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Registration number: 07110298

Read Motor Group Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2022

 

Read Motor Group Limited

Contents

Company Information

1

Strategic Report

2 to 3

Directors' Report

4 to 5

Statement of Directors' Responsibilities

6

Independent Auditor's Report

7 to 9

Consolidated Profit and Loss Account

10

Consolidated Statement of Comprehensive Income

11

Consolidated Balance Sheet

12

Balance Sheet

13

Consolidated Statement of Changes in Equity

14

Statement of Changes in Equity

15

Consolidated Statement of Cash Flows

16

Notes to the Financial Statements

17 to 30

 

Read Motor Group Limited

Company Information

Directors

M Read

N Read

Company secretary

N Read

Registered office

Altyre Way
Hewitts Avenue Business Park
Humberston
Grimsby
N E Lincolnshire
DN36 4RJ

Solicitors

Wilkin Chapman LLP
Cartergate House
26 Chantry Lane
Grimsby
N E Lincolnshire
DN31 2LJ

Bankers

Handelsbanken
Unit 7
Europa Park
Appian Way
Grimsby
N E Lincolnshire
DN31 2UT

Auditors

Forrester Boyd
Chartered Accountants
26 South Saint Mary's Gate
Grimsby
North East Lincolnshire
DN31 1LW

 

Read Motor Group Limited

Strategic Report for the Year Ended 31 December 2022

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

Principal activity

The principal activity of the Company is that of a Parent Company to its trading subsidiaries; the consolidated Group accounts including the results and assets of these Companies.

The Company’s only source of income is dividends from its subsidiary Companies. The principal activities of the Group continue to be those of Hyundai, MG, Alfa Romeo, Jeep and Suzuki motor dealers and garage proprietors with parts operations also including Volkswagen.

Fair review of the business

The Group has produced another year of excellent results further consolidating the exceptional results achieved in 2021.

The Group’s focus on operational excellence and achieving high customer satisfaction levels is reflected in the further significant growth in sales despite what continues to be an ever increasing competitive environment. Due to this commitment the Group has proudly retained its position as one of the leading performers within the retailer groups it operates in.

Whilst turnover has increased by 26% operating costs have been controlled with active and ongoing cost reduction reviews at all sites. These cost controls coupled with the maximisation of scale cost benefits have further improved standards and efficiencies across the Group.

The pre-tax profit of £2.1m represents another magnificent achievement and the Directors are grateful for the hard work and commitment of their loyal employees which is fundamental to the ongoing success of the Group.

The Group Balance Sheet continues to strengthen and shows a £1.5m increase in net assets over the year with a £1.4m improvement in net current assets. The Balance Sheet is underpinned by an extensive freehold and long leasehold property portfolio and has grown consistently as the Group continues to be profitable year on year.

Looking ahead the Group has started the current year extremely positively and the Directors are confident of returning another good set of results.

The Company's key financial and other performance indicators during the year were as follows:

 

Unit

2022

2021

Turnover

£

136,875,370

108,921,860

Turnover growth

%

26

102

Gross profit

£

11,399,466

8,917,735

Gross profit %

%

8

8

Principal risks and uncertainties

The war in Ukraine together with high energy costs, increasing inflation and interest rates are challenges for the business and can affect customer spending.

Currently however the Group is trading well and is well positioned to deal with any fall off in demand buoyed by its ever increasing loyal customer base.

 

Read Motor Group Limited

Strategic Report for the Year Ended 31 December 2022

Section 172(1) statement

The Board of Directors, in line with their duties under s172 of the Companies Act 2006, are constantly considering be most likely approach to promote the success of the Group for the benefit of its shareholders, and in doing so have regard to a range of matters when making decisions for the long term. Key decisions and matters that are of strategic importance to the Group are appropriately informed by s172 factors.

Through an open and transparent dialogue with our key stakeholders, we have been able to develop a clear understanding of their needs, assess their perspectives and monitor their impact on our strategic ambition and culture. As part of managements decision-making process, we consider the potential impact of decisions on relevant stakeholders whilst also having regard to a number of broader factors, including the impact of the Group’s operations on the community and environment, responsible business practices and the likely consequences of decisions in the long term.

Engagement with suppliers, customers and other relationships

The Board of directors consider the need to develop excellent working relationships with all key stakeholders as emphasised in the Section 172(1) statement but specifically those with suppliers and customers. In all key decisions made by the Board the long term working relationship with suppliers is a key factor and the Group's excellent long standing relationship with Hyundai UK as principal supplier is testament to the relationships built up.

The results of the Group's approach to fostering good relationships with customers can be seen through the number of repeat customers obtained and the excellent performance of individual sites in the Hyundai UK Dealership awards. All sites are monitored using a balanced scorecard approach and a number of sites have won National awards in recent years.

Approved by the Board on 19 September 2023 and signed on its behalf by:

.........................................
M Read
Director

 

Read Motor Group Limited

Directors' Report for the Year Ended 31 December 2022

The Directors present their report and the consolidated financial statements for the year ended 31 December 2022.

Directors of the Group

The Directors who held office during the year were as follows:

M Read

N Read - Company secretary and director

Financial instruments

Objectives and policies

The Group uses basic financial instruments, comprising cash and other liquid resources and various other items such as trade debtors and creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group's operations.

Price risk, credit risk, liquidity risk and cash flow risk

The Group's principal financial instruments comprise of bank balances and loan agreements, trade debtors, trade creditors and vehicle funding agreements.

The liquidity risk is managed by maintaining a balance between the need for continuity of funding and flexibility through the use of loan facilities and vehicle funding agreements. All business cash balances are held in such a way that achieves a competitive rate of interest.

Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to business customers and the regular monitoring of amounts outstanding for both time and credit limits. The amounts presented in the consolidated balance sheet are net of allowances for trade debtors.

Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.

Streamlined energy and carbon reporting

During the year the Group's total annual consumption of energy was 1,641,898kwh (2021: 1,615,600kwh) which equates to 205,327kwh (2021: 215,413kwh) per operating site. This was calculated using GHG reporting protocols and UK Government GHG 2022 conversion factors and represents 321,410kgC02e (2021: 325,242kgC02e) of greenhouse gas emissions.

The reporting includes all material emission sources required by the regulations for which we deem ourselves to be responsible and have maintained adequate records of calculations completed.

The main areas of energy usage were gas and electricity used in each of the Company showrooms and fuel for Company vehicles. The Directors consider energy consumption on an ongoing basis and are committed to increasing energy efficiency in all areas of operations as well as for consumers in the form of its electric vehicle offering.

Energy usage continues to be monitored and changes are implemented as appropriate.

Other matters

Some items required to be disclosed in the directors' report under Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports Regulations) 2008 are set out in the strategic report in accordance with section 414C(11) of the Companies Act 2006.

 

Read Motor Group Limited

Directors' Report for the Year Ended 31 December 2022

Disclosure of information to the auditor

Each Director has taken steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information. The Directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Approved and authorised by the Board on 19 September 2023 and signed on its behalf by:
 

.........................................
M Read
Director

 

Read Motor Group Limited

Statement of Directors' Responsibilities

The Directors acknowledge their responsibilities 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 Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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 Group's and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and 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 Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Read Motor Group Limited

Independent Auditor's Report to the Members of Read Motor Group Limited

Opinion

We have audited the financial statements of Read Motor Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Consolidated Profit and Loss Account, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated Statement of Cash Flows, 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 Group's and the parent Company's affairs as at 31 December 2022 and of the Group's 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 auditor responsibilities for the audit of the financial statements section of our report. We are independent of the Group 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 Group's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were 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 included in the Strategic and Directors' reports, other than the financial statements and our auditor’s report 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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 matter 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

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

 

Read Motor Group Limited

Independent Auditor's Report to the Members of Read Motor Group Limited

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

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 by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

the parent Company 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 6], 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 Group and Parent 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 Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor 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:

Discussions with management held, including consideration of known or suspected instances of non-compliance.

Enquiries of management and the Group's solicitors of actual and potential litigation claims.

Challenging assumptions and judgements made within significant accounting estimates and judgements such as vehicle stock valuation.

Identification of key laws and regulations central to the Group's operations and review of compliance with such laws including a review of FCA website and correspondence to identify any disciplinary action or ongoing issues.

Testing of journal entries and potential override of systems.

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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

 

Read Motor Group Limited

Independent Auditor's Report to the Members of Read Motor Group Limited

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 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 members as a body, for our audit work, for this report, or for the opinions we have formed.

......................................
Neal Watford ACA (Senior Statutory Auditor)
For and on behalf of Forrester Boyd, Statutory Auditor

26 South Saint Mary's Gate
Grimsby
North East Lincolnshire
DN31 1LW

19 September 2023

 

Read Motor Group Limited

Consolidated Profit and Loss Account for the Year Ended 31 December 2022

Note

2022
£

2021
£

Turnover

3

136,875,370

108,921,860

Cost of sales

 

(125,475,904)

(100,004,125)

Gross profit

 

11,399,466

8,917,735

Administrative expenses

 

(8,771,111)

(6,798,928)

Other operating income

4

-

273,823

Operating profit

5

2,628,355

2,392,630

Other interest receivable and similar income

6

38

5

Interest payable and similar expenses

7

(505,183)

(297,500)

 

(505,145)

(297,495)

Profit before tax

 

2,123,210

2,095,135

Taxation

11

(404,017)

(483,978)

Profit for the financial year

 

1,719,193

1,611,157

 

Read Motor Group Limited

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2022

2022
£

2021
£

Profit for the year

1,719,193

1,611,157

Surplus/(deficit) on property, plant and equipment revaluation

172

(9,947)

Total comprehensive income for the year

1,719,365

1,601,210

Total comprehensive income attributable to:

Owners of the Company

1,719,365

1,601,210

 

Read Motor Group Limited

(Registration number: 07110298)
Consolidated Balance Sheet as at 31 December 2022

Note

2022
 £

2021
 £

Fixed assets

 

Intangible assets

12

348,695

405,935

Tangible assets

13

9,644,529

9,267,466

 

9,993,224

9,673,401

Current assets

 

Stocks

15

19,465,055

13,388,008

Debtors

16

4,419,827

2,340,169

Cash at bank and in hand

17

799,934

743,622

 

24,684,816

16,471,799

Creditors: Amounts falling due within one year

18

(24,854,359)

(18,007,872)

Net current liabilities

 

(169,543)

(1,536,073)

Total assets less current liabilities

 

9,823,681

8,137,328

Creditors: Amounts falling due after more than one year

18

(2,864,585)

(2,687,369)

Provisions for liabilities

19

(281,259)

(291,487)

Net assets

 

6,677,837

5,158,472

Capital and reserves

 

Called up share capital

21

10,000

10,000

Revaluation reserve

22

58,990

59,504

Profit and loss account

22

6,608,847

5,088,968

Total equity

 

6,677,837

5,158,472

Approved and authorised by the Board on 19 September 2023 and signed on its behalf by:
 

.........................................
M Read
Director

 

Read Motor Group Limited

(Registration number: 07110298)
Balance Sheet as at 31 December 2022

Note

2022
 £

2021
 £

Fixed assets

 

Investments

14

2,212,623

2,212,623

Current assets

 

Debtors

16

796,618

664,618

Creditors: Amounts falling due within one year

18

(2,924,241)

(2,792,241)

Net current liabilities

 

(2,127,623)

(2,127,623)

Net assets

 

85,000

85,000

Capital and reserves

 

Called up share capital

10,000

10,000

Profit and loss account

75,000

75,000

Total equity

 

85,000

85,000

No separate holding company income statement has been prepared in line with section 408 of the Companies Act 2006. The company made a profit after tax for the financial year of £200,000 (2021 - profit of £170,000).

Approved and authorised by the Board on 19 September 2023 and signed on its behalf by:
 

.........................................
M Read
Director

 

Read Motor Group Limited

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2022
Equity attributable to the parent company

Share capital
£

Revaluation reserve
£

Profit and loss account
£

Total
£

Total equity
£

At 1 January 2022

10,000

59,504

5,088,968

5,158,472

5,158,472

Profit for the year

-

-

1,719,193

1,719,193

1,719,193

Movement in deferred tax

-

172

-

172

172

Total comprehensive income

-

172

1,719,193

1,719,365

1,719,365

Dividends

-

-

(200,000)

(200,000)

(200,000)

Transfers

-

(686)

686

-

-

At 31 December 2022

10,000

58,990

6,608,847

6,677,837

6,677,837

Share capital
£

Revaluation reserve
£

Profit and loss account
£

Total
£

Total equity
£

At 1 January 2021

10,000

70,137

3,647,125

3,727,262

3,727,262

Profit for the year

-

-

1,611,157

1,611,157

1,611,157

Movement in deferred tax

-

(9,947)

-

(9,947)

(9,947)

Total comprehensive income

-

(9,947)

1,611,157

1,601,210

1,601,210

Dividends

-

-

(170,000)

(170,000)

(170,000)

Transfers

-

(686)

686

-

-

At 31 December 2021

10,000

59,504

5,088,968

5,158,472

5,158,472

 

Read Motor Group Limited

Statement of Changes in Equity for the Year Ended 31 December 2022

Share capital
£

Retained earnings
£

Total
£

At 1 January 2022

10,000

75,000

85,000

Profit for the year

-

200,000

200,000

Dividends

-

(200,000)

(200,000)

At 31 December 2022

10,000

75,000

85,000

Share capital
£

Retained earnings
£

Total
£

At 1 January 2021

10,000

75,000

85,000

Profit for the year

-

170,000

170,000

Dividends

-

(170,000)

(170,000)

At 31 December 2021

10,000

75,000

85,000

 

Read Motor Group Limited

Consolidated Statement of Cash Flows for the Year Ended 31 December 2022

Note

2022
 £

2021
 £

Cash flows from operating activities

Profit for the year

 

1,719,193

1,611,157

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

5

437,764

389,474

Finance income

6

(38)

(5)

Finance costs

7

505,183

297,500

Income tax expense

11

404,017

483,978

 

3,066,119

2,782,104

Working capital adjustments

 

Increase in stocks

15

(6,077,047)

(2,631,048)

Increase in trade debtors

16

(2,079,658)

(323,948)

Increase in trade creditors

18

7,174,671

2,575,613

Decrease in deferred income, including government grants

 

-

(4,256)

Cash generated from operations

 

2,084,085

2,398,465

Income taxes paid

11

(743,230)

(27,275)

Net cash flow from operating activities

 

1,340,855

2,371,190

Cash flows from investing activities

 

Interest received

38

5

Acquisitions of tangible assets

13

(757,585)

(2,035,032)

Proceeds from sale of tangible assets

 

-

1,077

Acquisition of intangible assets

12

-

(151,681)

Net cash flows from investing activities

 

(757,547)

(2,185,631)

Cash flows from financing activities

 

Interest paid

7

(505,183)

(297,500)

Proceeds from bank borrowing draw downs

 

850,000

250,000

Repayment of bank borrowing

 

(584,907)

(516,504)

Repayment of other borrowing

 

(86,906)

(55,714)

Dividends paid

(200,000)

(170,000)

Net cash flows from financing activities

 

(526,996)

(789,718)

Net increase/(decrease) in cash and cash equivalents

 

56,312

(604,159)

Cash and cash equivalents at 1 January

 

743,622

1,347,781

Cash and cash equivalents at 31 December

17

799,934

743,622

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

1

General information

The company is a private company limited by share capital incorporated in the United Kingdom and the company registration number is 07110298.

The address of its registered office is:
Altyre Way
Hewitts Avenue Business Park
Humberston
Grimsby
N E Lincolnshire
DN36 4RJ

These financial statements were authorised for issue by the Board on 19 September 2023.

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

The financial statements are prepared in sterling which is the functional currency of the Group and have been rounded to the nearest pound.

The financial statements have been prepared in sterling and are rounded to the nearest pound.

Summary of disclosure exemptions

The Parent Company has taken advantage of the reduced disclosure exemption from preparing a cash flow statement as described in section 1.12 of FRS 102.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the Company and its subsidiary undertakings drawn up to 31 December 2022.

A subsidiary is an entity controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the Group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the Company and its subsidiaries, which are related parties, are eliminated in full. Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Judgements

The Directors have made a number of judgements in applying the Group's accounting policies, the most significant of which is in relation to the valuation of vehicle stocks. The Group holds a considerable amount of vehicle stocks which is held at the lower of cost and net realisable value. The net realisable value of vehicle stocks is impacted by a number of factors including the condition of the vehicle and general economic factors outside of the Directors' control. The calculation of the net realisable value of individual vehicles and stock provisions is closely controlled by the Directors' and involves significant judgments made utilising the years of experience and knowledge of the industry held.

Key sources of estimation uncertainty

The key sources of estimation uncertainty surround the net realisable value of year end stocks and specifically in the last 2 years the impact of Covid 19 on the future trading. See the Strategic Report for the Directors' assessment of the potential future impact of Covid 19 on the future trading of the Group and the year end stock valuation.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Group’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the Group's activities.

Government grants

Government grants are recognised in the Profit & Loss Account on an accruals basis over the period in which the entity recognises the related costs for which the grant is intended to compensate. The Group has not received any grants with performance related conditions.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account.

The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the group operates and generates taxable income.

Deferred tax represents the future tax consequences of transactions and events recognised in the financial statements of current and previous periods. It is recognised in respect of all timing differences, with certain exceptions. Timing differences are differences between taxable profits and total comprehensive income as stated in the financial statements that arise from the inclusion of income and expense in tax assessments in periods different from those in which they are recognised in the financial statements. 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.

Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply to the reversal of timing differences. Deferred tax on revalued non-depreciable tangible fixed assets and investment properties is measured using rates and allowances that apply to the sale of the asset.

Tangible assets

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Land and buildings

2% straight line basis

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Furniture, fittings & equipment

15 - 33% straight line basis

Other property, plant and equipment

15% straight line basis

Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Goodwill

5-20% straight line basis

Investments

Investments in shares in subsidiaries are measured at cost less impairment.

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.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the statement of income and retained earnings over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the profit and loss account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Dividends

Dividend distribution to the Group’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the Group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

3

Turnover

The analysis of the group's revenue for the year from continuing operations is as follows:

2022
£

2021
£

Sale of goods

129,093,688

102,326,399

Rendering of services

7,002,907

6,055,838

Commissions received

778,775

539,623

136,875,370

108,921,860

4

Other operating income

The analysis of the Group's other operating income for the year is as follows:

2022
£

2021
£

Government grants

-

273,823

Included within other income is government grant income of £Nil (2021: £212,323) relating to the Coronavirus Job Retention Scheme (CJRS) and £Nil (2021: £61,500) relating to local government discretionary grants for Covid-19 closures.

Within turnover is further government grant income of £Nil (2021: £754,000) in relation to electric vehicle ‘plug-in’ grants received on the sale of electric vehicles.

5

Operating profit

Arrived at after charging/(crediting)

2022
£

2021
£

Depreciation expense

380,524

339,818

Amortisation expense

57,240

49,656

Operating lease expense - property

221,442

148,562

Operating lease expense - plant and machinery

33,195

16,408

6

Other interest receivable and similar income

2022
£

2021
£

Interest income on bank deposits

38

5

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

7

Interest payable and similar expenses

2022
£

2021
£

Interest on bank overdrafts and borrowings

146,484

92,056

Interest on stock financing

358,699

205,444

505,183

297,500

8

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2022
£

2021
£

Wages and salaries

5,032,887

4,104,394

Social security costs

496,340

380,336

Pension costs, defined contribution scheme

78,528

60,326

5,607,755

4,545,056

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

2022
No.

2021
No.

Administration and support

28

23

Sales

55

48

Servicing, aftersales and other departments

112

99

195

170

9

Directors' remuneration

The directors' remuneration for the year was as follows:

2022
£

2021
£

Remuneration (including benefits in kind)

39,940

41,779

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

10

Auditors' remuneration

2022
£

2021
£

Audit of these financial statements

2,750

2,500

Audit of the financial statements of subsidiaries of the company pursuant to legislation

24,750

22,500

27,500

25,000

Other fees to auditors

Taxation compliance services

9,500

8,750

All other non-audit services

18,000

16,250

27,500

25,000


 

11

Taxation

Tax charged/(credited) in the consolidated profit and loss account

2022
£

2021
£

Current taxation

UK corporation tax

413,247

443,221

UK corporation tax adjustment to prior periods

(1,670)

591

411,577

443,812

Deferred taxation

Arising from origination and reversal of timing differences

(7,560)

40,166

Tax expense in the income statement

404,017

483,978

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2021 - higher than the standard rate of corporation tax in the UK) of 19% (2021 - 19%).

The differences are reconciled below:

2022
£

2021
£

Profit before tax

2,123,210

2,095,135

Corporation tax at standard rate

403,410

398,076

Effect of expense not deductible in determining taxable profit (tax loss)

4,158

8,664

UK deferred tax expense relating to changes in tax rates or laws

5,745

68,928

(Decrease)/increase in UK and foreign current tax from adjustment for prior periods

(1,670)

591

Tax (decrease)/increase from effect of capital allowances and depreciation

(7,626)

7,719

Total tax charge

404,017

483,978

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Deferred tax

Group

Deferred tax assets and liabilities

2022

Asset
£

Liability
£

Difference between accumulated depreciation and amortisation and capital allowances

-

239,436

Revaluation of land and buildings

-

41,823

-

281,259

2021

Asset
£

Liability
£

Difference between accumulated depreciation and amortisation and capital allowances

-

249,492

Revaluation of land and buildings

-

41,994

-

291,486

On 24 May 2021 the UK Government enacted a bill which will increase the main rate of corporation tax in the UK from 19% to 25% from 1 April 2023. Deferred tax has been calculated at 25% on all relevant timing differences which are expected to reverse after this date.

12

Intangible assets

Group

Goodwill
 £

Total
£

Cost or valuation

At 1 January 2022

873,116

873,116

At 31 December 2022

873,116

873,116

Amortisation

At 1 January 2022

467,181

467,181

Amortisation charge

57,240

57,240

At 31 December 2022

524,421

524,421

Carrying amount

At 31 December 2022

348,695

348,695

At 31 December 2021

405,935

405,935

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

13

Tangible assets

Group

Freehold land and buildings
£

Long leasehold land and buildings
£

Short leasehold land and buildings
£

Fixtures and fittings
£

Plant and machinery
£

Total
£

Cost or valuation

At 1 January 2022

7,444,575

1,529,625

962,066

1,184,885

604,086

11,725,237

Additions

404,417

43,000

11,317

166,438

132,413

757,585

At 31 December 2022

7,848,992

1,572,625

973,383

1,351,323

736,499

12,482,822

Depreciation

At 1 January 2022

457,825

64,732

629,807

880,944

424,462

2,457,770

Charge for the year

83,967

24,280

84,038

129,139

59,099

380,523

At 31 December 2022

541,792

89,012

713,845

1,010,083

483,561

2,838,293

Carrying amount

At 31 December 2022

7,307,200

1,483,613

259,538

341,240

252,938

9,644,529

At 31 December 2021

6,986,750

1,464,893

332,259

303,941

179,623

9,267,466

The Group’s freehold properties were last revalued at a combined value of £2,400,000 in 2015 by an independent valuer on an existing use basis. The Group elected to adopt the transition exemption on first application of FRS 102 to use these previous valuations as deemed cost.

Had the properties not been revalued, the historical cost and accumulated provision for depreciation as at 31 December 2022 would have been £7,698,152 and £536,181 respectively (2021: £7,293,735 and £452,900).

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

14

Investments

Company

Details of the investments (including principal place of business of unincorporated entities) in which the Group holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2022

2021

Subsidiary undertakings

Read Hyundai Limited*

England

Ordinary

100%

100%

 

     

Read Hyundai Lincoln Limited*

England

Ordinary

100%

100%

 

     

Read Hyundai Kings Lynn Limited*

England

Ordinary

100%

100%

 

     

Read Automotive Grimsby Limited*

England

Ordinary

100%

100%

 

     

Read Hyundai Worksop Limited*

England

Ordinary

100%

100%

 

     

Read Hyundai Boston Limited*

England

Ordinary

100%

100%

 

     

Read Hyundai Doncaster Limited*

England

Ordinary

100%

100%

 

     

Read Derby Limited*

Ordinary

100%

100%

 

England

     

* indicates direct investment of the company

Subsidiary undertakings

All subsidiary companies are included in the consolidated accounts and have the same registered office address as Read Motor Group Limited.

The Company also owns 100% of the share capital of Read Used Car Sales Limited, a dormant Company not included in these consolidated accounts.

2022
£

2021
£

Investments in subsidiaries

2,212,623

2,212,623

Subsidiaries

£

Cost or valuation

At 1 January 2022

2,212,623

Provision

At 1 January 2022

-

Provision

-

At 31 December 2022

-

Carrying amount

At 31 December 2022

2,212,623

At 31 December 2021

2,212,623

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

15

Stocks

 

Group

Company

2022
 £

2021
 £

2022
 £

2021
 £

Vehicle and parts stocks

19,465,055

13,388,008

-

-

Group

The carrying amount of stocks pledged as security for liabilities amounted to £16,901,235 (2021 - £11,728,979).

16

Debtors

   

Group

Company

Note

2022
£

2021
£

2022
£

2021
£

Trade debtors

 

4,155,429

1,841,898

-

-

Amounts owed by related parties

27

-

-

796,618

664,618

Other debtors

 

67,825

286,887

-

-

Prepayments

 

196,573

211,384

-

-

   

4,419,827

2,340,169

796,618

664,618

17

Cash and cash equivalents

 

Group

Company

2022
 £

2021
 £

2022
 £

2021
 £

Cash on hand

1,020

1,321

-

-

Cash at bank

798,914

742,301

-

-

799,934

743,622

-

-

18

Creditors

   

Group

Company

Note

2022
 £

2021
 £

2022
 £

2021
 £

Due within one year

 

Loans and borrowings

23

591,707

588,238

-

-

Trade creditors

 

23,364,168

15,523,030

-

-

Amounts due to related parties

 

3,369

13,001

2,924,241

2,475,434

Social security and other taxes

 

105,688

583,313

-

-

Other payables

 

213,188

112,075

-

-

Accrued expenses

 

400,492

680,815

-

316,807

Corporation tax liability

11

175,747

507,400

-

-

 

24,854,359

18,007,872

2,924,241

2,792,241

Due after one year

 

Loans and borrowings

23

2,864,585

2,687,369

-

-

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

19

Deferred tax and other provisions

Group

Deferred tax
£

Total
£

At 1 January 2022

291,487

291,487

Increase (decrease) in existing provisions

(10,228)

(10,228)

At 31 December 2022

281,259

281,259

20

Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £78,528 (2021 - £60,326).

21

Share capital

Allotted, called up and fully paid shares

 

2022

2021

 

No.

£

No.

£

Ordinary shares of £1 each

10,000

10,000

10,000

10,000

         

Rights, preferences and restrictions

Ordinary shares have the following rights, preferences and restrictions:
Full voting and participation rights with no restriction on distribution of dividends or repayment of capital.

22

Reserves

Group

Share capital

Share capital comprises of the value of issued share capital at par in the parent company.

Revaluation reserve

The revaluation reserve is made up of a previous revaluation adopted, less deferred tax recognised on this revaluation.

Profit and loss account

The profit and loss account consists of profits made by the group attributable to the shareholders of the parent company.

The changes to each component of equity resulting from items of other comprehensive income for the current year were as follows:

Revaluation reserve
£

Total
£

Surplus/deficit on property, plant and equipment revaluation

172

172

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Company

Share capital

Share capital comprises of the value of issued share capital at par in the parent company.

Profit and loss account

The profit and loss account consists of profits made by the group attributable to the shareholders of the parent company.

23

Loans and borrowings

 

Group

Company

2022
 £

2021
 £

2022
 £

2021
 £

Non-current loans and borrowings

Bank borrowings

2,864,585

2,683,712

-

-

Other borrowings

-

3,657

-

-

2,864,585

2,687,369

-

-

 

Group

Company

2022
 £

2021
 £

2022
 £

2021
 £

Current loans and borrowings

Bank borrowings

591,707

504,989

-

-

Other borrowings

-

83,249

-

-

591,707

588,238

-

-

Included in the loans and borrowings are the following amounts due after more than five years:

2022
£

2021
£

After more than five years by instalments

1,273,100

987,650

Bank loans and overdrafts after five years

Bank loans due after more than five years are repayable by quarterly instalments over the full terms of the loans and have interest rates ranging from LIBOR + 2.10 to LIBOR + 3.78%.

Secured creditors

Included within bank borrowings are amounts which are secured and denominated in sterling. The carrying amount of the secured element at the year end is £3,456,292 (2021 - £3,188,701).

Bank borrowings are secured by an unlimited cross guarantee debenture over the assets of all companies within the group.

Included within trade creditors are amounts which are secured and denominated in sterling. The carrying amount of the secured element at the year end is £22,030,106 (2021 - £14,320,359).

Secured trade creditors are secured against the vehicles to which they relate.

Included within other borrowings are amounts which are secured and denominated in sterling. The carrying amount of the secured element at the year end is £Nil (2021 - £93,451).

Other borrowings are secured by a fixed and floating charge against a specific property owned by the Group.

The aggregate amount of secured creditors across all liabilities is £25,486,398 (2021: £17,602,511).

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

24

Obligations under leases and hire purchase contracts

Group

Operating leases

The total of future minimum lease payments is as follows:

2022
£

2021
£

Not later than one year

155,072

211,572

Later than one year and not later than five years

287,751

445,357

442,823

656,929

The amount of non-cancellable operating lease payments recognised as an expense during the year was £212,191 (2021 - £137,072).

25

Commitments

Group

Capital commitments

The total amount contracted for but not provided in the financial statements was £Nil (2021 - £397,122).

26

Analysis of changes in net debt

Group

At 1 January 2022
£

Financing cash flows
£

At 31 December 2022
£

Cash and cash equivalents

Cash

743,622

56,312

799,934

Borrowings

Long term borrowings

(2,687,369)

(177,216)

(2,864,585)

Short term borrowings

(588,238)

(3,469)

(591,707)

(3,275,607)

(180,685)

(3,456,292)

 

(2,531,985)

(124,373)

(2,656,358)

27

Related party transactions

Group

Key management compensation

2022
£

2021
£

Salaries and other short term employee benefits

42,640

41,779

Summary of transactions with key management
Personal guarantees totalling £500,000 have been given by members of key management personnel relating to outstanding bank loan facilities.

 

Read Motor Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Transactions with directors

Dividends paid to directors and close family members during the year total £200,000 (2021: £170,000).

Expenditure with and payables to related parties

2022

Key management/
Directors
£

Amounts payable to related party

3,369

2021

Key management/
Directors
£

Amounts payable to related party

13,001

28

Parent and ultimate parent undertaking

The ultimate controlling party is the directors and close family members who own 100% of the called up share capital.