Park's of Hamilton (Holdings) Limited - Limited company accounts 20.1

REGISTERED NUMBER: SC066568 (Scotland)

FOR

Page

Company Information  

1

Group Strategic Report  

2

Report of the Directors  

5

Report of the Independent Auditors  

8

Consolidated Income Statement  

10

Consolidated Other Comprehensive Income  

11

Consolidated Statement of Financial Position  

12

Company Statement of Financial Position  

13

Consolidated Statement of Changes in Equity  

14

Company Statement of Changes in Equity  

15

Consolidated Statement of Cash Flows  

16

Notes to the Consolidated Statement of Cash Flows  

17

Notes to the Consolidated Financial Statements  

19

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:

SC066568 (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

The directors present their strategic report of the company and the group for the year ended 31 March 2020.

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.

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

The turnover of the group by sector was as follows:

     2020

     2019

        £

        £

Motor Division

784,914,303

769,280,917

Coach Hiring Operations

28,004,638

  27,900,951

812,918,943

797,181,868

The turnover in the Motor division increased by 2%.   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, 16,220 new vehicles (2019 - 16,636) and 20,342 used vehicles (2019 - 20,102) were sold in the year.   New cars due to be delivered in March were postponed until permitted by the easing of restrictions.

Against similar trading restrictions, the Motor division aftersales operations (which encompass service, body repair and parts sales) increased year on year turnover by 3.9%.

During the year the Group completed the construction of the UK's largest McLaren dealership in Leeds, and added a neighbouring showroom to welcome Lamborghini to the Group's operations.

The Coach Hiring division turnover remained broadly comparable to the prior year despite cancellations of private hire bookings during March due to the imposition of Covid-19 restrictions.

Gross profit for the Group increased from £100,019,758 to £104,471,182, but operating profit decreased from £15,416,455 to £14,312,444 largely due to increased staff costs in line with the increased employee numbers and the restriction of trading late in the trading period.

The impact of Covid-19 restrictions continued to adversely impact on trading into the 2020-21 trading year.  The Directors recognise the ongoing support of central and local government, manufacturer partners and major coach hire contractors during the pandemic.  Since the reopening of car showrooms, the Motor division has performed ahead of expectations despite lower trading volumes, with management keenly focused on profitability and cost control.  The coach hiring division has continued to be adversely impacted by restrictions.  However, support of the public transport network and other private hire opportunities have continued to generate income while management has acted swiftly to identify significant cost savings.

PRINCIPAL RISKS AND UNCERTAINTIES

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

Operational risk

The Group's Motor division 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 Group'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.

The Coach Hiring division relies on the ability of the Group to maintain an operational fleet of vehicles to reliably meet the requirements of customers.  Risks are managed by the development of a rigorous maintenance and repair program which includes the support of key suppliers.

Market and strategic risks

The Group'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 Group places increasing emphasis on the careful management of the purchasing and maintaining of used vehicle inventory and sales profitability to provide the Group 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 Group 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 Group benefits from a wide geographical presence, well diversified operations and brand portfolio, and a focus on maintaining a strong reputation for service and quality.

Regulatory and legislative risk

The Group operates in a highly regulated marketplace and is regulated by the FCA for general insurance broking and consumer credit purposes.  The Group 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 Group complies with all legislation and directives applicable to the Group's activity.

The impact of Brexit and Covid-19 have emerged as significant risks to business continuity.  Preparations for the end of the transition period following the United Kingdom leaving the EU have progressed well in conjunction with major suppliers and no significant issues are foreseen.  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 Group for the benefit of its members as a whole and, in doing so, to have regard amongst other matters) to:

   The interests of the Group's employees;

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

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

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

Employees

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

Suppliers

The Motor division works closely with a wide 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 Group 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 Group 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 and the group for the year ended 31 March 2020.

PRINCIPAL ACTIVITIES

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

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

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.

STREAMLINED ENERGY AND CARBON REPORTING

As part of the Streamlined Energy and Carbon Reporting (SECR) regulations, the Group is reporting the annual greenhouse gas emissions from 1 April 2019 to 31 March 2020.  This includes all emissions sources for scopes 1 and 2 plus scope 3 emissions we deem ourselves responsible for where information is practically available.  The company has taken advantage of the exemption from making individual reports in subsidiary companies by reporting on a consolidated basis.

No comparative figures are available as this is the first year of reporting.

The gross carbon emissions for Park's of Hamilton (Holdings) Limited were 23,909 tonnes of carbon dioxide and equivalent gases (TCO2e).

TCO2e by Scope

                                                                                                 Year ended

                                                                                           31 March 2020 (TCO2e)

Scope 1 (Direct emissions)

  21,826

Scope 2 (Indirect emissions)

    2,083

Scope 3 (Other indirect emissions)

           0

Total

  23,909

Intensity ratios

TCO2e per £1,000 turnover

      0.03

TCO2e per employee

    11.48

The coach hiring division is responsible for 77% of the Group's overall greenhouse gas emissions, predominantly from diesel used to fuel the coach fleet.  The vehicles operated by the group are usually less than five years old and are purchased new from the manufacturer, complying with emissions regulations at the time of registration.  Systems are in place to monitor fuel efficiency.

The remaining emissions are derived from the heating and powering of the Group's properties.  The Directors are committed to the ongoing improvement of the efficiency of heating systems and electrical fittings.

Methodology

The methodology used to calculate our emissions is based on financial control in accordance with the principles of ISO14064 and the WRI/WBCSD GHG Reporting Protocols (revised edition), utilising conversion factors for the period reported as issued by BEIS/DEFRA.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group'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 group'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

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 group 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 group'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 Group 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 Group 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 Group 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-

the parent company 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 seven, 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 group's and the parent 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 group or the parent 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 C.A. (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

812,918,943

797,181,868

Other operating income

11,955,779

10,494,860

824,874,722

807,676,728

Raw materials and consumables

(720,403,540

)

(707,656,970

)

104,471,182

100,019,758

Staff costs

4

(62,749,746

)

(58,624,429

)

Depreciation

(5,567,333

)

(5,317,452

)

Other operating expenses

(21,841,659

)

(20,661,422

)

OPERATING PROFIT

5

14,312,444

15,416,455

Interest receivable and similar income

21,957

9,534

14,334,401

15,425,989

Interest payable and similar expenses

6

(1,976,335

)

(1,841,509

)

PROFIT BEFORE TAXATION

12,358,066

13,584,480

Tax on profit

7

(2,109,452

)

(1,880,000

)

PROFIT FOR THE FINANCIAL YEAR

10,248,614

11,704,480

Profit attributable to:

Owners of the parent

10,248,614

11,704,480

PROFIT FOR THE YEAR

10,248,614

11,704,480

OTHER COMPREHENSIVE INCOME

Actuarial losses

-

(29,000

)

GMP Equalisation

-

203,000

Income tax relating to components of other

comprehensive income

-

-

OTHER COMPREHENSIVE INCOME

FOR THE YEAR, NET OF INCOME TAX

-

174,000

TOTAL COMPREHENSIVE INCOME

FOR THE YEAR

10,248,614

11,878,480

Total comprehensive income attributable to:

Owners of the parent

10,248,614

11,878,480

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

111,407,875

108,769,488

Investments

12

1

1

Investment property

13

11,645,000

11,775,000

123,052,876

120,544,489

CURRENT ASSETS

Stocks

14

172,140,339

160,775,748

Debtors

15

18,349,969

40,626,834

Cash at bank and in hand

1,976,689

253,912

192,466,997

201,656,494

CREDITORS

Amounts falling due within one year

16

(216,617,543

)

(228,930,624

)

NET CURRENT LIABILITIES

(24,150,546

)

(27,274,130

)

TOTAL ASSETS LESS CURRENT

LIABILITIES

98,902,330

93,270,359

CREDITORS

Amounts falling due after more than one

year

17

(20,930,891

)

(25,396,553

)

PROVISIONS FOR LIABILITIES

22

(1,092,961

)

(1,243,942

)

NET ASSETS

76,878,478

66,629,864

CAPITAL AND RESERVES

Called up share capital

23

20,000,004

20,000,004

Retained earnings

24

56,878,474

46,629,860

SHAREHOLDERS' FUNDS

76,878,478

66,629,864

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

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

88,936,818

85,347,017

Investments

12

17,698,968

17,698,968

Investment property

13

11,645,000

11,775,000

118,280,786

114,820,985

CURRENT ASSETS

Debtors

15

7,526,993

15,381,690

Cash at bank and in hand

1,771,070

139,695

9,298,063

15,521,385

CREDITORS

Amounts falling due within one year

16

(72,441,301

)

(79,688,682

)

NET CURRENT LIABILITIES

(63,143,238