Pinkstone Retail Limited - Limited company accounts 20.1

REGISTERED NUMBER: 04129930 (England and Wales)

GROUP STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

FOR

PINKSTONE RETAIL LIMITED

Page

Company Information

1

Group Strategic Report

2

to

3

Report of the Directors

4

to

5

Report of the Independent Auditors

6

to

9

Consolidated Statement of Comprehensive Income

10

Consolidated Statement of Financial Position

11

Company Statement of Financial Position

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Statement of Cash Flows

15

Notes to the Consolidated Statement of Cash Flows

16

Notes to the Consolidated Financial Statements

17

to

27

DIRECTORS:

S N Pinkstone

N E Pinkstone

SECRETARY:

N E Pinkstone

REGISTERED OFFICE:

499 Newcastle Road Trent Vale

Stoke On Trent

Staffordshire

ST4 6PJ

REGISTERED NUMBER:

04129930 (England and Wales)

AUDITORS:

DPC Accountants Ltd

Chartered accountants & statutory auditors

Stone House

Stone Road Business Park

Stoke-On-Trent

ST4 6SR

The directors have pleasure in submitting their Strategic Report for Pinkstone Retail Limited for the year ended 31 December 2020.

REVIEW OF BUSINESS

Interim dividends of £nil have been paid in 2020 (2019: £300,000).

The group's turnover increased in the financial year in New Vehicle Sales with just slight decreases in Used Vehicle Sales, Service and Parts despite the pandemic. Overall turnover increased by £688.9k to £46.6m from £45.9m.

We managed to open up strongly after lockdown and as a result the group gross profit increased slightly to £5.28m from £5.07m.

Selling and distribution costs were managed effectively along with other expenses and as a result, even with the business being closed for part of the year, profit before taxation this year was £1.2m compared to £0.2m in the prior year.

Net assets of the group increased due to the increase in profitability and focus has been maintained to ensure a continuing healthy trading position with all financial obligations met.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the nature of the company's strategy are subject to a number of risks.

As with many businesses of our size and nature, the business environment in which we operate continues to be challenging. In particular the vehicle market in the UK is highly competitive and margins continue to be tight. Ultimately levels of business activity will be dependent on factors such as economic cycles consumer confidence, consumer's overall level of disposable income, growth of the economy and product cycles with our Franchise partners.

Manufacturers supply of new and improved products

The group is reliant on new vehicle products from its Manufacturer Partners. This exposes the company to risks in a number of areas as the company is dependent on its manufacturer/supplier in respect of:

- Availability of new vehicle products

- Quality of new vehicle products

- Pricing of new vehicle products

The directors are confident that future new products from its manufacturer/supplier will continue to be competitively priced and high quality and therefore consider that this "manufacturer risk" is minimal.

Economic downturn

The success of the business is reliant on consumer spending. An economic downturn, resulting in a reduction of consumer spending power, will have a direct impact on the income achieved by the company.In response to this risk, management aim to keep abreast of economic conditions. In cases of severe economic downturn, marketing and pricing strategies are modified to reflect the new market conditions.

KEY PERFORMANCE INDICATORS

The group has established key performance indicators to measure the progress of the group in achieving both its business objectives and strategy. The management team reviews performance against these measures on a regular basis.

The group's key financial indicators during the year are as follows:

2020

2019

Turnover

£46,583,532

£45,894,670

Operating profit

£1,156,275

£220,774

Operating profit return on turnover

2.48%

0.48%

Profit before taxation

£1,136,832

£169,644

Net assets

£5,123,575

£4,100,647

FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

The group uses various financial instruments which include stocking loans, cash and various items, such as consignment stock, trade debtors and trade creditors that arise directly from operations. The main purpose of these financial instruments is to raise finance for the company's operations. Their existence exposes the group to a number of financial risks.

The main risks arising from the company's financial instruments are price risk, interest rate risk, liquidity risk and cash flow risk. The directors review and agree policies for managing each of these risks which are summarised below. These policies have remained unchanged.

Price

Toyota, Lexus, Subaru and MG continue to produce vehicles to be sold in a very competitive market,however prices and bonus structures are constantly reviewed and revised throughout the year to remain competitive.

Interest rate risk

The group finances its operations through a mixture of its own cash liquidity and other external borrowings. The group's exposure to interest rate fluctuations on its borrowings is managed by the use of floating facilities.

The group policy throughout the year has been to achieve its objective of managing interest rate risk through day to day involvement of management in business decisions rather than through setting maximum or minimum levels for the level of fixed interest rate borrowings.

Liquidity and cashflows

It is the policy of the group to minimise levels of funding and maximise liquidity. The group finances its longer-term activities with loans and finance leases from the funding departments of its manufacturers. The group uses its cash liquidity for day to day transactions and invests surpluses for higher rates of return.

FUTURE DEVELOPMENTS

The group will continue to benchmark itself against its peers to ensure achievement of its future goals.

The group continues to trade profitably, is well funded and will continue to capitalise on new business

opportunities as they arise.

ON BEHALF OF THE BOARD:

S N Pinkstone - Director

23 September 2021

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

DIVIDENDS

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

EVENTS SINCE THE END OF THE YEAR

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

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2020 to the date of this report.

S N Pinkstone

N E Pinkstone

DISCLOSURE IN THE STRATEGIC REPORT

The company has chosen in accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out in the company's strategic report information required by schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.

The strategic report can be found on pages 2 to 3 of these financial statements.

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). 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;

-	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 is deemed to have been re-appointed in accordance with section 487 of the Companies Act 2006.

ON BEHALF OF THE BOARD:

S N Pinkstone - Director

23 September 2021

Opinion

We have audited the financial statements of Pinkstone Retail Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2020 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated 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 group's and of the parent company affairs as at 31 December 2020 and of the group's 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 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

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 group's and the parent 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 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 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 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 four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the 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.

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

- the nature of the industry and sector, control environment and business performance including the design of the group's remuneration policies, key drivers for directors' remuneration, bonus levels and performance targets;

- results of our enquiries of management about their own identification and assessment of the risks of irregularities;

- any matters we identified having obtained and reviewed the group's documentation of their policies and procedures relating to:

- Identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of noncompliance;

- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

- the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

Based on this approach we were able to assess the group risks and ensure the risks were considered throughout all areas of audit testing. The audit team was professionally sceptical throughout the audit and remained alert for inaccurate or misleading information.

Audit response to risks identified

As a result of performing the above, we identified management override as a key audit matter related to the potential risk of fraud.

During the planning stage of the audit, the susceptibility of the group to irregularities including fraud was considered and discussed with the audit team.

During the year, the UK entered its first Covid lockdown and many of the group's employees worked from home. Due to the nature of the business; remote working was not possible for the majority of the business operations. It experienced closures of the dealerships and service centres which resulted in a large number of staff being put on furlough. A small number of staff were able to work remotely but this did not significantly alter the internal operating controls used to mitigate the risk of irregularities including fraud. As a result, we assessed the increase in the risk of fraud and irregularities as a result of remote working to be low.

During the audit we reviewed the laws and regulations that the group is required to adhere to, to ensure we fully understood any risks of irregularities including fraud. There has been no indication of any non-compliance with laws and FCA regulations.

Due to the measures outlined above, the audit was planned in such a way as to identify any potential high risk sources of irregularities including fraud and targeted sample testing was planned accordingly. Notwithstanding the inherent difficulties of identifying irregularities including fraud, the audit targeted higher risk areas where the risk of irregularities including fraud was considered higher. No instances were identified.

Our procedures to respond to risks identified included the following:

- reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

- enquiring of management concerning actual and potential litigation and claims;

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

- obtained an understanding of provisions and held discussions with management to understand the basis of recognition or non-recognition of tax provisions; and

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

Audit testing was completed on a targeted sample basis based on our assessment of risk and materiality. Due to this, it is not possible to identify all occurrences of irregularities including fraud. Any irregularities identified from the samples tested were discussed with management. No unexplained irregularities arose from our sample testing.

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.

Steven Owen (Senior Statutory Auditor)

for and on behalf of DPC Accountants Ltd

Chartered accountants & statutory auditors

Stone House

Stone Road Business Park

Stoke-On-Trent

ST4 6SR

24 September 2021

TURNOVER

3

46,583,532

45,894,670

Cost of sales

(41,307,126

)

(40,827,451

)

GROSS PROFIT

5,276,406

5,067,219

Administrative expenses

(4,599,334

)

(4,846,445

)

677,072

220,774

Other operating income

479,203

-

OPERATING PROFIT

5

1,156,275

220,774

Interest receivable and similar income

932

1,606

1,157,207

222,380

Interest payable and similar expenses

6

(20,375

)

(52,736

)

PROFIT BEFORE TAXATION

1,136,832

169,644

Tax on profit

7

(113,904

)

(44,854

)

PROFIT FOR THE FINANCIAL YEAR

1,022,928

124,790

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,022,928

124,790

Profit attributable to:

Owners of the parent

1,022,928

124,790

Total comprehensive income attributable to:

Owners of the parent

1,022,928

124,790

FIXED ASSETS

Intangible assets

10

23,623

70,330

Tangible assets

11

3,533,235

3,603,205

Investments

12

-

-

3,556,858

3,673,535

CURRENT ASSETS

Stocks

13

4,768,877

3,062,206

Debtors

14

1,435,438

1,216,065

Cash at bank

18,774

567,965

6,223,089

4,846,236

CREDITORS

Amounts falling due within one year

15

(4,564,188

)

(4,173,317

)

NET CURRENT ASSETS

1,658,901

672,919

TOTAL ASSETS LESS CURRENT LIABILITIES

5,215,759

4,346,454

CREDITORS

Amounts falling due after more than one year

16

(87,391

)

(123,552

)

PROVISIONS FOR LIABILITIES

19

(4,793

)

(122,255

)

NET ASSETS

5,123,575

4,100,647

CAPITAL AND RESERVES

Called up share capital

20

3,350

3,350

Share premium

21

139,744

139,744

Retained earnings

21

4,980,481

3,957,553

SHAREHOLDERS' FUNDS

5,123,575

4,100,647

The financial statements were approved by the Board of Directors and authorised for issue on 23 September 2021 and were signed on its behalf by:

S N Pinkstone - Director

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

-

-

Investments

12

702,070

702,070

702,070

702,070

TOTAL ASSETS LESS CURRENT LIABILITIES

702,070

702,070

CAPITAL AND RESERVES

Called up share capital

20

3,350

3,350

Share premium

21

139,744

139,744

Retained earnings

21

558,976

558,976

SHAREHOLDERS' FUNDS

702,070

702,070

Company's profit for the financial year

-

300,000

The financial statements were approved by the Board of Directors and authorised for issue on 23 September 2021 and were signed on its behalf by:

S N Pinkstone - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2019

3,350

4,132,763

139,744

4,275,857

Changes in equity

Dividends

-

(300,000

)

-

(300,000

)

Total comprehensive income

-

124,790

-

124,790

Balance at 31 December 2019

3,350

3,957,553

139,744

4,100,647

Changes in equity

Total comprehensive income

-

1,022,928

-

1,022,928

Balance at 31 December 2020

3,350

4,980,481

139,744

5,123,575

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2019

3,350

558,976

139,744

702,070

Changes in equity

Dividends

-

(300,000

)

-

(300,000

)

Total comprehensive income

-

300,000

-

300,000

Balance at 31 December 2019

3,350

558,976

139,744

702,070

Changes in equity

Balance at 31 December 2020

3,350

558,976

139,744

702,070

Cash flows from operating activities

Cash generated from operations

1

(388,871

)

651,587

Interest paid

(20,375

)

(52,736

)

Tax paid

(34,544

)

(237,048

)

Net cash from operating activities

(443,790

)

361,803

Cash flows from investing activities

Purchase of intangible fixed assets

-

(58,259

)

Purchase of tangible fixed assets

(70,172

)

(66,799

)

Interest received

932

1,606

Net cash from investing activities

(69,240

)

(123,452

)

Cash flows from financing activities

Loan repayments in year

-

(133,243

)

Capital repayments in year

(36,161

)

(67,271

)

Equity dividends paid

-

(300,000

)

Net cash from financing activities

(36,161

)

(500,514

)

Decrease in cash and cash equivalents

(549,191

)

(262,163

)

Cash and cash equivalents at beginning of year

2

567,965

830,128

Cash and cash equivalents at end of year

2

18,774

567,965

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

31.12.20

31.12.19

£

£

Profit before taxation

1,136,832

169,644

Depreciation charges

186,850

205,385

Finance costs

20,375

52,736

Finance income

(932

)

(1,606

)

1,343,125

426,159

Increase in stocks

(1,706,671

)

(365,358

)

Increase in trade and other debtors

(219,373

)

(205,573

)

Increase in trade and other creditors

194,048

796,359

Cash generated from operations

(388,871

)

651,587

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 December 2020

31.12.20

1.1.20

£

£

Cash and cash equivalents

18,774

567,965

Year ended 31 December 2019

31.12.19

1.1.19

£

£

Cash and cash equivalents

567,965

830,128

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

At 1.1.20

Cash flow

At 31.12.20

£

£

£

Net cash

Cash at bank

567,965

(549,191

)

18,774

567,965

(549,191

)

18,774

Debt

Finance leases

(159,714

)

36,161

(123,553

)

(159,714

)

36,161

(123,553

)

Total

408,251

(513,030

)

(104,779

)

1.	STATUTORY INFORMATION

Pinkstone Retail Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

The presentation currency of the financial statements is the Pound 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.

Basis of consolidation

The consolidated financial statements incorporate those of Pinkstone Retail Limited and its subsidiary undertaking for the year. Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes. The difference between the cost of acquisition of shares in subsidiaries and the fair value of the identifiable net assets acquired is capitalised as purchased goodwill and amortised through the profit and loss account over its estimated economic life. Provision is made for any impairment. The financial statements are made up to 31 December 2020.

All companies have co-terminus year ends. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.

As permitted by Section 408 of the Companies Act 2006, the company has not presented its own profit and loss account. The company's profit and total comprehensive income are presented in the company Statement of Financial Position.

Significant judgements and estimates

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the

circumstances.

(i) Critical accounting estimates and assumptions

The group makes estimates and assumptions concerning the future. The resulting accounting

estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(ii) Estimated useful lives and residual values of tangible and intangible fixed assets

Depreciation of tangible and intangible fixed assets has been based on estimated useful lives and

residual values deemed appropriate by the directors. Estimated useful lives and residual values are reviewed annually and revised as appropriate. Revisions take into account estimated useful lives used by other companies operating in the sector and actual asset lives and residual values, as evidenced by disposals during the current and prior accounting periods.

(iii) Consignment stock

In recognising consignment stock, management makes judgements as to whether substantially

all of the principal benefits and inherent risks rest with the group.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts,rebates, value added tax and other sales taxes.

Sale of goods

Turnover is recognised when it and the associated costs can be measured reliably, future economic benefits are probable, and the risks and rewards of ownership have been transferred to the customer. Sales of vehicles and parts are recognised when goods are delivered and legal title has passed and the group has no continuing managerial involvement associated with ownership or effective control of the goods sold. This is generally when goods have been checked and accepted by the customer on delivery at the specified location.

Sale of services

Turnover from contracts for the provision of vehicle services is recognised on completion of the service being performed.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a previously acquired business, is being amortised evenly over its estimated useful life of twenty years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Computer software is being amortised evenly over its estimated useful life of three years.

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.

Freehold property

-

2% straight line

Plant and machinery

-

20 - 50% straight line

Fixtures and fittings

-

3 - 7 years straight line

Computer equipment

-

25 - 33.3% straight line

No depreciation is provided on freehold land.

Residual value is calculated on prices prevailing at the reporting date, after estimated costs of disposal, for the asset as if it were at the age and in the condition expected at the end of its useful life.

Land and buildings are accounted for separately even when acquired together.

Stocks

Stocks are stated at the lower of cost and net realisable value. Cost is determined on an actual basis in respect of new vehicles, on a net realisable basis in respect of used vehicles and on a first in, first out basis in respect of other stocks.

Vehicles on consignment are included in stock when substantially all of the principal benefits and

inherent risks rest with the group. The corresponding liability is included within creditors.

At each reporting date, the group assesses whether stocks are impaired or if an impairment loss recognised in prior periods has reversed. Any excess of the carrying amount of stock over its

estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.