Borders Automobile Company Limited - Limited company accounts 22.3

REGISTERED NUMBER: SC131487 (Scotland)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE PERIOD 1 JANUARY 2021 TO 31 MARCH 2022

FOR

BORDERS AUTOMOBILE COMPANY LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Income Statement

10

Other Comprehensive Income

11

Statement of Financial Position

12

Statement of Changes in Equity

13

Statement of Cash Flows

14

Notes to the Statement of Cash Flows

15

Notes to the Financial Statements

16

DIRECTORS:

W Cumming

R B Hare

I B Mackay

A G Noble

R W Park

G T Park

D I Park

SECRETARY:

A G Noble

REGISTERED OFFICE:

Park House

14 Bothwell Road

Hamilton

ML3 0AY

REGISTERED NUMBER:

SC131487 (Scotland)

AUDITORS:

Thomas Barrie & Co LLP

Statutory Auditor

Chartered Accountants

Atlantic House

1a Cadogan Street

Glasgow

G2 6QE

BANKERS:

ROYAL BANK OF SCOTLAND

36 ST ANDREW SQUARE

EDINBURGH

EH2 2YB

SOLICITORS:

Brodies LLP

110 Queen Street

Glasgow

G1 3BX

The directors present their strategic report for the period 1 January 2021 to 31 March 2022.

REVIEW OF BUSINESS

We aim to present a balanced and comprehensive review of the development and performance of our business during the period and its position at the period 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 operated three Toyota franchises in Carlisle, Dumfries and St Boswells, one Lexus franchise in Carlisle, two Hyundai franchises in Carlisle and Dumfries, one Skoda franchise in Dumfries and two authorised repairer and approved used vehicle franchises for Volkswagen in Dumfries and St Boswells.

On 1 March 2022 the company and three of the properties it trades from were acquired by Park's of Hamilton (Holdings) Limited. Subsequent to the period end the trading of all franchise operations was transferred within the group to Park's of Hamilton (Townhead Garage) Limited.

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.

2022

2020

£

£

Turnover

90,589,255

53,476,603

The financial statements for the Company cover a 15 month period that included periods of restrictions on trading from the company's properties due to the Covid-19 pandemic. However, the subsequent recovery in trading and strong performance of the franchises held by the Company saw a considerable increase in turnover that can be attributed in part to the inclusion of three plate-change months and strong demand for new and used vehicles.

Gross profit for the Company fell from 13.5% in 2020 to 11.2% for the period largely due to the impact of Coronavirus Job Retention Scheme support received in the prior year. Despite this, return on sale rose from 2.6% to 3.1% in the year due to a continued focus on cost control and sales profitability. The Company benefited from relief from business rates under the Retail Hospitality and Leisure relief.

The impact of Covid-19 restrictions has receded as the 2022-23 trading year continues. The Motor division is able to operate as normal although measures have been kept in place to ensure the safety and health of customers and employees.

Factors affecting trading in the 2022-23 trading year and beyond and their impact are reported in the Strategic Report of Park's of Hamilton (Townhead Garage) Limited, all trading having been transferred to that company in July 2022.

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 to 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. Preparation 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 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

14 December 2022

The directors present their report with the financial statements of the company for the period 1 January 2021 to 31 March 2022.

PRINCIPAL ACTIVITY

The principal activity of the company in the period under review was that of motor vehicle retailers and repairers of motor vehicles.

DIVIDENDS

An interim dividend of £3.50 per share was paid on 28 February 2022. The directors recommend that no final dividend be paid.

The total distribution of dividends for the period ended 31 March 2022 will be £ 350,000 .

FUTURE DEVELOPMENTS

All trade & assets were transferred to Parks of Hamilton (Townhead Garage) Limited as of July 2022. The directors will continue to look for opportunities to expand the company's core business.

EVENTS SINCE THE END OF THE PERIOD

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

DIRECTORS

The directors who have held office during the period from 1 January 2021 to the date of this report are as follows:

A S Bryce - appointed 1 March 2022

W Cumming - appointed 1 March 2022

R B Hare - appointed 1 March 2022

I B Mackay - appointed 1 March 2022

R A Maclean - resigned 1 March 2022

Mrs P A Maclean - resigned 1 March 2022

Dr C A Maclean - resigned 1 March 2022

A D Maclean - resigned 1 March 2022

A G Noble - appointed 1 March 2022

R W Park - appointed 1 March 2022

G T Park - appointed 1 March 2022

D I Park - appointed 1 March 2022

A S Bryce ceased to be a director after 31 March 2022 but prior to the date of this report.

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 as well as several severe downside scenarios. The group's balance sheet has strong reserves and trading since the year end has been good, 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;

-	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

14 December 2022

Opinion

We have audited the financial statements of Borders Automobile Company Limited (the 'company') for the period ended 31 March 2022 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 2022 and of its profit for the period 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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 this gives rise to a material misstatement in the financial statements themselves. 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.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentation, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with those charged with governance of the company and management.

We considered the nature of the company's industry and its control environment, and reviewed the company's documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities.

We obtained an understanding of the legal and regulatory frameworks that the company operates in, and identified the key laws and regulations that:

- had a direct effect on the determination of material amounts and disclosures in the financial statements. These included UK Companies Act, tax legislation, pensions legislation, financial conduct authority regulation and data protection regulations; and

- do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty.

We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.

In common with all audits under ISA's (UK), we are also required to perform specific procedures to respond to the risk of management override.

In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments, assessed whether the judgements made in making accounting estimates are indicative of a potential bias and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

- reviewing financial statement disclosures to underlying supporting documentation,

- performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatements due to fraud,

- enquiring of management and legal counsel concerning actual and potential litigation and claims, and instances of non-compliance of laws and regulations, and

- reviewing minutes of those charges with governance.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.

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

15 December 2022

TURNOVER

3

90,589,255

53,476,603

Other operating income

4

265,024

912,215

90,854,279

54,388,818

Raw materials and consumables

(80,704,002

)

(47,160,603

)

10,150,277

7,228,215

Staff costs

5

(5,140,072

)

(3,903,517

)

Depreciation

(72,610

)

(74,760

)

Other operating expenses

(2,107,584

)

(1,987,146

)

OPERATING PROFIT

6

2,830,011

1,262,792

Interest receivable and similar income

-

160,420

2,830,011

1,423,212

Interest payable and similar expenses

7

(14,783

)

(27,374

)

PROFIT BEFORE TAXATION

2,815,228

1,395,838

Tax on profit

8

(532,208

)

(278,119

)

PROFIT FOR THE FINANCIAL PERIOD

2,283,020

1,117,719

PROFIT FOR THE PERIOD

2,283,020

1,117,719

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

2,283,020

1,117,719

FIXED ASSETS

Tangible assets

10

473,552

564,134

CURRENT ASSETS

Stocks

11

8,024,444

6,026,269

Debtors

12

6,823,579

4,579,044

Cash at bank and in hand

1,211,020

1,452,317

16,059,043

12,057,630

CREDITORS

Amounts falling due within one year

13

(8,063,122

)

(6,085,311

)

NET CURRENT ASSETS

7,995,921

5,972,319

TOTAL ASSETS LESS CURRENT LIABILITIES

8,469,473

6,536,453

CAPITAL AND RESERVES

Called up share capital

16

100,000

100,000

Retained earnings

17

8,369,473

6,436,453

SHAREHOLDERS' FUNDS

8,469,473

6,536,453

The financial statements were approved by the Board of Directors and authorised for issue on 14 December 2022 and were signed on its behalf by:

A G Noble - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2020

100,000

5,318,734

5,418,734

Changes in equity

Total comprehensive income

-

1,117,719

1,117,719

Balance at 31 December 2020

100,000

6,436,453

6,536,453

Changes in equity

Dividends

-

(350,000

)

(350,000

)

Total comprehensive income

-

2,283,020

2,283,020

Balance at 31 March 2022

100,000

8,369,473

8,469,473

Cash flows from operating activities

Cash generated from operations

1

1,399,633

822,098

Interest paid

(14,783

)

(27,374

)

Tax paid

(494,119

)

(17,223

)

Net cash from operating activities

890,731

777,501

Cash flows from investing activities

Purchase of tangible fixed assets

(67,028

)

(63,811

)

Sale of tangible fixed assets

85,000

-

Interest received

-

160,420

Net cash from investing activities

17,972

96,609

Cash flows from financing activities

Loan repayments in year

(800,000

)

-

Equity dividends paid

(350,000

)

-

Net cash from financing activities

(1,150,000

)

-

(Decrease)/increase in cash and cash equivalents

(241,297

)

874,110

Cash and cash equivalents at beginning of period

2

1,452,317

578,207

Cash and cash equivalents at end of period

2

1,211,020

1,452,317

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

Period

1.1.21

to

Year Ended

31.3.22

31.12.20

£

£

Profit before taxation

2,815,228

1,395,838

Depreciation charges

72,610

74,760

Finance costs

14,783

27,374

Finance income

-

(160,420

)

2,902,621

1,337,552

(Increase)/decrease in stocks

(1,998,175

)

1,837,033

(Increase)/decrease in trade and other debtors

(2,244,535

)

729,541

Increase/(decrease) in trade and other creditors

2,739,722

(3,082,028

)

Cash generated from operations

1,399,633

822,098

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:

Period ended 31 March 2022

31.3.22

1.1.21

£

£

Cash and cash equivalents

1,211,020

1,452,317

Year ended 31 December 2020

31.12.20

1.1.20

£

£

Cash and cash equivalents

1,452,317

578,207

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.21

Cash flow

At 31.3.22

£

£

£

Net cash

Cash at bank and in hand

1,452,317

(241,297

)

1,211,020

1,452,317

(241,297

)

1,211,020

Total

1,452,317

(241,297

)

1,211,020

1.	STATUTORY INFORMATION

Borders Automobile Company Limited is a private company, limited by shares, registered in Scotland, registration number SC131487. 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

All trade & assets were transferred to Parks of Hamilton (Townhead Garage) Limited as of July 2022.

The group meets its day to day working capital requirements through loans from finance houses and a group overdraft facility which is due for renewal within 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 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. The depreciation rates being applied are outlined below.

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 the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

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

The company recognises revenue from rendering of services in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed based on surveys of work performed.

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.

Improvements to property

-

5% on cost

Plant and machinery

-

25% on reducing balance

Fixture and fittings

-

25% on cost

Computer equipment

-

25% on cost

Within fixtures and fittings are number plates which due to the nature of the asset are not depreciated.

Freehold property consists of land to be used within the business, due to the nature of the asset the company ha adopted the policy not to depreciate freehold property.

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.

Government grants

Grants are accounted under the accruals model as permitted by FRS102. Grants of a revenue basis are recognised in the Income Statement on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate.

Stocks

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

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 period 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 period 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 for the period ended 31 March 2022 is given below:

£

Sale of goods

86,805,438

Service income

3,783,817

90,589,255

This analysis is not considered to be applicable to the year ended 31 December 2020.

4.	OTHER OPERATING INCOME

Period

1.1.21

to

Year Ended

31.3.22

31.12.20

£

£

Management charges

-

50,000

Government grants

265,024

862,215

265,024

912,215

5.	EMPLOYEES AND DIRECTORS

Period

1.1.21

to

Year Ended

31.3.22

31.12.20

£

£

Wages and salaries

4,604,548

3,499,161

Social security costs

436,850

327,968

Other pension costs

98,674

76,388

5,140,072

3,903,517

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

Period

1.1.21

to

Year Ended

31.3.22

31.12.20

Sales, service & administration

128

139

Period

1.1.21

to

Year Ended

31.3.22

31.12.20

£

£

Directors' remuneration

-

-