar and Landrover franchises in Ayr.

We consider that our key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover and operating profit.

2020

2019

£

£

Turnover

71,206,988

73,281,799

The turnover for the Company fell by 2.8%. We received instruction to close all but essential services by on 23 March 2020, which restricted sales toward the end of the trading period.

In total, 899 new vehicles (2019 - 892) and 820 used vehicles (2019 - 994) were sold in the year.The reduction in used vehicles was attributable to the transfer of some operations to other group companies. New cars due to be delivered in March were postponed until permitted by the easing of restrictions.

Against similar trading restrictions, the Company's aftersales operations (which encompass service, body repair and parts sales) saw year on year turnover fall by 2.2%.

Gross profit for the Company reduced from £5,582,621 to £5,178,095, and operating profit decreased from £819,127 to £235,480 partly due to fewer used vehicle sales and the restriction of trading late in the trading period.

The impact of Covid-19 restrictions continued to adversely impact on trading and profitability into the 2020-21 trading year. The Directors recognise the ongoing support of central and local government, and manufacturer partners during the pandemic. Since the reopening of car showrooms, the Company has performed ahead of expectations, with management keenly focused on profitability and cost control.

PRINCIPAL RISKS AND UNCERTAINTIES

The strategic direction of the Company is aligned to manage the principal risks identified by the Directors as follows:

Operational risk

The Company's operation is dependent on supply chains which are outside the influence of the Directors, the failure of which would risk the ability meet customer demands and the Company's financial goals. Risk is managed through regular and proactive dialogue with suppliers to ensure customer demand is met through reliable delivery of vehicles and associated products.

Market and strategic risks

The Company's profitability and cash flow are affected by changes in market conditions and the ability of the Directors to accurately predict these in advance. The Company places increasing emphasis on the careful management of the purchasing and maintaining of used vehicle inventory and sales profitability to provide the Company with protection against shortfalls in new vehicle demand.

The emergence of Covid-19 restrictions has highlighted the importance of being able to adapt sales processes to meet changing customer demands and behaviours. The Directors recognise the emergence of online sales platforms from both manufacturers and internet consolidators which increase competition and threaten to reduce profitability of sales. The Company is focused on retaining customers by providing a high standard of service across all sales channels.

Competitive risk

The marketplace continues to be competitive but the Company benefits from a wide geographical presence, well diversified operations and brand portfolio in the wider Group, and a focus on maintaining a strong reputation for service and quality.

Regulatory and legislative risk

The Company operates in a highly regulated marketplace and is regulated by the FCA for general insurance broking and consumer credit purposes. The Company operates under the Senior Managers and Certification Regime (SMCR), with responsibilities appropriately allocated to Directors and senior Group managers.

The Directors are committed to ensuring the Company complies with all legislation and directives applicable to the Company's activity.

The impact of Brexit and Covid-19 have emerged as significant risks to business continuity. Preparations for the United Kingdom leaving the EU are progressing well in conjunction with major suppliers. The ongoing impact of Covid-19 restrictions continues and the Directors have ensured decisions and actions can be taken swiftly to minimise cost and disruption while maximising trading opportunities.

Financial Risk Management

The main risks associated with the company's financial assets and liabilities are set out below.

Liquidity Risk

The objective of the company in managing liquidity risk is to ensure that it can meet its financial obligations as and when they fall due. The company expects to meet its financial obligations through operating cash flows. In the event that the operating cash flows would not cover all the financial obligations the company has credit facilities available.

Interest Rate Risk

The company borrows from its bankers using either overdrafts or term loans whose tenure depends on the nature of the asset and management's view of the future direction of interest rate.

Credit Risk

The company has external debtors, however, the company undertakes assessments of its customers in order to ensure that credit is not extended where there is a likelihood of default

SECTION 172(1) STATEMENT

The Directors are aware of their duty under s.172 of the Companies Act 2006 to act in the way which they consider, in good faith, would be the most likely to promote the success of the Company for the benefit of its members as a whole and, in doing so, to have regard amongst other matters) to:

The interests of the Company's employees;

The need to foster the Company's relationships with suppliers, customers and others;

The impact of the Company's operations on the community and the environment; and

The desirability of the Company maintaining a reputation for high standards of business conduct.

Employees

The Company's employees are key to delivering the overall strategy. Ensuring that the business has the right values and culture is of paramount importance to the continued success of the Company's business.

The business engages on a regular basis with all of its employees, including regular team meetings, appraisals, apprenticeship programmes and various training and development courses.

Customers

The Company is committed to delivering a professional, industry leading customer experience across all activities. Customer feedback is collected from a number of sources. The Company regularly carries out mystery shopping exercises to assess the quality of the sales process and we aim to treat all customers fairly.

Suppliers

The Company works closely with a variety of motor manufacturers under a franchise business model. Successful operation is dependent on the continued maintenance of strong relationships with those manufacturers and their financing partners through regular engagement and participation in conferences and dealer councils.

The Company is committed to developing strong relationships with suppliers across all activities to drive value, ensure continuity of service and improve customer outcomes.

Community and Environment

The Company values the importance of making a positive impact and maintaining its physical presence in each of its operating locations by engaging in the local community in which it operates.

The Directors are committed to delivering a corporate social responsibility strategy that sets the aim to be environmentally responsible, a good neighbour and an excellent workplace.

ON BEHALF OF THE BOARD:

A G Noble - Director

28 January 2021

The directors present their report with the financial statements of the company for the year ended 31 March 2020.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the sale and service of private vehicles together with the sale of motor accessories.

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2020.

FUTURE DEVELOPMENTS

The directors will continue to look for opportunities to expand the company's core business.

DIRECTORS

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

D I Park

I B Mackay

W Cumming

R W Park

A S Bryce

G T Park

A G Noble

Other changes in directors holding office are as follows:

R B Hare - appointed 6 April 2019

Qualifying third party indemnity provisions

The company has put in place qualifying third party indemnity provisions for all of the directors.

GOING CONCERN

The directors are of the opinion that the financial statements should be prepared on a going concern basis. In forming this opinion, the directors have considered forecasts prepared taking into account the information currently available on Covid-19 and the likely impact of vaccines, as well as several severe downside scenarios. The group's balance sheet has strong reserves and trading since the year end has been good, despite repeated lockdowns, and there is no reason to believe that the group's current funding and liquidity position is not sufficient.

EMPLOYEES

The company is committed to providing a safe and pleasant environment for its employees and training and career development opportunities are available. No discrimination is made on the grounds of age, colour, disability, marital status, race, religion or sex. Employees are given the opportunity to develop and progress according to their ability. Disabled people are given fair consideration for all job vacancies for which they offer themselves as suitable applicants, having regard to their particular aptitudes and abilities.

Every effort is made to keep staff informed of, and involved in, the operations and progress of the group.

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;

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-	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, Thomas Barrie & Co LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

A G Noble - Director

28 January 2021

Opinion

We have audited the financial statements of Park's (Ayr) Limited (the 'company') for the year ended 31 March 2020 which comprise the Income Statement, Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Statement of Cash Flows, 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 March 2020 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.

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 six, 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.

Gordon Cruickshank CA (Senior Statutory Auditor)

for and on behalf of Thomas Barrie & Co LLP

Statutory Auditor

Chartered Accountants

Atlantic House

1a Cadogan Street

Glasgow

G2 6QE

29 January 2021

TURNOVER

3

71,206,988

73,281,799

Other operating income

595,313

755,084

71,802,301

74,036,883

Raw materials and consumables

(66,624,206

)

(68,454,262

)

5,178,095

5,582,621

Staff costs

4

(2,758,152

)

(2,766,025

)

Depreciation

(217,005

)

(181,343

)

Other operating expenses

(1,967,458

)

(1,816,126

)

OPERATING PROFIT

5

235,480

819,127

Interest payable and similar expenses

6

(107,314

)

(121,672

)

PROFIT BEFORE TAXATION

128,166

697,455

Tax on profit

7

(38,644

)

(143,686

)

PROFIT FOR THE FINANCIAL YEAR

89,522

553,769

PROFIT FOR THE YEAR

89,522

553,769

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

89,522

553,769

FIXED ASSETS

Tangible assets

9

423,563

450,846

CURRENT ASSETS

Stocks

10

17,740,794

12,489,249

Debtors

11

3,487,016

5,161,365

Cash at bank and in hand

555

938,912

21,228,365

18,589,526

CREDITORS

Amounts falling due within one year

12

(16,120,337

)

(13,598,303

)

NET CURRENT ASSETS

5,108,028

4,991,223

TOTAL ASSETS LESS CURRENT LIABILITIES

5,531,591

5,442,069

CAPITAL AND RESERVES

Called up share capital

16

1,000,000

1,000,000

Retained earnings

17

4,531,591

4,442,069

SHAREHOLDERS' FUNDS

5,531,591

5,442,069

The financial statements were approved by the Board of Directors and authorised for issue on 28 January 2021 and were signed on its behalf by:

A G Noble - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2018

1,000,000

4,888,300

5,888,300

Changes in equity

Dividends

-

(1,000,000

)

(1,000,000

)

Total comprehensive income

-

553,769

553,769

Balance at 31 March 2019

1,000,000

4,442,069

5,442,069

Changes in equity

Total comprehensive income

-

89,522

89,522

Balance at 31 March 2020

1,000,000

4,531,591

5,531,591

Cash flows from operating activities

Cash generated from operations

1

(1,009,330

)

2,031,850

Interest paid

(107,314

)

(121,672

)

Tax paid

(142,920

)

(175,230

)

Net cash from operating activities

(1,259,564

)

1,734,948

Cash flows from investing activities

Purchase of tangible fixed assets

(189,721

)

(99,935

)

Net cash from investing activities

(189,721

)

(99,935

)

Cash flows from financing activities

Equity dividends paid

-

(1,000,000

)

Net cash from financing activities

-

(1,000,000

)

(Decrease)/increase in cash and cash equivalents

(1,449,285

)

635,013

Cash and cash equivalents at beginning of year

2

938,912

303,899

Cash and cash equivalents at end of year

2

(510,373

)

938,912

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2020

2019

£

£

Profit before taxation

128,166

697,455

Depreciation charges

217,005

181,343

Finance costs

107,314

121,672

452,485

1,000,470

(Increase)/decrease in stocks

(5,251,545

)

1,640,900

Decrease/(increase) in trade and other debtors

1,674,348

(367,127

)

Increase/(decrease) in trade and other creditors

2,115,382

(242,393

)

Cash generated from operations

(1,009,330

)

2,031,850

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 March 2020

31.3.20

1.4.19

£

£

Cash and cash equivalents

555

938,912

Bank overdrafts

(510,928

)

-

(510,373

)

938,912

Year ended 31 March 2019

31.3.19

1.4.18

£

£

Cash and cash equivalents

938,912

303,899

3.	ANALYSIS OF CHANGES IN NET FUNDS/(DEBT)

At 1.4.19

Cash flow

At 31.3.20

£

£

£

Net cash

Cash at bank and in hand

938,912

(938,357

)

555

Bank overdrafts

-

(510,928

)

(510,928

)

938,912

(1,449,285

)

(510,373

)

Total

938,912

(1,449,285

)

(510,373

)

1.	STATUTORY INFORMATION

Park's (Ayr) Limited is a private company, limited by shares, registered in Scotland, registration number SC135015. The registered office is Park House, 14 Bothwell Road, Hamilton, ML3 0AY.

The presentation currency of the financial statements is Pounds Sterling (£).

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.

Going Concern

The group meets is day to day working capital requirements through loans from finance houses and a group overdraft facility which is due for renewal withing the next financial year.

The group's forecasts and projections, taking into account of possible changes in trading performance, show that the company will be able to operate within the level of its current facilities. The group will open renewal negotiations with the bank in due course, who have indicated that it is their intention to renew all group facilities. The group has held discussions with its bankers about its future borrowing needs and no matters have been drawn to its attention to suggest that finance may not be forthcoming on acceptable terms.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Significant judgements and estimates

In preparing these consolidated financial statements, the directors are required to make judgements, estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

The following areas provide estimation uncertainty.

Used Vehicle Stock

Used vehicle stock valuations which are derived from expert vehicle valuation data and directors' judgements.

Tangible Fixed Assets

The estimates and assumptions made to determine asset lives require judgements to be made as regards useful lives and residual values. The useful lives and residual values of the company's financial assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The lives are based on management experience with similar assets.

Bad Debts

Bad debts are provided for where objective evidence of the need for a provision exists.

Turnover

Turnover is measured at the fair value of consideration received or receivable, taking into account the amount of any discounts and rebates allowed by the entity, but excluding value added tax and other sales taxes.

Sale of Goods

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.Revenue is measured net of returns, trade discounts and volume rebates.

Services

Income from services is recognised when performed, such that risks and rewards have been transferred.

Commission

If the Company acts in the capacity of an agent rather than as the principal in a transaction, then the revenue recognised is the net amount of commission made by the Company.

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.

Plant and machinery

-

10% to 25% on cost

Fixtures and fittings

-

20% to 25% on cost

Computer equipment

-

25% on cost

The carrying value of tangible fixed assets are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be reasonable.

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.

Vehicle stock held on a consignment basis are not recorded in the balance sheet. Amounts paid for these vehicles are reflected within debtors as deposits.

Financial instruments

Basic financial instruments are recognised at amortised cost, except for investments in nonconvertible preference and non-puttable ordinary shares which are measured at fair value, with changes recognised in profit or loss. Derivative financial instruments are initially recorded at cost and thereafter at fair value with changes recognised in profit or loss.

Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Cash and cash equivalents

Cash and cash equivalents comprises cash balances. Bank overdrafts that are payable on demand and form an integral part of the company's cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.

Creditors

Short term trade creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Provisions

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

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 statement of financial position date.

Deferred tax

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

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.

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

3.

TURNOVER

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

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

2020

2019

£

£

Sale of goods

69,766,144

71,889,046

Service income

1,440,844

1,392,753

71,206,988

73,281,799

Turnover represents net invoiced sales of new & used cars as well as the repair & servicing of motor vehicles.

4.	EMPLOYEES AND DIRECTORS

2020

2019

£

£

Wages and salaries

2,475,264

2,478,956

Social security costs

232,872

250,678

Other pension costs

50,016

36,391

2,758,152

2,766,025

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

2020

2019

Office and Management

36

26

Production

72

63

108

89

2020

2019

£

£

Directors' remuneration

-

-

5.	OPERATING PROFIT

The operating profit is stated after charging:

2020

2019

£

£

Depreciation - owned assets

217,004

181,344

Auditors' remuneration

5,400

6,000

In accordance with SI 2008/489 the company has not disclosed the fees payable to the company’s auditors for ‘Other services’ as this information is included in the consolidated financial statements of Park's of Hamilton (Holdings) Limited.

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2020

2019

£

£

Stocking interest

107,314

121,672

7.

TAXATION

Analysis of the tax charge

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

2020

2019

£

£

Current tax:

UK corporation tax

39,410

143,686

Overprovided in previous years

(766

)

-

Tax on profit

38,644

143,686

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:

2020

2019

£

£

Profit before tax

128,166

697,455

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

24,352

132,516

Effects of:

Expenses not deductible for tax purposes

190

950

Depreciation in excess of capital allowances

14,868

10,220

Adjustments to tax charge in respect of previous periods

(766

)

-

Total tax charge

38,644

143,686

8.

DIVIDENDS

2020

2019

£

£

Ordinary shares of £1 each

Interim

-

1,000,000