Sinclair Garages Limited - Limited company accounts 23.2

REGISTERED NUMBER: 01342890 (England and Wales)

Sinclair Garages Limited

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 December 2023

Page

Company Information

1

Strategic Report

2

Report of the Directors

7

Report of the Independent Auditors

9

Statement of Comprehensive Income

12

Balance Sheet

13

Statement of Changes in Equity

14

Notes to the Financial Statements

15

Directors:

Mr G S Sinclair

Mr J M Sinclair

Mr A J Sinclair

Registered office:

Old Field Road

Bocam Park

Pencoed

Bridgend

CF35 5LJ

Registered number:

01342890 (England and Wales)

Auditors:

Haines Watts Wales LLP, Statutory Auditors

7 Neptune Court

Vanguard Way

Cardiff

CF24 5PJ

Bankers:

Barclays Bank PLC

P O Box 10

Windsor Court

Cardiff

CF11 3WP

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 2023.

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

Review of business

31/12/2023

31/12/2022

31/12/2021

31/12/2020

Turnover

£217,561,694

£192,648,839

£191,459,140

£159,739,590

Profit before tax

£3,311,353

£4,638,103

£5,248,925

£1,161,608

Shareholders' funds

£9,395,727

£9,830,299

£9,614,010

£8,354,590

The year of 2023 resulted in a mixed performance across the group. As a board we were increasingly concerned that our performance may be significantly impacted by the Macro economic and political events happening around the World. The ongoing War in the Ukraine and Middle East, continued to have build and price impacts on the industry. Closer to home, the constant increases in Inflation and interest rates continued to affect consumer confidence, and always carried the threat of a reduction in customer spend on high ticket items such as vehicles.

All these factors carried the real threat that 2023 would be a year where we witnessed a reduction in group volumes and performance. It is therefore really pleasing to see that our turnover as a group actually exceeded our performance in 2022. The focus and commitment of our staff teams ensured that our vehicle turnover, service and parts sales all increased on last year, which was a fantastic result. With all the challenges that the industry faced throughout the year, to see our group performance exceed the previous year was a result we are truly proud of. However, there were some additional challenges across the group that unfortunately resulted in our profitability being somewhat down on the previous year.

Our new car departments witnessed most of our Manufacturer partners begin to emerge from the build constraints they had previously been experiencing. This resulted in a return to a more normal supply chain for our customers, and our ability to supply more new cars. As a result, across the group our new car performance was ahead of the previous year. This return of new car volume did however have an impact on chassis profit retention, as we began to witness the reduction in the higher than usual profit retention in new car margins. It was really pleasing that as a whole, our group increased its turnover and gross profitability in the new car departments, even with a reduction in average chassis profits.

However, the new car performance within our Mercedes-Benz franchise was significantly back on 2022, as 2023 saw Mercedes-Benz move to a new Agency distribution process, and implement a new luxury vehicle strategy. The adoption of an agency system is a significant change within the industry, and Mercedes were our first manufacturer to adopt this. Whilst the transformation to the new system was seamless for the dealers and the customer, the reality was that it was going to take some months to settle into the market and volumes during this time would be reduced. In addition, the brands move towards a luxury vehicle strategy again had the result in reduced volumes across all markets. The consequent result of both these strategies was that our Mercedes-Benz sites delivered half of the volume of the previous year, and therefore half the profitability.

Our Group's used car performance was really encouraging for most of the year. Across the majority of our sites, both our vehicle volumes and profitability were inline or ahead of the previous year and our budgeted expectations. The ongoing shortage of used vehicles, resulting from a lack of new car availability over the previous years, had continued to result in a very strong used car market across the UK.

However, the final quarter of the year witnessed a very sharp realignment of the used car market, and a swift drop in used car values. Whilst this was always forecast to happen at some stage, nobody expected the fall to be so sudden and swift. This unfortunately resulted in a significant reduction in our used car stock values, with an immediate reduction in used car profitability. The unavoidable result was that our group's quarter 4 used car performance was decimated by this stock value drop. Whilst our volumes remained inline with budget, our profitability was way off where we had planned.

The Group's service and parts departments had another very strong year in 2023. Here, both turnovers and profitability were ahead of last year, and both departments were again key contributors to our overall profitability. This strong performance continues to assist in being the financial foundations to our group, and to its ongoing profitability.

In addition to our site and departmental performance, 2023 witnessed the opening of our latest new business within the Sinclair group. This is the new Jaguar Land Rover site in Swansea, and represents the very latest in technological advancements within our industry. The new facility is something that we are extremely proud of and will set a new standard for our customers and help move our business to the next level in the years to come.

Overall, whilst the year of 2023 ended being somewhat down on the previous year's profit, there are many reasons to be proud of the performance and optimistic for the coming year. The majority of our businesses experienced growth in most departments, and many had record profitability. The overall turnover of the group increased year on year, which clearly illustrates the strong health of the South Wales motor industry and our every increasing achievements within it. Also, when we examine the real issues that drove our profitability down versus last year, they are in two key areas that will not be repeated this year. Firstly, the issues of the Mercedes-Benz volume reduction are mostly isolated to 2023, and we are planning a return to better volumes and profitability within that brand for 2024. Also, the financial impact from the used car realignment was significant, however this has now happened and whilst the impacts may be felt for the first few months of 2024, they will then be behind us and not repeated again.

Overall 2023 was definitely a much more challenging year than previous years. However, our group has coped exceedingly well with all the challenges it faced, and has resulted in a performance and profitability that we are very proud of. This result again illustrates that even in difficult political and economic times, our team's commitment and professionalism ensures that the business continues to succeed.

Principal risks and uncertainties

Sinclair Garages Ltd 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 Ltd devotes significant resources to supporting these relationships to ensure that they continue to operate as well in the future. From time to time the company undertakes surveys of customer satisfaction, which are reviewed by the board. The directors realise the importance of excellent customer service to remain ahead of 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. Sinclair Garages Limited 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 sufficient Net Current Assets to cover it's long-term borrowings and provisions for liabilities. Future profits are being ploughed back into the business to re-invest in future opportunities as they become available. The company is in a strong position from a liquidity point of view, with excess funds being invested in Green Deposits. The directors are confident that the company accounts may be prepared on a going concern basis.

Climate Legislation Risk

The effects of climate change and associated future legislation may potentially have an impact on our business model.

As detailed in the report of the directors under our streamlined energy and carbon report, the business is investing in the future and finding ways to embrace the changes and change the way in which we work to meet current guidelines and help future proof our business Model.

Electric vehicle adoption risk

The change to electric and hybrid vehicles is being pushed politically and is therefore likely to accelerate which could impact the traditional business model.

We have a close relationship with our manufacturing partners which enables us to have access to these types of vehicles and to support our customer base who currently own or are looking to own electric or hybrid vehicles. We are committed to expanding our range of suppliers to ensure we offer our customer base a range of vehicles to meet their changing needs, as we are to investing in our staff in order to upskill them to meet the new requirements for assisting customers once their purchase has completed.

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 Motor Holdings 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 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 2023.

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

25 April 2024

The directors present their report with the financial statements of the company for the year ended 31 December 2023.

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

Dividends paid for the year ended 31st December 2023 amounted to £3,600,000.

Directors

The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report.

Mr G S Sinclair

Mr J M Sinclair

Mr A J 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. In the last 12 months we have changed our waste oil partner - our waste oil is now re-refined into base oil, reducing the need to drill for crude oil. For every 1000 litres of used oil we re-refine, we save over 480kg of CO2 compared to using virgin crude oil.

We have implemented a pilot that separates our waste into recycling streams, this pilot has seen us now recycle 75% of the waste we produce. The Welsh Govt is introducing a similar scheme in April 2024 – we already exceed the minimum requirements of this scheme and as a result have been selected as a case study by Welsh Govt. All sites will be on our version of the scheme by April 2024.

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 and movement activated interior lights. We have adopted energy saving practices in the business such as fast hand dryers in washrooms and end of day lighting and heating programmes and policies.

We obtain our gas and electricity from green energy providers wherever possible. Any energy that we consume that is not green we are currently offsetting back to net zero. We will continue to pursue the march to 100% renewable energy as the economy strengthens out of the Covid years. We are currently working with our energy providers to create a daily dashboard that will allow each site to track daily consumption stats - taking action immediately that we identify spikes in usage.

We have established an ‘Eco-Champion’ at each site with responsibility for identifying improvement opportunities. Each champion has successfully completed the Carbon Trust Carbon Literacy programme via Cynnal Cymru training provider. As have all Operational Board members. Our ambition is to see 50% of our staff through this programme in the next 2 years. We are currently investigating the Governments Flexible Skills Programme to identify areas of upskilling in the green arena that can be funded through this programme.

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)

2023

2022

Total emissions generated through combustion of gas (tCO2e)

596

683

Total emissions generated through use of purchased electricity (tCO2e)

674

1,071

Total emissions generated through use of other fuels (tCO2e)

5.17

42

Total emissions generated through business travel (tCO2e)

1,564

1,475

Total gross emissions (tCO2e)

2,839

3,271

Intensity ratio /total gross emissions (kgCO2 per sqft)

4.88

6.02

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

25 April 2024

Opinion

We have audited the financial statements of Sinclair Garages Limited (the 'company') for the year ended 31 December 2023 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 2023 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 eight, 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 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 or 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 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

30 April 2024

Turnover

3

217,561,694

192,648,839

Cost of sales

(200,665,785

)

(175,849,176

)

Gross profit

16,895,909

16,799,663

Administrative expenses

(12,753,527

)

(11,814,751

)

4,142,382

4,984,912

Other operating income

4

250,848

185,033

Operating profit

6

4,393,230

5,169,945

Interest payable and similar expenses

7

(1,081,877

)

(531,842

)

Profit before taxation

3,311,353

4,638,103

Tax on profit

8

(145,925

)

(921,814

)

Profit for the financial year

3,165,428

3,716,289

Other comprehensive income

-

-

Total comprehensive income for the year

3,165,428

3,716,289

Fixed assets

Tangible assets

10

1,560,987

1,308,325

Current assets

Stocks

11

24,781,681

23,505,482

Debtors

12

44,380,637

36,588,110

Cash at bank

1,249,554

2,107,026

70,411,872

62,200,618

Creditors

Amounts falling due within one year

13

(62,276,302

)

(53,436,005

)

Net current assets

8,135,570

8,764,613

Total assets less current liabilities

9,696,557

10,072,938

Provisions for liabilities

16

(300,830

)

(242,639

)

Net assets

9,395,727

9,830,299

Capital and reserves

Called up share capital

17

100

100

Retained earnings

9,395,627

9,830,199

Shareholders' funds

9,395,727

9,830,299

The financial statements were approved by the Board of Directors and authorised for issue on 25 April 2024 and were signed on its behalf by:

Mr A J Sinclair - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2022

100

9,613,910

9,614,010

Changes in equity

Dividends

-

(3,500,000

)

(3,500,000

)

Total comprehensive income

-

3,716,289

3,716,289

Balance at 31 December 2022

100

9,830,199

9,830,299

Changes in equity

Dividends

-

(3,600,000

)

(3,600,000

)

Total comprehensive income

-

3,165,428

3,165,428

Balance at 31 December 2023

100

9,395,627

9,395,727

1.	Statutory information

Sinclair Garages 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.

The financial statements have been prepared on a going concern basis. The Directors have reviewed and considered relevant information, including the annual budget and future cash flows in making their assessment. Based on these assessments, the Directors have concluded that they can continue to adopt the going concern basis in preparing the annual report and accounts.

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 estimated selling prices less costs to sell.

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 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 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

All tangible fixed assets are initially recorded at cost. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Freehold buildings - 2% on cost

Plant and Machinery -10% on cost

Motor Vehicles - 20% on cost

Computer Equipment - 33% on cost

Fixture and Fittings - 10% on cost

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 lower of cost and estimated selling price. Cost is determined using the first in, first out (FIFO) method.

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.

Taxation

Taxation for the year comprises current and 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 the 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 company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

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:

2023

2022

£

£

Sales of new vehicles

89,200,612

69,793,015

Sales of used vehicles

110,837,328

106,630,866

Repairs and other sales

17,523,754

16,224,958

217,561,694

192,648,839

4.	Other operating income

2023

2022

£

£

Solar Rebates

78,815

38,948

Other income

172,033

146,085

250,848

185,033

5.	Employees and directors

2023

2022

£

£

Wages and salaries

9,606,792

8,848,513

Social security costs

746,446

717,615

Other pension costs

221,400

188,248

10,574,638

9,754,376

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

2023

2022

Sales

90

88

Service

113

112

Parts

16

15

Administration

17

16

Body and Paint

25

25

261

256

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

2023

2022

£

£

Directors' remuneration

-

-

6.	Operating profit

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

2023

2022

£

£

Hire of plant and machinery

26,808

17,711

Depreciation - owned assets

331,347

293,126

(Profit)/loss on disposal of fixed assets

(147

)

23,277

Auditors' remuneration

20,000

20,000

Auditors' remuneration for non audit work

3,000

3,000

7.

Interest payable and similar expenses

2023

2022

£

£

Bank loan interest

-

5,821

Stocking interest

1,081,877

526,021

1,081,877

531,842

8.

Taxation

Analysis of the tax charge

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

2023

2022

£

£

Current tax:

UK corporation tax

87,734

808,386

Deferred tax

58,191

113,428

Tax on profit

145,925

921,814

Reconciliation of total tax charge included in profit and loss

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

2023

2022

£

£

Profit before tax

3,311,353

4,638,103

Profit multiplied by the standard rate of corporation tax in the UK of 25% (2022 - 19%)

827,838

881,240

Effects of:

Expenses not deductible for tax purposes

57

5,018

Capital allowances in excess of depreciation

(58,191

)

(77,872

)

Change in tax rate

(5,519

)

-

Balancing charge SD

2,666

-

Deferred tax movement

57,907

113,428

Profit on disposal of asset

(37

)

-

Group relief

(678,796

)

-

Total tax charge

145,925

921,814

9.

Dividends

2023

2022

£

£

Ordinary shares of £1 each

Final

3,600,000

3,500,000

10.	Tangible fixed assets

Fixtures

Plant and

and

Motor

Computer

machinery

fittings

vehicles

equipment

Totals

£

£

£

£

£

Cost

At 1 January 2023

1,852,426

1,389,633

17,392

595,140

3,854,591

Additions

244,868

194,782

73,267

81,602

594,519

Disposals

(12,314

)

(915

)

(1,000

)

(10,130

)

(24,359

)

At 31 December 2023

2,084,980

1,583,500

89,659

666,612

4,424,751

Depreciation

At 1 January 2023

1,138,006

913,052

13,409

481,799

2,546,266

Charge for year

161,218

89,131

9,716

71,282

331,347

Eliminated on disposal

(2,874

)

(424

)

(421

)

(10,130

)

(13,849

)

At 31 December 2023

1,296,350

1,001,759

22,704

542,951

2,863,764

Net book value

At 31 December 2023

788,630

581,741

66,955

123,661

1,560,987

At 31 December 2022

714,420

476,581

3,983

113,341

1,308,325