Harratts of Wakefield Limited - Limited company accounts 18.2

REGISTERED NUMBER: 03191474 (England and Wales)

Harratts of Wakefield Limited

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 31 December 2017

Page

Company Information

1

Strategic Report

2

Report of the Directors

6

Report of the Independent Auditors

8

Income Statement

10

Other Comprehensive Income

11

Statement of Financial Position

12

Statement of Changes in Equity

13

Notes to the Financial Statements

14

DIRECTORS:

Mr D Harratt

Mrs S M Harratt FIoD

Mr S T Harratt MIoD

SECRETARY:

Mrs S M Harratt FIoD

REGISTERED OFFICE:

Group Head Office

Peel Avenue, Calder Park

Off Denby Dale Road

Wakefield

West Yorkshire

WF2 7UA

REGISTERED NUMBER:

03191474 (England and Wales)

AUDITORS:

Jolliffe Cork LLP

Chartered Accountants & Statutory Auditor

33 George Street

Wakefield

West Yorkshire

WF1 1LX

BANKERS:

HSBC Bank plc

Market Place

Dewsbury

West Yorkshire

WF13 1DH

The directors present their strategic report for the year ended 31 December 2017.

REVIEW OF BUSINESS

We report as a Board on a year where our decision to focus on cost reduction at the end of 2016 was vital in mitigating the effect of

loss of revenue from new cars and used cars. In contrast our after-sales business showed healthy growth and forms the foundation to

support our efforts to improve profitability.

After a strong start to trading in the first quarter of the financial year, thereafter we saw a marked decline in the new car market for

the next nine months. Vehicle excise duty was scheduled to increase in April 2017 and, as with others in our sector, we brought

forward registrations in the first quarter of the year to escalate trading at that point but it impacted the results thereafter. That,

combined also with uncertainty created by Brexit and exchange rate fluctuations had a twofold impact both on supply issues and

secondly on consumer spending.

We continue to monitor our performance through regular management meetings and in line with a number of our car manufacturers

we review our balanced scorecard which focuses on the inputs such as how many appointments each dealership has achieved, how

many videos have been created and sent in the week and monitoring the gross profit in our stock on a weekly basis.. We have very

good measurement and KPI tools in place, a first class daily operating control reporting suite and a robust showroom system

(Dealerweb) which gives us real time information to monitor financial performance.

A key foundation of our strategy has been to consolidate the business to a more manageable and efficient operating unit centred and

focussed around Wakefield. As reported in our Directors Report last year we concluded the sale of our Leeds Volvo business in

June 2017 while retaining the property on a 15 year lease to Marshall Group PLC. The losses incurred by our Leeds business in

2017 were £(317,363).

We continue to work closely with our manufacturers and funders to provide a platform to improve our financial performance not

only in the short term but also for the medium and long term. During 2017 we strategically focussed on working capital and reduced

our pre-registration activity. This has helped us to reduce stock and mitigate future disposal losses on these cars, however on the

other hand we failed to achieve some of our quarter end targets.

The UK new car market reduced by 5.7% in 2017 to 2.54million, still the 3rd largest in the decade. After a very strong market in

2016 where most of our brands performed well only Kia moved forward in 2017. Mitsubishi-11.7% and Honda -8.8% showed the

largest decline while Volvo reduced by 1% year on year. Key models introduced during 2017 were as follows: Volvo XC60, Kia

Stinger, Stonic & Picanto, Honda Civic and Mitsubishi introduced the all new Eclipse Cross at the end of 2017.

The Group continue to invest in the development of our people through our manufacturers, our finance partners and our training

partner 'Get the Edge'. This has been matched by our own in-house workshops and we have worked closely with our finance

partners to support active and on-line training. We continue to work with our independent compliance associate ITC to support our

compliance with FCA and we have also used them to give guidance on GDPR and future electronic document retention.

The Board continue to monitor financial performance, working capital efficiency, compliance, strategic opportunities and health &

safety at monthly Board Meetings.

For 2018 we have continued our drive to rationalise costs and put more focus on improving used car profitability through more

consistent and active used car purchasing both at physical and on-line auctions. We have also put strong focus on cleansing our

over-age used car stock and changing the profile and mix of used car stock to enable us to increase stock numbers while reducing

the overall stock value.

We recognise the continued efforts of our staff who have worked hard during 2017 and their dedication and loyalty is much

appreciated by the Board.

KEY PERFORMANCE INDICATORS

The company's key performance indicators during the year were as follows:

Financial

2017

2016

Change

£

£

%

Turnover

51,535,416

65,520,191

(21.34)

Operating loss

(644,613

)

(292,151

)

(120.64)

Interest payable and similar charges

196,390

194,128

1.16

Non-financial:

UK new car market (registrations)

2.54m

2.69m

New car sales (units)

994

1,348

Used car sales (units)

1,477

1,812

Employees

105

111

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the implementation of the Group's strategy are subject to a number of risks. These risks are

continually reviewed by the Board communicated to our stakeholders and where appropriate, monitored, addressed and mitigated

by suitable alternative processes.

Any business associated with the sale of cars is vulnerable to outside factors, both political and economic. Interest rate changes,

transport cost fluctuations, environmental issues, inflation pressures and austerity measure can all have a direct impact on a

consumer's decision to purchase a new or used car.

As our activities are spread across six different manufacturers this reduces the risk and the impact on our new car sales and

profitability and our spread and diversity of activities covering new and used cars, finance and after-sales also minimises the risk.

The Board monitors our manufacturer partners' performance in volume and share of the market and our close contact with them

seeks to ensure our objectives and plans are aligned with their targets to deliver mutually optimum and acceptable performance.

The Board have daily visibility with systems and tools to measure performance on all sales activities and therefore any risks or

threats can be identified early and measures taken to minimise the impact on sales and profitability. Additionally, marketing

initiatives and our continued investment in our website and on-line presence enhance our regional visibility and broaden our appeal

to customers.

Possible future changes to the legislative framework governing the sale of new cars in the UK and the competition provided by

non-franchise dealers, internet-based brokers and fast -fit repairers all pose a risk to the Group as they tempt customers away from

our business and can have a direct influence on driving down our margin.

The continued investment in technology both on-line and off-line and the strategic focus on customer care standards, operational

standards and investment in training our staff all help to mitigate the above threats to our business.

The impact of falling prices of used cars can have on our used car margins, given the significant proportion that used car sales form

of our total income needs to be recognised.

The risk is minimised by our continued review and monitoring of used car prices and both on-line and on site. Our scrutiny of used

car stock and our constant focus on ageing stock through re-pricing and trade disposal also minimises our risk to a correction in

prices in the used car market.

Our Competitors: We are always at risk of competitors marketing and selling to our existing customers through discounted prices

and marketing offers.

Mitigation: Through our continued review of our local market conditions, our excellent customer relationship management and

continued focus on customer satisfaction and retention and our family values and heritage all help to minimise this risk and protect

our customer loyalty.

Finance & Treasury: Our ability to pay for goods and services required for the Group's operational activities reflects the exposure to

liquidity risk.

We have two main funding streams in place, our committed facilities by our bank HSBC and the credit streams from suppliers and

sector specific funders who support our new and used car stocking plans and our parts stocking arrangements. Withdrawal or

reduced limits on any of these areas would impact on the trading ability of the Group. We work closely with all our funders and

have regular communication meetings to report on financial, operational and working capital requirements. Through our Senior

Finance Team, we have a robust and active management of our funding needs and regular financial and cash-flow reports are

communicated to the Board and our Funders.

Legal and Regulatory: Regulator action against the Group or significant litigation.

We maintain the right level of legal expertise to address, interpret and respond to key regulatory changes. We also have within our

Group's Senior Team expertise to assess ongoing regulatory changes and where appropriate training and workshops are organised

and undertaken to keep our staff fully briefed and trained on executing the regulation changes. We have a strong culture on

compliance and treating our customers fairly and consistently.

In particular, the changes to the data protection laws imposed by GDPR which by necessity are there to protect our valued

customers have been a difficult process to implement into our CRM activities and widened the scope and need for additional

monitoring and review. The risks we face are manifest through the potential penal fines which could be levied through

non-compliance. Our aim to mitigate this is the review processes implemented internally through our GDPR Committee. This meets

every month to review and measure our compliance with the legislation.

We are also working closely with IT, a partner in this process to ensure we have the necessary software and tools to assist with

documentation retention in the required formats and mediums.

Environmental: Continued pressure from our customers and the government to reduce our carbon footprint and a move towards

greener technologies, hybrid and electric vehicles.

The manufacturers we represent are driving cleaner emissions, building more environmentally friendly cars and this segment of the

market is increasing sharply. We continue to invest in infrastructure and technology to support these environmental changes.

Information Technology and Computer Systems: Our business is dependent on the efficient and uninterrupted operation of our

information technology and computer systems which are vulnerable to damage or interruption from power loss, telecommunications

failure, sabotage, vandalism that would impact the daily cycle of business and the risk and reputational damage to customer

confidence.

We have put in place contingency and recovery plans to mitigate the effects of such failures and have suppliers and contractors

available to support and respond to such events.

Cyber Security is an ever present and we are alert to the impact this could have on our day to day operations by its ability to corrupt,

affect or destroy key systems for customer data communications as well as the impact on our web platforms and the erosion of

customer confidence. Clear policies are in place in the form of unified threat management and the support of external specialists.

Senior Team and Key Employees: Our success is highly dependent on the efforts, expertise and abilities of our Senior Team and

key employees and our ability to attract and retain these and other skilled staff. The loss of the service of a number of such

individuals could have an adverse effect on the business performance, particularly from the reputational damage caused by poor

customer service and the overall customer satisfaction experience.

We mitigate this risk by providing a secure, satisfying and motivated work environment where we recognise and reward our

employees for their hard work and endeavours. We invest in on-line and through social media activities to attract quality candidates.

We also invest in training our staff in order to give them better skills to apply to their job and to develop them for future progression

in the Company.

Macro-Economic and Political: Following the outcome of the EU Referendum vote and subsequent General Election, economic

instability in the European Union is likely to impact the UK and the associated risk of deteriorating business conditions and the

impact on used vehicle pricing in particular.

The on- going investment in front line customer service, loyalty and retention programmes will help to stabilise demand at this level

along with keen pricing and stock management to mitigate the impact of this risk. However, the continued uncertainty in exchange

rate mechanisms could have an impact on new vehicle supplies particularly where we have a downward effect on the manufacturers

profitability.

Despite all of the foregoing, we operate in a cyclical business and as a result of the uncertainty around Brexit, we have seen a fall in

the new car market in 2018 with supply issues becoming more prevalent from a number of car manufacturers which are linked to

exchange rate pressures due to the fall in sterling. These issues will continue to have an impact on the market; our trading and

indeed investment until there is a much clearer position of the likely outcome of Brexit in 2019. The Society of Motor

Manufacturers and Traders (SMMT) the governing body representing car manufacturers have requested the need for Customs

Union Membership to ensure investment levels are sustained for the future of our industry. They have established too that import

tariffs alone could push up the retail price of cars imported to the UK from the continent by an average of £1,500 if brands and their

retail networks were unable to absorb these additional costs arising from adverse exchange rates and higher tariffs. This too could

impact the prices and therefore demand for new cars albeit the used car market may see some positive trends as a result of this.

ON BEHALF OF THE BOARD:

Mrs S M Harratt FIoD - Secretary

20 August 2018

The directors present their report with the financial statements of the company for the year ended 31 December 2017.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the retailing of motor vehicles and providing other

ancillary services.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2017.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2017 to the date of this report.

Mr D Harratt

Mrs S M Harratt FIoD

Mr S T Harratt MIoD

GOING CONCERN

The financial statements have been prepared on a going concern basis as a result of continuing support from our Bank and principal

funders (bank facilities in place to July 2019), as well as the ongoing financial assistance to the Group from our shareholders. The

performance in the current financial year is, at present, meeting our strategic plan.

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 or she ought to have taken as a director

in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of

that information.

AUDITORS

The auditors, Jolliffe Cork LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mrs S M Harratt FIoD - Secretary

20 August 2018

Opinion

We have audited the financial statements of Harratts of Wakefield Limited (the 'company') for the year ended 31 December 2017

which comprise the Income Statement, Other Comprehensive Income, Statement of Financial Position, 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 2017 and of its loss 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.

Material uncertainty related to going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made

in note 2 to the financial statements concerning the company's ability to continue as a going concern. The company incurred a net

loss of £841,003 during the year ended 31 December 2017 and, at that date the company's current liabilities exceeded its total assets

by £5,392,356 and it had net current liabilities of £5,691,090. These conditions, along with the other matters explained in note 2 to

the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's

ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company

were unable to continue as a going concern.

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 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, 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.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not

identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our

opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page six, the directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the

directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due

to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going

concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the

directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in

the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial

statements.

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.

Claire Lawton FCA DChA (Senior Statutory Auditor)

for and on behalf of Jolliffe Cork LLP

Chartered Accountants & Statutory Auditor

33 George Street

Wakefield

West Yorkshire

WF1 1LX

20 August 2018

TURNOVER

4

51,535,416

65,520,191

Cost of sales

49,618,236

62,913,119

GROSS PROFIT

1,917,180

2,607,072

Administrative expenses

2,583,171

2,899,223

(665,991

)

(292,151

)

Other operating income

21,378

-

OPERATING LOSS

6

(644,613

)

(292,151

)

Interest payable and similar expenses

7

196,390

194,128

LOSS BEFORE TAXATION

(841,003

)

(486,279

)

Tax on loss

8

-

-

LOSS FOR THE FINANCIAL YEAR

(841,003

)

(486,279

)

LOSS FOR THE YEAR

(841,003

)

(486,279

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

(841,003

)

(486,279

)

FIXED ASSETS

Tangible assets

9

298,734

506,377

CURRENT ASSETS

Stocks

10

6,196,757

8,761,700

Debtors

11

901,495

1,392,463

Cash in hand

1,020

1,490

7,099,272

10,155,653

CREDITORS

Amounts falling due within one year

12

12,790,362

15,213,383

NET CURRENT LIABILITIES

(5,691,090

)

(5,057,730

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(5,392,356

)

(4,551,353

)

CAPITAL AND RESERVES

Called up share capital

17

10,000

10,000

Retained earnings

18

(5,402,356

)

(4,561,353

)

SHAREHOLDERS' FUNDS

(5,392,356

)

(4,551,353

)

The financial statements were approved by the Board of Directors on 20 August 2018 and were signed on its behalf by:

Mrs S M Harratt FIoD - Director

Mr S T Harratt MIoD - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2016

10,000

(4,075,074

)

(4,065,074

)

Changes in equity

Total comprehensive loss

-

(486,279

)

(486,279

)

Balance at 31 December 2016

10,000

(4,561,353

)

(4,551,353

)

Changes in equity

Total comprehensive loss

-

(841,003

)

(841,003

)

Balance at 31 December 2017

10,000

(5,402,356

)

(5,392,356

)

1.	STATUTORY INFORMATION

Harratts of Wakefield 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.

The company's functional and presentation currency is the pound sterling £. All financial information presented has been

rounded to the nearest £, unless otherwise stated.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going Concern

The company's business activities, together with the factors likely to affect its future development, performance and

position are set out in the Strategic Report. The Strategic Report further describes the financial position of the company; its

cash flows, liquidity position and borrowing facilities; the Group's objectives, policies and processes for managing its

capital; its financial risk management objectives and its exposure to credit risk and liquidity risk.

As described in the Strategic Report, the current economic environment is still challenging and the company has reported a

further significant operating loss for the year. The directors' recognise that the outlook still presents them with some further

strategic demands but the report outlines clearly how a strategy has been developed to impact upon the current activities to

meet these challenges.

Operationally, the company meets its day to day working capital requirements through a group overdraft facility as well as

manufacturer linked funding lines. The Group's forecasts and projections, taking account of reasonably possible changes in

trading performance, show that the Group should be able to operate within the level of its current facility. In addition, the

Group has been able to conclude its renewal negotiations on acceptable terms with the bank and its facility is now in place

until July 2019.

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for

the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial

statements.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption 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.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, net of discounts and value added taxes.

Turnover includes revenue earned from the sale of goods and from the rendering of services.

The company recognises turnover when (a) the significant risks and rewards of ownership have been transferred to the

buyer; (b) the company retains no continuing involvement or control over the goods; (c) the amount of revenue can be

measured reliably and (d) it is probable that future economic benefits will flow to the entity.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Leasehold property improvements

-

10% on cost

Plant and equipment

-

15% on reducing balance

Fixtures and fittings

-

15% on reducing balance

Motor vehicles

-

33% on cost

Computer equipment

-

33% on cost

All fixed assets are initially recorded at cost.

The replacement of initial tools is charged to the profit and loss account in the period in which they occur.

Impairment of assets

At each reporting date fixed assets are reviewed to determine whether there is any indication that those assets have suffered

an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is

estimated and compared with its carrying amount. If estimated recoverable amount is lower, the carrying amount is reduced

to its estimated recoverable amount. An impairment loss is recognised in the income statement, unless the asset has been

revalued, when the amount is recognised in the statement of other comprehensive income to the extent of any previously

recognised revaluation. Thereafter, any excess is recognised in profit or loss.

Stocks

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

items.

Cost incurred in bringing each product to its present location and condition is based on purchase price less trade discounts.

Consignment stocks received under the terms of franchise agreements for Mitsubishi and Honda are not categorised as

stock on the statement of financial position. The value of consignment stocks held by the company at the year end, under

the terms of these agreements were £701,578 (2016: £618,921).

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent

that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively

enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of

financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in

which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted

or substantively enacted by the 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.

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.

Operating lease agreements

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor

are charged against profits on a straight line basis over the period of the lease.

Provisions for liabilities and charges

Provisions for the expected costs of maintenance under guarantees are charged against profits when products have been

invoiced. The effect of the time value of money is not material and therefore the provisions are not discounted.

3.	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 amounts 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 and other factors, including

expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates

will, by definition, seldom equal the related actual results.

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.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets

and liabilities in the next financial year are:

Estimated useful lives of tangible fixed assets

The annual depreciation charges for tangible fixed assets is sensitive to changes in the estimated useful lives of the assets.

The useful economic lives are re-assessed annually. They are amended when necessary to reflect current estimates, based

on technological advancement, future investments, economic utilisation and the physical condition of the assets.

Stock provisions

When calculating the stock provisions or write offs, management considers the nature and condition of the stock, as well as

applying assumptions around anticipated saleability.

4.

TURNOVER

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

An analysis of turnover by geographical market is given below:

2017

2016

£

£

United Kingdom

51,535,416

65,520,191

51,535,416

65,520,191

5.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

1,708,938

2,047,638

Social security costs

955,291

1,230,747

Other pension costs

15,351

18,013

2,679,580

3,296,398

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

2017

2016

Production staff

71

75

Administrative staff

34

36

105

111

2017

2016

£

£

Directors' remuneration

-

-

6.	OPERATING LOSS

The operating loss is stated after charging:

2017

2016

£

£

Depreciation - owned assets

66,473

96,238

Loss on disposal of fixed assets

123,645

6,286

Auditors' remuneration

21,550

25,250

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Bank interest payable

34,165

40,000

Other interest

-

136

Vehicle stocking loan interest

162,225

153,992

196,390

194,128

8.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose for the year ended 31 December 2017 nor for the year ended 31 December 2016.

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:

2017

2016

£

£

Loss before tax

(841,003

)

(486,279

)

Loss multiplied by the standard rate of corporation tax in the UK of 19% (2016 - 20%)

(159,791

)

(97,256

)

Effects of:

Expenses not deductible for tax purposes

4,141

-

Depreciation in excess of capital allowances

27,309

5,239

Tax losses carried forward

111,054

89,723

Group relief

22,099

-

Other timing differences - pension accrual

(4,591

)

3,501

Movement in unrecognised deferred tax asset

1,281

(1,207

)

Change in the rate of tax

(1,502

)

-

Total tax charge

-

-

9.	TANGIBLE FIXED ASSETS

Leasehold

property

Initial

Plant and

improvements

tools

equipment

£

£

£

COST

At 1 January 2017

269,556

22,869

1,039,936

Additions

-

-

12,720

Disposals

(215,860

)

-

(244,319

)

At 31 December 2017

53,696

22,869

808,337

DEPRECIATION

At 1 January 2017

167,529

-

775,633

Charge for year

14,460

-

35,201

Eliminated on disposal

(149,246

)

-

(182,185

)

At 31 December 2017

32,743

-

628,649

NET BOOK VALUE

At 31 December 2017

20,953

22,869

179,688

At 31 December 2016

102,027

22,869

264,303