Company registration number NI013216 (Northern Ireland)
JKC SPECIALIST CARS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
JKC SPECIALIST CARS LIMITED
CONTENTS
Page
Company information
1
Strategic report
2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
JKC SPECIALIST CARS LIMITED
COMPANY INFORMATION
- 1 -
Directors
Mr J K Cassidy
Mrs M S Cassidy
Mr. N MacFlynn
Secretary
Mrs M S Cassidy
Company number
NI013216
Registered office
1-9 Millburn Road
Coleraine
BT52 1QS
Auditor
Moore (NI) LLP
21/23 Clarendon Street
Derry/Londonderry
BT48 7EP
Bankers
AIB (NI)
78 Wellington Street
Ballymena
Co. Antrim
BT43 6AF
Solicitors
Johnsons Solicitors
50-56 Wellington Place
Belfast
BT1 6GF
JKC SPECIALIST CARS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -

The directors present the strategic report for the year ended 31 December 2021.

Fair review of the business

The principal activities of the company is the sale and servicing of motor vehicles and accessories,

 

In 2021 we continued to trade under the difficult circumstances of COVID 19, and delay in vehicle product due to factory closures. The delay in new car product resulted in the value of used vehicles becoming inflated. In the final quarter of 2021 we opened our new state of the art vehicle workshop.

 

A strong start to 2022, with some product finally arriving on site in quarter one. Although quarter two has been impacted by the war in Ukraine, cost of living crisis, and the lack of local government. These factors have affected consumer confidence and reduced our level of business activity, especially in the areas of used cars and servicing.

 

We have once again been recognised by BMW and MINI UK, having recently won a national award and being nominated for a further four awards.

 

2022 also marks our 50th anniversary as a BMW franchise retailer. Certainly a special milestone for the staff, business and owners. Which we will be promoting throughout the year.

Principal risks and uncertainties

The company's operations expose it to a variety of financial risks that include foreign exchange risk, credit risk, liquidity risk and interest rate risk. The company has in place a risk management programme to monitor and control the effects of these risks on the financial performance of the company. In accordance with the requirement to analyse the key risks and uncertainties facing the future development of the company, the following have been identified:

 

Foreign exchange risk

A small proportion of the company's trading is conducted in foreign currency, primarily the Euro. Any exposure to foreign currency risk is in the normal course of business and deemed to be immaterial.

 

Credit risk

The company is exposed to a minimal degree of credit risk due to its policy of giving credit to a small number of customers. The company has implemented policies that require appropriate credit checks on all existing and potential customers before sales are made. Bad debt is monitored on an on-going basis. These policies are regularly assessed by the directors.

 

Liquidity risk

The company has financing facilities in place that are designed to ensure there are sufficient available funds to meet day to day working capital requirements.

 

Interest rate risk

The company has interest bearing liabilities. The company has a policy of monitoring its debt finance to ensure certainty of future cash flows.

Key performance indicators

Given the straightforward nature of the business, the company's directors are of the opinion that analysis using KPI's is not necessary for an understanding of the development, performance or position of the business.

On behalf of the board

Mr J K Cassidy
Director
21 July 2022
JKC SPECIALIST CARS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2021.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £60,000. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr J K Cassidy
Mrs M S Cassidy
Mr. N MacFlynn
Future developments

Details of future developments have been disclosed in the strategic report on page 2.

Auditor

The auditor, Moore (NI) LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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:

 

 

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 of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

JKC SPECIALIST CARS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
On behalf of the board
Mr J K Cassidy
Director
21 July 2022
JKC SPECIALIST CARS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF JKC SPECIALIST CARS LIMITED
- 5 -
Opinion

We have audited the financial statements of JKC Specialist Cars Limited (the 'company') for the year ended 31 December 2021 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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:

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 Auditor's 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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

JKC SPECIALIST CARS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF JKC SPECIALIST CARS LIMITED
- 6 -
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 directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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 is 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.

Auditor's 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 an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

Extent to which the audit was considered capable of detecting irregularities, including fraud

The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.

 

Based on our understanding of the company and its operating environment, we determined that the most significant frameworks which have a direct impact on the preparation of the financial statements are those related to the reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations. Additionally, we concluded that there are significant laws and regulations in relation to the provision of general insurance regulated activities, of which non-compliance may have a material effect on the financial statements.

We assessed the susceptibility of the company's financial statements to material misstatement, including how fraud might occur, including evaluating management's incentives and opportunities to manage earnings or influence the reported results. From the results of our assessment, we determined that the principal risk of fraud related to posting inappropriate journal entries. In common with all audits under ISAs (UK), we are required to perform specific procedures to respond to the risk of management override.

JKC SPECIALIST CARS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF JKC SPECIALIST CARS LIMITED
- 7 -
Audit response to risks identified

As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. Audit procedures performed by the engagement team included:

We communicated relevant laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

 

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment through collusion, forgery, intentional omissions, misrepresentations or the override of internal control.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the company's member 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 member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.

John Bradley (Senior Statutory Auditor)
For and on behalf of Moore (NI) LLP
21 July 2022
Chartered Accountants
Statutory Auditor
21/23 Clarendon Street
Derry/Londonderry
BT48 7EP
JKC SPECIALIST CARS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 8 -
2021
2020
Notes
£
£
Turnover
3
49,841,375
54,861,719
Cost of sales
(44,805,014)
(50,061,031)
Gross profit
5,036,361
4,800,688
Distribution costs
(203,574)
(224,857)
Administrative expenses
(3,878,515)
(3,483,748)
Other operating income
114,464
278,198
Operating profit
4
1,068,736
1,370,281
Fair value gains and losses on investment properties
10
47,708
-
0
Profit before taxation
1,116,444
1,370,281
Tax on profit
7
(177,225)
(277,504)
Profit for the financial year
939,219
1,092,777
JKC SPECIALIST CARS LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2021
31 December 2021
- 9 -
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
9
4,252,834
2,860,687
Investment properties
10
190,000
142,292
4,442,834
3,002,979
Current assets
Stocks
11
8,921,559
8,007,443
Debtors
12
1,483,421
2,102,423
Cash at bank and in hand
289,116
3,318,909
10,694,096
13,428,775
Creditors: amounts falling due within one year
13
(5,147,210)
(7,428,318)
Net current assets
5,546,886
6,000,457
Total assets less current liabilities
9,989,720
9,003,436
Provisions for liabilities
Deferred tax liability
15
255,565
148,500
(255,565)
(148,500)
Net assets
9,734,155
8,854,936
Capital and reserves
Called up share capital
17
250,000
250,000
Profit and loss reserves
18
9,484,155
8,604,936
Total equity
9,734,155
8,854,936
The financial statements were approved by the board of directors and authorised for issue on 21 July 2022 and are signed on its behalf by:
Mr J K Cassidy
Director
Company Registration No. NI013216
JKC SPECIALIST CARS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2020
250,000
7,522,159
7,772,159
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
1,092,777
1,092,777
Dividends
8
-
(10,000)
(10,000)
Balance at 31 December 2020
250,000
8,604,936
8,854,936
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
939,219
939,219
Dividends
8
-
(60,000)
(60,000)
Balance at 31 December 2021
250,000
9,484,155
9,734,155
JKC SPECIALIST CARS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
23
(1,613,400)
2,465,988
Income taxes paid
(280,748)
(216,613)
Net cash (outflow)/inflow from operating activities
(1,894,148)
2,249,375
Investing activities
Purchase of tangible fixed assets
(1,652,411)
(337,721)
Proceeds on disposal of tangible fixed assets
5,900
7,801
Purchase of investment property
-
0
(142,292)
Receipts arising from loans made
(116,138)
432
Net cash used in investing activities
(1,762,649)
(471,780)
Financing activities
Dividends paid
(60,000)
(10,000)
Net cash used in financing activities
(60,000)
(10,000)
Net (decrease)/increase in cash and cash equivalents
(3,716,797)
1,767,595
Cash and cash equivalents at beginning of year
3,318,909
1,551,314
Cash and cash equivalents at end of year
(397,888)
3,318,909
Relating to:
Cash at bank and in hand
289,116
3,318,909
Bank overdrafts included in creditors payable within one year
(687,004)
-
0
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 12 -
1
Accounting policies
Company information

JKC Specialist Cars Limited is a company limited by shares incorporated in Northern Ireland. The registered office is 1-9 Millburn Road, Coleraine, BT52 1QS.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of vehicles and parts is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from servicing of vehicles is recognised when the service has been provided and all contractual obligations have been satisfied.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Land and buildings Freehold
straight line over 50 years
Land and buildings Leasehold
straight line over 50 years
Plant and machinery
20% straight line
Fixtures, fittings & equipment
15% straight line

Leasehold improvements in the course of completion are not depreciated until the works are complete and the premises is available for use.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
1.5
Investment properties

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

1.6
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.7
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Consignment stock
Under certain dealer agreements with motor manufacturers, the company is allocated consignment stock. As legal title does not pass until the end of the consignment period, such stock has not been included in the balance sheet of the company.

1.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
1.9
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

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

1.10
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.11
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.12
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.14
Leases

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

1.15
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.16
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 17 -
2
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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2021
2020
£
£
Turnover analysed by class of business
Vehicle sales
45,204,895
50,756,076
Servicing and parts
4,636,480
4,105,643
49,841,375
54,861,719
2021
2020
£
£
Other revenue
Grants received
99,464
270,698
4
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(99,464)
(270,698)
Fees payable to the company's auditor for the audit of the company's financial statements
14,000
14,000
Depreciation of owned tangible fixed assets
260,264
194,760
Profit on disposal of tangible fixed assets
(5,900)
(3,865)
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 18 -
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2021
2020
Number
Number
Sales
19
17
Service
32
36
Parts
6
5
Aftersales (Vehicle Prep Team)
12
13
Admin
13
13
Total
82
84

Their aggregate remuneration comprised:

2021
2020
£
£
Wages and salaries
2,328,289
2,333,221
Social security costs
210,777
216,155
Pension costs
43,958
44,387
2,583,024
2,593,763
6
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
151,900
151,900
7
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
95,416
280,748
Adjustments in respect of prior periods
(25,256)
(3,244)
Total current tax
70,160
277,504
Deferred tax
Origination and reversal of timing differences
107,065
-
0
Total tax charge
177,225
277,504
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
7
Taxation
(Continued)
- 19 -

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2021
2020
£
£
Profit before taxation
1,116,444
1,370,281
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
212,124
260,353
Adjustments in respect of prior years
(25,256)
(3,244)
Permanent capital allowances in excess of depreciation
(107,643)
20,395
Deferred tax timing differences
107,065
-
0
Investment property fair value uplift
(9,065)
-
0
Tax expense for the year
177,225
277,504

Factors that may affect future tax charges

In the UK 2021 budget of the 3 March 2021, it was announced that the rate of Corporation Tax main rate would increase from 19% to 25% from the financial year 2023.

8
Dividends
2021
2020
£
£
Final paid
10,000
10,000
Interim paid
50,000
-
0
60,000
10,000
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
9
Tangible fixed assets
Land and buildings Freehold
Land and buildings Leasehold
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
£
Cost
At 1 January 2021
3,230,793
209,705
626,464
585,071
4,652,033
Additions
-
0
1,387,246
191,425
73,740
1,652,411
Disposals
-
0
-
0
(44,536)
(36,662)
(81,198)
At 31 December 2021
3,230,793
1,596,951
773,353
622,149
6,223,246
Depreciation and impairment
At 1 January 2021
875,434
-
0
465,380
450,532
1,791,346
Depreciation charged in the year
64,929
35,307
104,584
55,444
260,264
Eliminated in respect of disposals
-
0
-
0
(44,536)
(36,662)
(81,198)
At 31 December 2021
940,363
35,307
525,428
469,314
1,970,412
Carrying amount
At 31 December 2021
2,290,430
1,561,644
247,925
152,835
4,252,834
At 31 December 2020
2,355,359
209,705
161,084
134,539
2,860,687

Freehold land and buildings with a carrying amount of £2,290,430 (2020 - £2,355,359) have been pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

10
Investment property
2021
£
Fair value
At 1 January 2021
142,292
Net gains or losses through fair value adjustments
47,708
At 31 December 2021
190,000

The fair value of the investment property has been arrived at on the basis of an assessment carried out by the directors at the reporting date.

If investment properties were stated on an historical cost basis rather than a fair value basis, the amounts would have been included as follows:
2021
2020
£
£
Cost
142,292
142,292
Accumulated depreciation
(5,692)
(2,846)
Carrying amount
136,600
139,446
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
11
Stocks
2021
2020
£
£
Raw materials and consumables
338,735
312,592
Finished goods and goods for resale
8,582,824
7,694,851
8,921,559
8,007,443

The company holds vehicle stocks on consignment from the manufacturer. These remain the property of the manufacturer until sold to a third party or purchased by the company. The consignment agreement includes an initial 60 day period where there are no restrictions on the company. After this period, the manufacturer is entitled to require their return or insist that they are passed to another dealer. These stocks are not included in the balance sheet of the company for the reasons outlined in the accounting policies. The amount of consignment stock held at the year end was £154,206 (2020 - £2,478,965).

12
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
611,120
1,038,505
Other debtors
777,874
988,288
Prepayments and accrued income
94,427
75,630
1,483,421
2,102,423
13
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Bank loans and overdrafts
14
687,004
-
0
Trade creditors
3,251,045
5,777,161
Amounts owed to group undertakings
1,018,433
1,015,122
Corporation tax
69,510
280,098
Other taxation and social security
101,376
324,021
Accruals and deferred income
19,842
31,916
5,147,210
7,428,318
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
14
Loans and overdrafts
2021
2020
£
£
Bank overdrafts
687,004
-
0
Payable within one year
687,004
-
0

Bank overdrafts are secured as follows:

Overdraft facilities are repayable on demand. If no demand is made the facilities will be subject to review at any time but in any event on an annual basis. Interest is charged at 3% per annum. The overdraft facility is due to be reviewed on 30 November 2022.

15
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2021
2020
Balances:
£
£
Accelerated Capital Allowances
246,500
148,500
Investment property
9,065
-
255,565
148,500
2021
Movements in the year:
£
Liability at 1 January 2021
148,500
Charge to profit or loss
107,065
Liability at 31 December 2021
255,565
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
16
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
43,958
44,387

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

17
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Issued and fully paid of £1 each
250,000
250,000
250,000
250,000

The company has one class of ordinary shares which entitle the shareholders to:

18
Profit and loss reserves
2021
2020
£
£
At the beginning of the year
8,604,936
7,522,159
Profit for the year
939,219
1,092,777
Dividends declared and paid in the year
(60,000)
(10,000)
At the end of the year
9,484,155
8,604,936
19
Capital commitments

Amounts contracted for but not provided in the financial statements:

2021
2020
£
£
Acquisition of tangible fixed assets
-
1,200,000
20
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel, is as follows.

2021
2020
£
£
Aggregate compensation
607,259
628,579
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
20
Related party transactions
(Continued)
- 24 -
Transactions with related parties

During the year the company continued to rent property from an entity under the control of two of the directors, at a commercial rate. Rentals of £49,750 were paid in the year (2020: £45,980).

Amounts owed to the company by entities under the control of the directors at the reporting date total £283,015 (2020: £242,846). These amounts are included in Other debtors at note 12.

Other information

The company has taken advantage of the exemption not to disclose related party transactions with other members of the group under S33.1A of FRS 102, as it is a wholly owned subsidiary.

21
Directors' transactions

Dividends totalling £56,000 (2020 - £6,000) were paid in the year in respect of shares held by the company's directors.

22
Ultimate controlling party

The parent company of JKC Specialist Cars Limited is JKC Garages (Coleraine) Limited, a company incorporated in Northern Ireland, and its registered office is 1-9 Millburn Road, Coleraine, BT52 1QS.

The ultimate controlling party of JKC Specialist Cars Limited is John K Cassidy who is the controlling shareholder in the parent company JKC Garages (Coleraine) Limited.

23
Cash (absorbed by)/generated from operations
2021
2020
£
£
Profit for the year after tax
939,219
1,092,777
Adjustments for:
Taxation charged
177,225
277,504
Gain on disposal of tangible fixed assets
(5,900)
(3,865)
Fair value gain on investment properties
(47,708)
-
0
Depreciation and impairment of tangible fixed assets
260,264
194,760
Movements in working capital:
(Increase)/decrease in stocks
(914,116)
925,293
Decrease in debtors
735,140
621,800
Decrease in creditors
(2,757,524)
(642,281)
Cash (absorbed by)/generated from operations
(1,613,400)
2,465,988
JKC SPECIALIST CARS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
24
Analysis of changes in net funds/(debt)
1 January 2021
Cash flows
31 December 2021
£
£
£
Cash at bank and in hand
3,318,909
(3,029,793)
289,116
Bank overdrafts
-
0
(687,004)
(687,004)
3,318,909
(3,716,797)
(397,888)
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