Sinclair Garages (Cardiff) Limited - Limited company accounts 23.1

REGISTERED NUMBER: 06731125 (England and Wales)

Sinclair Garages (Cardiff) Limited

Strategic Report, Report of the Directors and

Audited Financial Statements for the Year Ended 31 December 2022

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Statement of Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

Directors:

Mr G S Sinclair

Mr A J Sinclair

Mr J M Sinclair

Registered office:

Sinclair Group

Old Field Road

Pencoed

Bridgend

CF35 5LJ

Registered number:

06731125 (England and Wales)

Auditors:

Haines Watts Wales LLP, Statutory Auditors

7 Neptune Court

Vanguard Way

Cardiff

CF24 5PJ

Solicitors:

Acuity Legal

3 Assembly Square

Britannia Quay

Cardiff Bay

Cardiff

CF10 4PL

The directors present their strategic report for the year ended 31 December 2022.

Sinclair Garages (Cardiff) Limited operates its core functions of retailing new cars, used cars servicing (including repairs, bodyshop repairs and parts sales).

Review of business

31/12/2022

31/12/2021

31/12/2020

31/12/2019

Turnover

£95,392,750

£93,236,495

£80,710,855

£96,380,754

Profit/(Loss) before tax

£1,982,662

£1,482,413

(£155,244)

£20,208

Shareholders funds

£7,075

(£1,592,111)

(£2,751,801)

(£2,596,557)

The year of 2022 has resulted in another impressive and successful result for our group, and a year that we are extremely proud of. Not only have we been able to grow the financial result of the group, we have also been able to grow the size of our group, with the acquisition of Shukers Ltd. Shukers was a business that represented Land Rover in Aberystwyth and Ludlow, and Hyundai in Aberystwyth. The Shukers business was a very successful privately owned business and represented a great opportunity for our further expansion. With the acquisition we were able to double the representation points of our Land Rover business, and in doing so strengthen a key part of our group. We were also able to launch our very first Hyundai business, which is a brand we are very excited to add to the group. The Hyundai brand is going from strength to strength in the UK and we are very proud to add this to our portfolio of strong brands. These new sites result in our geographical coverage extending in Wales further north to Aberystwyth, and in Ludlow having our first business across the border into England.

The new car supply challenge continued throughout 2022 with the ongoing worldwide shortage of semi-conductors. This shortage has had an ongoing impact for all our Manufacturer partners and has resulted in significant reductions in new car production and supply. Whilst all Manufacturers have been affected differently, all have witnessed a significant impact across all of 2022. The results of this on our group has meant that throughout 2022 we have received somewhat less cars than we would have budgeted to receive.

In normal times this would have had a significant impact on our retail site's new car profitability. However, due to a shortage of product supply, our unit profitability result was far ahead of expectations, and this uplift in unit profit more than compensated for the lack of volume. The result was our new car departments performed ahead of budgeted expectations and had a strong result in 2022.

The lack of new car production created a similar picture for our used car departments. Availability of used car stock has been a constant challenge, and as a result our stock holdings across the group have been lower than we would normally expect. However, again due to a scarcity of product, the profit retention per vehicle has been ahead of budgeted expectations, and our used car profitability has benefited from this. The result was a very strong used car performance across the group for 2022.

Likewise our after sales departments have had a strong 2022. The ongoing post covid return of our strong service customer base, in conjunction with a strong warranty volume across most brands, has resulted in full workshops and a very impressive service and parts return for 2022.

Clearly the Macro environment outside of our group has not been easy for 2022. The growth in inflation and interest rates has presented a challenge not just for our business, but also for all our loyal staff working within it. Fortunately, due to our strong profitability across 2022, and a constant management of cash flow, as a business we were able to financially assist all staff during the later stages of 2022. Almost all households have felt it increasingly difficult to keep pace with ever growing energy and food bills, and we have been able to assist our staff with additional financial payments leading up to Christmas, which hopefully went some way to assisting them at that costly time of year.

Whilst 2022 undoubtedly presented challenges to all businesses within the industry, our group has performed incredibly well. The passion and commitment of our team to be the best they can be, has driven us to a performance in 2022 that we are hugely proud of. Every site across the group has contributed to what ended as an exceptional year.

Principal risks and uncertainties

Sinclair Garages (Cardiff) Limited benefits from the close commercial relationships with a number of key suppliers and customers. the loss of any of these of key suppliers and customers or a significant worsening in commercial terms could have a material impact on the results.

Sinclair Garages (Cardiff) Limited devotes significant resources to supporting these relationships to ensure that they continue to operate as well in the future. From time to time the group undertakes surveys of customer satisfaction, which are reviewed by the board. The directors realise the importance of excellent customer service to remain ahead of the competition.

Price Risk:

The company operates in highly competitive markets. Significant product innovations, technical advances or the intensification of price competition could adversely affect the results for the company. The company invests in significant training of its staff to ensure that the company is well placed to provide a choice for customers, to ensure that they are aware of their options and are satisfied with the level of service we provide. The company also continually works to streamline its cost base to ensure that it remains competitive.

Credit Risk:

The group has well established policies and procedures that require appropriate credit checks on potential customers before sales are made. The amount of exposure to any individual customer is subject to a limit which is reassessed annually by the company.

Liquidity Risk:

Effective management of cash and working capital is a key ongoing priority. The company has an intercompany facility in place that is sufficient to ensure available funds for its operations.

Section 172(1) statement

Statement by the directors in performance of their statutory duties in accordance with s172(1) Companies Act 2006.

The board of Directors of Sinclair Garages (Cardiff) Limited consider that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as whole (having regard to the stakeholders and matters set out in s172(1)(a)-(f) of the Act) in the decisions taken during for the Year Ended 31 December 2022.

The Sinclair group was started by Bill Sinclair in 1945 and the company continues to be controlled and run by the Sinclair family. We're proud of the ways in which the company has provided employment, training and financial reward for its owners and employees for over 70 years. We are the largest and most successful motor group in Wales, representing some of the most prestigious automotive brands. In a highly competitive market, we aim to stand out from our competitors by virtue of quality, reliability and the great customer care that our reputation is built upon.

We make strategic decisions based on long-term objectives. In particular, this has meant significant investment in premises and people in the business. This investment is to continue in the future to provide customers with state-of-the- art facilities and the very finest expertise. We acknowledge that, in order to progress to the next phase in the company's future, it is likely that we will continue to expand our existing businesses and add to the prestige brand portfolio that we have. We continue to explore possibilities along these lines. Our aim continues to be to maximise the company's ability to grow profits to fund continued investment for the future of the business and job security for the employees.

Our Employees

We rely on the hard work, commitment and enthusiasm of our staff which is fundamental to the delivery of our plan. We aim to be a responsible employer in our approach to the pay and benefits our team members receive. We provide comprehensive training and career development support. The health, safety and well-being of our employees is one of our primary considerations in the way we do business.

Our suppliers and customers

We meet with our manufacturing partners regularly throughout the year and take the appropriate action to prevent involvement in modern slavery, corruption, bribery and breaches of competition law. Our business model prioritises quality and customer satisfaction. We have built and will maintain a reputation for transparency and fair dealing with customers and suppliers.

Our Community and the Environment

We are a family-run company with roots in South Wales and have invested in our community through our charity donation scheme. From sponsoring sports kit of local childrens' clubs, to having employees play and arrange charitable football matches. Our plan takes into account the impact of the Group's operations on the community and environment and our wider social responsibilities, and in particular how we comply with environmental legislation and pursue waste-saving opportunities and react promptly to local community concerns.

Business conduct and Corporate Governance

As the Board of Directors, our intention is to behave responsibly and ensure that the management operate the business in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as ours and in doing so, will contribute to the delivery of our plan. The intention is to nurture our reputation, through both the construction and delivery of our plan, that reflects our responsible behaviour. As the Board of Directors, our intention is to behave responsibly towards our shareholders and treat them fairly and equally, so they too may benefit from the successful delivery of our plan.

Employment of disabled persons

It is the policy that disabled persons shall be considered for employment, career development and promotion on the basis of their aptitude and abilities in common with all employees.

Employee involvement

The Directors recognise the importance of good communications and relations with employees and management is encouraged to adopt employee consultations.

On behalf of the board:

Mr A J Sinclair - Director

29 April 2023

The directors present their report with the financial statements of the company for the year ended 31 December 2022.

Principal activity

The principal activity of the company in the year under review was that of the retailing of motor vehicles and related activities in the motor trade.

Dividends

No dividends will be distributed for the Year Ended 31 December 2022.

Directors

The directors shown below have held office during the whole of the period from 1 January 2022 to the date of this report.

Mr G S Sinclair

Mr A J Sinclair

Mr J M Sinclair

Streamlined energy and carbon reporting

We minimise the effects of motor retailing on the environment through adherence to our environment policy. We review and control key areas of our business that may have impact on the environment including asbestos, contamination, noise, recycled waste, tyre disposal, waste oil.

We continue to monitor our energy consumption with the aim of reducing our carbon footprint. The Group undertakes the energy assessments of each of our businesses under the Energy Savings Opportunity Scheme (ESOS) regulations. We use the results of this assessment to identify potential energy saving opportunities. We have carried out site analysis and assessments to ascertain areas of inefficiencies in the use of resources such as energy, water and fuel.

We have incorporated many energy savings initiatives such as solar panels, LED lighting, movement activated interior lights. We have adopted energy saving practices in the business such as fast hand dryers in washrooms, closed external doors as much as we can, switched off equipment when not in use. We obtain our gas and electricity from green energy providers wherever possible.

We are keen to work with our manufacturing partners in the move to green technologies such as electric vehicles and the infrastructure to charge battery powered vehicles. We look to advances in IT to move towards a paperless business and have invested in paperless communications and systems solutions.

Current reporting year (January - December)

2022

2021

Total emissions generated through combustion of gas (tC02e)

683

815

Total emissions generated through use of purchased electricity (tC02e)

1,071

1,052

Total emissions generated through use of other fuels (tC02e)

42

57

Total emissions generated through business travel (tC02e)

1,475

1,679

Total gross emissions (tC02e)

3,271

3,603

Intensity ratio/total gross emissions) (kgCO2e per sqft)

6.02

6.91

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). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

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

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement as to disclosure of information to auditors

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

On behalf of the board:

Mr A J Sinclair - Director

29 April 2023

Opinion

We have audited the financial statements of Sinclair Garages (Cardiff) Limited (the 'company') for the year ended 31 December 2022 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and 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 December 2022 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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 five, 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our planning procedures identify the legal and regulatory frameworks applicable to the operations and financial statements of the company. These are reviewed internally with the audit team including relevant industry experience and expectations as well as externally with the client management. The key laws and regulations we considered in this context were the UK Companies Act 2006, UK GAAP, FRS 102, and relevant tax legislation.

Once identified, we assess the risks of material misstatements in relation to the laws and regulations, irregularities, including fraud, and adjust our testing accordingly. Our audit procedures include:

- Discussing with Directors and management which areas of the business they believe to be more susceptible to fraud, and whether they have any knowledge or suspicion of fraudulent activities;

- Obtaining an understanding of the key controls put in place by the company to address risks identified, assessing the effectiveness of those and discussing how these are maintained and monitored internally;

- Assessing the risk of management override and review and testing of journal entries made into the accounting system;

- Challenging assumptions and judgements made by the company in relation to the significant accounting estimates employed in the preparation of the financial statements;

- Discussing with Directors and Management the legal and regulatory obligations of the business and whether they have any knowledge of suspicion of non compliance.

Despite the audit being planned and conducted in accordance with ISAs (UK) there remains an unavoidable risk that material misstatements in the financial statements may not be detected owing to inherent limitations of the audit, and that by their very nature, any such instances of fraud or irregularities likely to involve collusion, forgery, intentional misrepresentation, or the override of internal controls.

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.

Clive Edwards (Senior Statutory Auditor)

for and on behalf of Haines Watts Wales LLP, Statutory Auditors

7 Neptune Court

Vanguard Way

Cardiff

CF24 5PJ

29 April 2023

Turnover

3

95,392,750

93,236,495

Cost of sales

(87,032,502

)

(85,394,019

)

Gross profit

8,360,248

7,842,476

Administrative expenses

(6,282,735

)

(6,483,435

)

2,077,513

1,359,041

Other operating income

98,639

302,036

Operating profit

5

2,176,152

1,661,077

Interest payable and similar expenses

6

(193,490

)

(178,664

)

Profit before taxation

1,982,662

1,482,413

Tax on profit

7

(383,476

)

(322,723

)

Profit for the financial year

1,599,186

1,159,690

Other comprehensive income

-

-

Total comprehensive income for the year

1,599,186

1,159,690

Fixed assets

Tangible assets

8

391,158

488,499

Current assets

Stocks

9

9,773,538

9,016,899

Debtors

10

8,855,780

3,733,747

Cash at bank

487,490

2,178,148

19,116,808

14,928,794

Creditors

Amounts falling due within one year

11

(19,451,219

)

(16,965,391

)

Net current liabilities

(334,411

)

(2,036,597

)

Total assets less current liabilities

56,747

(1,548,098

)

Provisions for liabilities

15

(49,672

)

(44,013

)

Net assets/(liabilities)

7,075

(1,592,111

)

Capital and reserves

Called up share capital

16

1

1

Retained earnings

7,074

(1,592,112

)

Shareholders' funds

7,075

(1,592,111

)

The financial statements were approved by the Board of Directors and authorised for issue on 29 April 2023 and were signed on its behalf by:

Mr A J Sinclair - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2021

1

(2,751,802

)

(2,751,801

)

Changes in equity

Total comprehensive income

-

1,159,690

1,159,690

Balance at 31 December 2021

1

(1,592,112

)

(1,592,111

)

Changes in equity

Total comprehensive income

-

1,599,186

1,599,186

Balance at 31 December 2022

1

7,074

7,075

1.	Statutory information

Sinclair Garages (Cardiff) 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 Company Information page.

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.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 33.7.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Company's accounting policies

The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Stock valuation

The directors on a periodic basis will review the valuation of stock. This is performed on an individual vehicle basis taking into account external factors such as market trends as well as anticipated values as provided by the industry sources. Any provisions made as a result of this review are intended to reflect differences between cost and net realisable values.

The Directors consider that there are no key sources of estimate uncertainty.

Turnover

Turnover represents amounts chargeable, net of value added tax, in respect of the sale and repair of motor vehicles, associated bonuses and commissions and the sale of vehicle parts.

Turnover from the sale of vehicles is recognised when the significant risks and rewards of ownership are transferred to the buyer. In most cases, the transfer of the risks and rewards of ownership coincides with the transfer of the legal title or the passing of the possession to the buyer.

Turnover from the sale of services is recognised by reference to the stage of completion of the transaction.

Turnover from commissions and bonuses are recognised on an accrual basis in accordance with the substance of the relevant agreement.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each over its estimated useful life

Freehold Property - 2% on cost

Plant and Machinery - 10% on cost

Motor Vehicles - 20% on cost

Computer Equipment - 33% on cost

FixtureS and fittingS - 10% on cost

Tangible assets are initially stated at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses.

Government grants

Government grants represents income receivable in relation to the UK Government COVID-19 job retention scheme. This is recognised in the period in which it becomes receivable.

Stocks

Stock and work in progress are valued at the lower of cost and estimated selling price less costs to complete and sell, after due regard for obsolete and slow moving stocks.

The ownership of consignment stock passes from the manufacturer to the company when full payment for vehicles is made.

The value of consignment stock is shown separately in the notes to the balance sheet as both current assets and as creditors due within one year. Part stocks are stated at the lower of cost and estimated selling price. Cost is determined using the first in, first out (FIFO) method.

Taxation

Taxation for the year comprises deferred tax. Tax is recognised in the Statement of Comprehensive Income, 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 balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of future payments is treated as a liability.

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual

arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is

any contract that evidences a residual interest in the assets of the company after deducting all of its

liabilities. Financial liabilities are derecognised when the company's contractual obligations expire or are discharged & cancelled.

Trade Debtors

Trade debtors are amounts due from customers for merchandise sold in the ordinary course of business. Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

3.

Turnover

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

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

2022

2021

£

£

New sales

43,634,454

38,325,346

Used sales

39,805,710

43,473,313

Parts, servicing and fuel sale

11,952,586

11,437,836

95,392,750

93,236,495

4.	Employees and directors

2022

2021

£

£

Wages and salaries

4,451,432

4,606,594

Social security costs

368,298

377,823

Other pension costs

93,407

93,814

4,913,137

5,078,231

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

2022

2021

Service

51

51

Administration

9

10

Sales

39

46

Parts

6

7

Body and Paint

6

7

111

121

Key management remuneration is disclosed in the consolidated financial statements of the parent entity, Sinclair Motor Holdings Limited (incorporated in England and Wales).

2022

2021

£

£

Directors' remuneration

-

-

5.	Operating profit

The operating profit is stated after charging/(crediting):

2022

2021

£

£

Hire of plant and machinery

15,334

16,416

Depreciation - owned assets

188,736

173,798

Profit on disposal of fixed assets

(25,868

)

-

Auditors' remuneration

5,000

5,000

Auditors' remuneration for non audit work

2,500

2,000

Other operating leases

557,853

557,853

6.

Interest payable and similar expenses

2022

2021

£

£

Bank interest

2,700

1,010

Stocking interest

190,790

177,654

193,490

178,664

7.

Taxation

Analysis of the tax charge

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

2022

2021

£

£

Current tax:

UK corporation tax

377,817

278,710

Deferred tax

5,659

44,013

Tax on profit

383,476

322,723

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2022

2021

£

£

Profit before tax

1,982,662

1,482,413

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2021 - 19%)

376,706

281,658

Effects of:

Expenses not deductible for tax purposes

1,524

516

Capital allowances in excess of depreciation

-

(3,464

)

Depreciation in excess of capital allowances

4,501

-

Profit on disposal

(4,914

)

-

Accelerated capital allowances

5,659

44,013

Total tax charge

383,476

322,723

8.	Tangible fixed assets

Fixtures

Plant and

and

Motor

Computer

machinery

fittings

vehicles

equipment

Totals

£

£

£

£

£

Cost

At 1 January 2022

702,283

201,900

131,157

253,757

1,289,097

Additions

28,825

51,131

-

11,446

91,402

Disposals

-

-

(60,383

)

-

(60,383

)

At 31 December 2022

731,108

253,031

70,774

265,203

1,320,116

Depreciation

At 1 January 2022

450,341

65,374

113,164

171,719

800,598

Charge for year

71,144

24,708

17,986

74,898

188,736

Eliminated on disposal

-

-

(60,376

)

-

(60,376

)

At 31 December 2022

521,485

90,082

70,774

246,617

928,958

Net book value

At 31 December 2022

209,623

162,949

-

18,586

391,158

At 31 December 2021

251,942

136,526

17,993

82,038

488,499

9.

Stocks

2022

2021

£

£

Fully paid new vehicles

151,441

118,186

New vehicles on consignment

4,421,533

1,080,520

Used vehicles

4,742,166

7,434,916

Oil, fuel and spares

458,398

383,277

9,773,538

9,016,899