ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2020
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Despite an unprecedented year, operating profit was £741,428 (2019: £496,398) with turnover in the year ended 31 December 2020 at £79,949,939 (2019: £104,107,570).
Diversification within the Company's motor dealership trade, combined with the significant contributions of a great number of people throughout the business, and strong partnerships, enabled what by many measures was a strong performance for the year. The motor trade was significantly impacted during the year by the Coronavirus pandemic and the associated UK national lockdowns announced by the Prime Minister on 22 March 2020 and again in November 2020. During the first lockdown period, the dealership showrooms were closed between 24 March and 1 June 2020. The majority of staff were furloughed during this period with a small team working tirelessly to carry out essential services work, and to prepare for reopening. On reopening, we did so with enhanced health and safety measures and strict social distancing guidelines in place to ensure the safest environment for our customers and staff. These measures included reconfigured showrooms to allow for social distancing, appointment only vehicle viewings and test drives, PPE and sanitising stations in all showrooms, more rigorous daily cleaning routines, cashless payment options and an enhanced digital experience with online appointments. Performance is always a product of the commitment and dedication of people, and this year was no different: but it did once again highlight this considerable strength within the business and the communities we serve. The financial performance in June to October 2020 was stronger than forecast and despite the reduction in activities in November as a result of the second lockdown in England, the Company was able to achieve and exceed targets. The Company's balance sheet discloses net assets at 31 December 2020 of £2,902,713 (2019: £2,984,081) and a strong net current asset position at the year end of £8,112,917 (2019: £7,140,334).
The business activities, financial condition and trading results are subject to risk factors and uncertainties that the Directors keep under review. The Directors are of the opinion that principal risks and uncertainties facing the Company relate to general economic and market conditions, which influence cost, pricing and the demand for its products and services as well as supply.
Economic risks and uncertainties brought about by the Coronavirus pandemic and Brexit are also closely monitored by the Directors. The Directors consider that the Company is well placed to continue in line with its business strategy.
The Company measures its financial performance and broader position by reference to key performance indicators. The key performance indicators used by the business include those relating to turnover, operating profit, net current assets and net assets. An analysis of these KPI's is included in the business review above.
The Company uses a range of other KPI's to monitor and measure performance within the business on a regular basis. These cover the whole business and reflect its evolving nature. KPI’s cover diverse areas of the business such as customer service and productivity.
The board of directors consider, both individually and together, that they have acted in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a) (f) of the Act) in the decisions taken during the year ended 31 December 2020.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Decision making at the Board
The Directors meet on a regular basis. When making decisions which are in the best interests of the Company they consider any potential impacts and risks for our customers, employees (both current and former employees, by reference to the Furrows pension Scheme, and as a future significant employer within our communities) and other stakeholders including our partners, suppliers, the communities in which we operate, and serve, and the environment and how they are to be managed. Stakeholders Our key stakeholders are our employees, customers, partners, suppliers, finance providers and the communities in which we operate. We take a current and future view in relation to all such stakeholders. Sustainability Furrows is a family business in its widest sense, and we consider the “Furrows Family” to be of great significance. We are proud that it has now provided employment, training and financial reward for its employees and owners and benefits for a wide group of stakeholders for over 100 years. When making business decisions we consider the needs of our current and future customers, employees, suppliers and the communities in which we operate to ensure we are conducting all our business relationships with integrity, as well as ongoing responsibilities for previous staff. The continued sustainability of the Company is paramount in our decision making, particularly in response to the challenging economic conditions and the Coronavirus pandemic. Employees Our people are fundamental to the delivery of our business plans. We aim to be a responsible employer in our approach to the pay and benefits our people receive. The health, safety and well being of our team is one of our primary considerations in the way we do business. We place considerable value on the involvement of our employees and continue to keep them informed on matters affecting them. Customers Engagement with customers who form the community we serve is key to our success. We are proud of our award winning customer service and ensure that this is maintained through customer satisfaction surveys, social media, focus group meetings and a dedicated customer service team. Partners and Suppliers The Company operates a franchise business model and therefore strong relationships with manufacturers is fundamental to what we do. We maintain regular communication with our key suppliers through regular reporting, conferences and councils. Finance Providers The Company seeks to make information available to financial stakeholders, including our relationship bank with whom we are proud to have had a strong relationship for over 100 years, as part of information provided about and by the Company. Communities and environment The Company aims to use its resources to create positive change for the communities and the environment in which we operate. We are very pleased to have recently been recognised by the British Chamber of Commerce as a 'UK Business Hero 2020' to recognise that we 'have gone the extra mile to support their local community during the Coronavirus outbreak'. Business Conduct The Board of Directors always strive to behave responsibly and ensure that the management of the Company operate the business in a responsible manner and with high standards of business conduct and governance. Page 2
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
This report was approved by the board and signed on its behalf.
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The Directors present their report and the financial statements for the year ended 31 December 2020.
The Directors are responsible for preparing the Strategic report, the Directors' report 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), 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 for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to 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.
The profit for the year, after taxation, amounted to £463,822 (2019 - £158,148).
The Directors considered that it was appropriate due to the Pandemic not to pay dividends during the year, (2019: £200,000).
The Directors who served during the year were:
The Company's operations expose it to a variety of financial risks that include credit risk, liquidity risk and interest rate risk. The Company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the Company by monitoring levels of debt finance and the related finance costs.
Credit risk - The Company has implemented policies that require appropriate credit checks on potential customers where credit sales are made. Liquidity risk - The Company actively maintains a mixture of long term and short term debt finance that is designed to ensure that it has sufficient available funds for operations and any planned expansions. Interest rate cash flow risk - The Company has interest bearing liabilities in the form of bank and financing facilities. Interest cash flows are monitored on a regular basis and interest rates are agreed at fixed rates where possible to ensure the certainty of future interest cash flows. Page 4
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Qualifying Third Party Indemnity Provisions During the year, and at the date of signing this report, the Company maintained liability insurance and third party indemnification provisions for its Directors, under which the Company has agreed to indemnify the Directors to the extent permitted by law in respect of all liabilities to third parties arising out of, or in connection with, the execution of their powers, duties and responsibilities as Directors of the Company and any of its associated companies.
This section includes our mandatory reporting of energy and greenhouse gas emissions for the period 1 January 2020 to 31 December 2020, pursuant to the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, implementing the government’s Streamlined Energy and Carbon Reporting (SECR) policy.
Our methodology to calculate our greenhouse gas emissions is based on the 'Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance (March 2019)’ issued by DEFRA, using DEFRA's 2020 conversion factors. In some cases consumption has been extrapolated from available data or direct comparison made to a comparable period.
We report using a financial control approach to define our organisational boundary. We have reported all material emission sources required by the regulations for which we deem ourselves to be responsible and have maintained records of all source data and calculations. During the reporting period, with its significant challenges, no new energy efficiency actions have been taken however, our energy management programme is ongoing at a number of sites, including monitoring and targeted reporting of energy consumption on a daily basis. Through the service provided by our energy consultants, the energy management programme we run enables us to identify and address any consumption issues as and when they arrive, allowing us to eliminate unnecessary energy waste.
The table below includes the Group's total energy consumption (reported as kWh) and greenhouse gas emissions for the sources required by the regulations, along with our intensity ratio.
Total Energy Consumption – Used for Emissions Calculation (kWh) 3,654,069 Gas Combustion Emissions, Scope 1 (tCO2e) 223.1 Purchased Electricity Emissions, Scope 2 (tCO2e) 294.0 Vehicle Fuel Combustion Emissions, Scope 1 (tCO2e) 268.0 Vehicle Fuel Combustion Emissions, Scope 3 (tCO2e) 9.8 Total Gross Reported Emissions (tCO2e) 794.9 Turnover (£m) 84.2 Intensity Ratio: Turnover (tCO2e / £m) 9.4
Disclosure of engagement with employees, suppliers, customers and others are included in the Strategic Report.
Future developments are also disclosed in the Strategic Report. Page 5
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There have been no significant events affecting the Company since the year end.
The auditors, WR Partners, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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We have audited the financial statements of Furrows Limited (the 'Company') for the year ended 31 December 2020, which comprise the Income statement, the Statement of comprehensive income, the Statement of financial position, the Statement of changes in equity and the related notes, 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).
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 United Kingdom, including the Financial Reporting Council'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.
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.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The Directors are responsible for the other information contained within the Annual Report. 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. 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 course of 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.
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
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 Directors' report.
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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 an Auditors' report 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.
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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
The audit team obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework (FRS102 and the Companies Act 2006), the relevant tax compliance regulations, employment law, Health and Safety Regulations and the EU General Data Protection Regulation (GDPR). We understood how the Company is complying with these frameworks by making enquiries of management and those responsible for legal and compliance procedures. We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur by meeting with key management to understand where they considered there was susceptibility to fraud. Based on our understanding our procedures involved enquiries of management and those charged with governance, manual journal entry testing, cashbook reviews for large and unusual items and the challenge of significant accounting estimates used in preparing the 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 Auditors' 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 an Auditors' report 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
Belmont House
Shrewsbury Business Park
Shropshire
SY2 6LG
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INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
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STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
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STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 35 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
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Furrows Limited is a limited liability company, incorporated in England. The registered office is disclosed on the Company Information page.
The principal activity of the business is the sale of motor vehicles and associated activities.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Furrows Holdings Limited as at 31 December 2020 and these financial statements may be obtained from Companies House.
In assessing the appropriateness of the going concern basis in preparing the accounts the Directors have considered the current financial position of the Company and the wider Group along with detailed forecasts for a period of 12 months after the date of the signing of these accounts.
In reviewing the forecasts the Directors have considered the headroom in the finance facilities which the Directors have a reasonable expectation will be renewed. The Directors have also considered the potential impact of Brexit on the working capital requirements of the Company based on the information available at the date of signing these accounts. The Directors consider that the Company is well positioned and have reasonable expectations that it has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements. Page 15
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Tangible fixed assets are stated at cost less depreciation.
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Listed investments held as fixed assets are shown at market value. Permanent diminutions in value are taken to the profit and loss account. Temporary changes in market value are taken to a revaluation reserve. At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss. Consignment Stock Consignment vehicles that are regarded effectively as being under the control of the Company due to the transfer of the risks and responsibilities, are included within new vehicle stocks on the balance sheet, although legal title has not passed to the Company. The corresponding liability is included within trade creditors and is secured directly on these vehicles.
The Company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other debtors and creditors, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade creditors or debtors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration, expected to be paid or received. However if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost. Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Profit and loss account. For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. Page 17
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For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.
Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Grants of a revenue nature are recognised in the Income statement in the same period as the related expenditure. Page 18
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Defined benefit pension plan
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Provisions are charged as an expense to the Profit and loss account in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet. Leasehold dilapidations Provision is made for the estimated dilapidation costs where payable on leases. Estimated future costs have not been discounted. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. In the opinion of the Directors there are no 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. Dilapidation provision The Company provides a provision for costs to restore sites leased by the Company for which the lease agreements contain a legal obligation to restore the locations to their original state at the end of the lease period. The total provision at balance sheet date is disclosed in note 23 of these accounts. Page 20
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12.Taxation (continued)
The pension payments made during the year have reduced the pension deficit provision, whilst interest on the scheme's assets and liabilities have been charged to the Statement of Comprehensive Income. For corporation tax purposes it is only the pension payments made that are deductible for tax purposes.
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22.Deferred taxation (continued)
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Other reserves
Profit & loss account
The Company is a member of a group guarantee arrangement with Furrows Holdings Limited, Deemster Investment Trust Limited, Furrows Properties Limited and Security Investments (Industrial) Limited.
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The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £144,578 (2019 - £132,498).
The Company also operates a defined benefit pension scheme.
The Scheme provides benefits based on final salary and length of service on retirement, leaving service or death.
The Scheme is subject to the Statutory Funding Objective under the Pensions Act 2004. A valuation of the Scheme is carried out at least once every three years to determine whether the Statutory Funding Objective is met. As part of the process the Company must agree with the Trustees of the Scheme the contributions to be paid to meet the Statutory Funding Objective. The most recent comprehensive actuarial valuation of the Scheme was carried out as at 5 April 2019 and the next valuation of the Scheme is due as at 5 April 2022. In the event that the next valuation reveals a larger deficit than expected the Company may be required to increase contributions above existing levels. Conversely, if the position is better than expected, it’s possible that contributions may be reduced. The Company expects to pay contributions of £500,000 in the year to 31 December 2021. The Scheme is managed by a board of Trustees appointed in part by the Company and part from elections by members of the Scheme. The Trustees have responsibility for obtaining valuations of the fund, administering benefit payments and investing the Scheme's assets. The Trustees delegate some of these functions to their professional advisers where appropriate. The Scheme exposes the Company to a number of risks: - Investment risk. The Scheme holds investments in asset classes, such as equities, which have volatile market values and while these assets are expected to provide real returns over the long-term the short term volatility can cause additional funding to be required if deficit emerges. - Interest rate risk. The Scheme's liabilities are assessed using market yields on high quality corporate bonds to discount the liabilities. As the Scheme holds assets such as equities the value of the assets and liabilities may not move in the same way. - Inflation risk. A significant proportion of the benefits under the Scheme are linked to inflation. Although the Scheme's assets are expected to provide a good hedge against inflation over the long term, movements over the short-term could lead to deficits emerging. - Mortality risk. In the event that members live longer than assumed a deficit will emerge in the Scheme. The effect of the judgment regarding equalisation of guaranteed minimum pensions for past transfers has been accounted for as a past service cost during the period. There were no other plan amendments, curtailments or settlements during the period. Page 32
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27.Pension commitments (continued)
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27.Pension commitments (continued)
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27.Pension commitments (continued)
The ultimate parent company is Furrows Holdings Limited, a company registered in England and Wales. Furrows Holdings Limited prepares consolidated financial statements for the smallest and largest group of which Furrows Limited is a member, and are publicly available from Companies House.
There is no ultimate controlling party of the Company. Page 35
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