The Directors present their Strategic Report for Platinum Retail Limited and its subsidiaries (the Group) together with the audited financial statements for the year ended 30 April 2023.
Fair review of the business
The Group's principal activity is fuel retailing, although it also drives profit from convenience stores and renting ancillary properties to tenants. The Group owns 40 (2022:31) petrol filling stations branded Texaco, BP, and Shell & Jet.
Performance in the reporting period has been relatively strong and there has been a minimal change in the number of competitors in the market and consumer demand for fuel has remained stable. The margins on fuel have been good most of the trading period.
Group Objectives and Business Model
The Group's purpose is to provide its customers with a high-quality fuel and retail offer on the forecourt, this is achieved through collaborating with the premium fuel brands and shop suppliers.
The Group primarily operates through a long established and successful Company owned agent (or retailer) operated model, where the Group retain the rights and responsibilities of business owner, while effectively sub-contracting the site operation to the retailer or operator.
The retailer is remunerated on a commission structure where they are incentivised to deliver a quality proposition and maximise the returns on site. The partnership with the retailers is flexible and collaborative, with the parties working together to maintain the sites to required standards, ensuring customer retention, this is of particular importance in residential locations.
Several themes have emerged during the continuing consolidation and modernisation of the UK fuel retailing industry:
Strong fuel brands: Continue to pull consumers onto site, reflecting heavy investment in promotions and branding.
Competitive pricing: Most consumers are willing to shop around for the lowest price per litre in the local area, to enhance margins fuel retailers introduce POS marketing to induce trading up to premium fuels.
Non-fuel offer: The convenience food and food to go offer is a major draw for customers whether purchasing fuel or not. Ranges tailored around specific shopping missions help to raise sales density.
Convenient locations: The characteristics of a "prime site" for fuel retail varies by type of location (e.g. urban residential, urban transient, trunk road transient, urban commercial, rural transient and rural local) but is mainly dependent on local population, demographics, traffic flow and ease of access and egress.
Financial Review
The financial year has witnessed all sites, including those acquired in 2022-2023, contributing to a successful operating profit. The Group’s strategic plan involves expanding the “Food to Go” offering into it’s broader portfolio and is in discussions with some of the leading brands.
The UK’s economy has experienced a dramatic rise in inflation rates thus adversely impacting an increase in interest rates together with rising energy prices. The Directors will continue to keep an eye on the situation and measures are being looked at to minimize the impact to the business.
The Directors are pleased to report that the trading performance during the reporting year were favorable and the Group delivered strong financial performance. Revenues were £ 115.8m (2022: £89.6m), Operating profit was £6.6m (2022: £5m) and profit after tax was £3.7m (2022: £3.2m). The Directors are pleased with the trading results which reflects the controls and hard work that its team have put in.
The financial results for the year to 30th April 2023 report a revenue of £115.8m (2022: £89.6m). The margins have remained steady despite market volatility with Gross Margins percentage increasing to 8.4% (2022: 8.3%). This has been achieved by pricing effectively and volume monitoring.
Earning before interest, tax, depreciation and amortisation (EBITDA) for the year was £8.8m (2022: £7.1m)
All VAT and Corporation Tax is up to date and there were no investigations during the trading year.
Strategy
The Group continues to work towards our strategic goals by improving our customer value proposition, enabling and empowering our Site Operators to achieve these strategic goals.
The Group's overriding strategy is to continue to provide the consumer with a premium fuel and retail offer. The Group will invest in sites to generate strong returns and continue to enhance profitability for shareholders.
The acquisition strategy is to look for opportunities to add quality sites to the portfolio that complement the existing network and enable the Group to benefit from further economies of scale.
The Group searches for continuous improvements, from training its staff, building new supplier relationships and improving the offer on site for customers.
Financial, Liquidity, Cash Flow and Credit Risks
The Group monitors cash balances and cash flows as part of its day-to-day control procedures. The Directors consider all aspects of liquidity, cash and cash flows on a weekly and monthly basis to ensure that appropriate investment decisions are made. Similarly, the Directors have throughout the course of this financial period ensured that the Group has retained substantial cash balances.
The Group's principal financial assets are cash and cash in transit. The Directors consider there to be a negligible credit risk in respect of the cash balances on the basis that they are held at a reputable financial institution.
Security, Safety, Health and Environmental Risk ("SSHE')
The Group places great importance and focus upon the safety and health of its customers, its employees and all others whom may be affected by its business activities.
Environmental awareness in respect of the storage, handling, sale and distribution of petroleum products has a high profile within the Group and the Directors are aware of the environmental contamination risks arising from these activities.
Environmental contamination and the risks associated are well know to the Directors and considered of paramount importance. The Group continues to operate under strict regulations in relation to Environmental safety.
On the fuels front we monitor all our tanks, pipelines, and dispensers both inhouse and via an external professional Company to ensure zero tolerance to any pollution.
Product, Price and Volatility Risk
The Directors recognises that the Group's input prices are influenced by movements on global prices for crude oil and wholesale refined products. To manage the volatility, risk the Directors monitor input prices daily and competitor retail prices, stocks are monitored by a specialist 3rd party operation.
Electric Vehicles and EV Charging Stations
A key strategy which is under constant review is the development of our EV offering across our portfolio in readiness of the Government 2035 target. We can confirm that an agreement in principle to roll out EV Stations at least 14 of our locations to start with. Further we have spoken to several suppliers and have commissioned one of these to do a FULL review of the Company network and report on potential charging points installation.
Our Operating /Employee Partners
We believe that people make the difference. We treat one another with respect and dignity. Individuals at all levels of the business feel valued and valuable. We provide ample opportunities for professional growth and development. We are an equal opportunity employer.
Customers
Key Interests
Convenience
Safety
Fair pricing policies
Customer Service
Methods of Engagement
Promotional activity
Contract Agents
Key Interests
Training
Site development
Support and guidance
Methods of Engagement
Operational support provided by Area Managers
Training and assistance for individuals and their business
Clear operating model generates clear benefits to both parties
Payment term compliance
Culture
The Group remains in total control and ownership of the family. The second generation of family members form key strategic positions within the Group’s Management structure with succession planning fully considered for the long term. The other senior positions are held by employees who have been with the Company since set up in 2011. They have known the Directors over two decades and so are like extended family.
Future Developments
The group continues to seek further strategic locations and is at present in advanced negotiations with several dealers.
The directors are confident in projecting a robust trading performance for the coming year and are also positive on the acquisition front.
Key performance indicators The group's performance improved during the current year. |
Year to |
Year to |
| 30 April 2023 | 30 April 2022 |
Gross profit margin | 8.4% | 8.3%
|
Earnings before interest, tax, depreciation and amortisation | £8,752,817 | £7,123,826 |
Section 172(1) statement
Section 414CZA(1) of the Companies Act 2006 requires the directors to explain how they have considered the matters set out in section 172(1) (a) to (f) of the Companies Act 2006 (‘S172 (1)’) when performing their duty to promote the success of the group. When making decisions, the directors ensure that they act in the way that would most likely promote the group’s success for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the following matters:
(a) The likely consequences of any decision in the long term
The directors understand the business and the evolving environment in which the group operates. The group’s strategy is to continue to acquire quality sites to add to the portfolio that complement the existing network and enable the group to benefit from further economies of scale.
(b) The interests of the group’s employees
The directors recognise that the success of the business depends on attracting, retaining and motivating high quality employees. The directors take into account the implications of decisions which may affect their perception as a responsible employer, on determining remuneration and benefits, and on providing a healthy and safe workplace environment, where relevant. See details above for employees key interests and methods of engagement.
(c) The need to foster the group's business relationships with suppliers, customers and others
The directors seek to promote strong mutually beneficial relationships with suppliers, customers and contract agents. Such general principles are critical in the delivery of the group's strategy. The group has established successful relationships with its suppliers and contract agents. The group insists on transparency in all areas including cost, delivery and problem solving. Our supply chain partners and the group have a strong relationship built around commitment and understanding relating to these criteria and believe communication is key to maintaining these relationships. When making principal decisions, the directors also consider near-term demand and how customers' priorities might change over a longer period of time, including effect of the COVID-19 pandemic and the use of electric vehicles.
(d) The impact of the group’s operations on the community and the environment
The group is committed to understanding the interests of these stakeholder groups. The directors receive information on these topics on a periodic basis to provide relevant information for specific board decisions.
(e) The desirability of the group maintaining a reputation for high standards of business conduct
The directors recognise the importance of acting in ways which promote high standards of business conduct. Internal risk assessments are periodically carried out at each petrol station site to ensure that high standards are maintained both within the businesses and the business relationships the company has with stakeholders.
(f) The need to act fairly as between members of the group
We are an independent group. The directors aim to act fairly between the group’s members when delivering the group’s strategy.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 April 2023.
The results for the year are set out on page 14.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
There are considered to be no matters concerning financial risk which are material to the assessment of the assets, liabilities, financial position and results of the group.
On 2 May 2023 the group completed on the acquisition of a filling station, for consideration of £4,475,000.
On 30 October 2023, the group entered into a new office lease. Annual rent is £55,500 per annum, with a lease term of 10 years.
On 22 September 2023, the group completed on the acquisition of two filling stations, for consideration of £5,000,000.
Included within bank loans at the balance sheet date are amounts of £22,316,400 which the company repaid following refinancing. New bank facilities totalling £32,300,000 were agreed with a new lender on 2 October 2023.
The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The below figures are for the period between 1 May 2022 to 30 April 2023 (with the appropriate comparatives).
The total energy used by the group during the year ended 30 April 2023: 3,616,104 kWh (2022: 4,298,017 kWH). The associated carbon emissions in this period totalled 759 tCO₂e (2022: 995 tCO₂e).
Platinum Retail Ltd have chosen to report on the following key items within their boundary:
• Scope 1 Emissions
- Transport – Company Owned Fleet
• Scope 2 Emissions
- Building Electricity Consumption
• Scope 3 Emissions
- Transport – Grey Fleet
Building energy
The building energy data has been calculated using monthly energy data provided by the Operations Manager.
Fuel | 22/23 Energy Consumption kWh | 21/22Energy Consumption kWh | 22/23 Carbon Emissions (tCO2e) | 21/22Carbon Emissions (tCO2e) | % Decrease kWh | % Decrease (tCO2e) |
Building Electricity | 3,496,514 | 4,218,600 | 730 | 975 | 17% | 25% |
The above table highlights a decrease of 17% and 25% for energy consumption and carbon emissions respectively.
Company Fleet
Fuel usage associated with the fleet vehicles has been populated from the use of annual mileage reports provided by the Operations Manager.
Fuel | 22/23 Energy Consumption kWh | 21/22 Energy Consumption kWh | 22/23 Carbon Emissions (tCO2e) | 21/22 Carbon Emissions (tCO2e) | % Increase kWh | % Increase (tCO2e) |
Company Fleet | 102,892 | 26,414 | 25 | 7 | 290 % | 273% |
The above table highlights a year on year increase of 290% and 273% for both energy consumption and carbon emissions respectively.
Grey fleet
Grey fleet data has been sourced from a fuel expenses breakdown that have been submitted by the relevant employee during the reporting period. This information has also been provided by the Operations Manager for the agreed reporting period.
Fuel | 22/23 Energy Consumption kWh | 21/22 Energy Consumption kWh | 22/23 Carbon Emissions (tCO2e) | 21/22 Carbon Emissions (tCO2e) | % Decrease kWh | % Decrease (tCO2e) |
Grey Fleet | 16,698 | 53,003 | 4 | 13 | 68% | 69% |
The above table highlights a year on year decrease of 68% and 69% for fuel consumption and carbon emissions respectively.
The intensity metrics that are being used for this current report are energy (kwh) per £'000,000 turnover and carbon emissions (tCO₂e) per £'000,000 turnover. The intensity metrics that are being used for the prior years report are energy (kwh) per square meter (m²) and carbon emissions (tCO₂e) per m², relating to the floor areas of the 30 service stations.
Overall energy usage is 31,672 kWh per £'000,000 turnover (2022: 415 kWh per m²).
Carbon emissions equate to 6.6 tCO₂e per £'000,000 turnover (2022: 0.1 tCO₂e per m²).
The above metrics include for all building and transport energy.
As a result of the production of the SECR reports for the 2019/20, 2020/21, 2021/22 and 2022/23 periods, Platinum Retail will be reviewing what action can be taken to reduce their carbon footprint further. The measures to be considered and evaluated could include the following:
Reducing and optimising the voltage across their sites as a result of the UK reducing its voltage in line with European standards to 220V. This can result in an approximate 10% reduction in energy consumption.
To develop, communicate, and promote a robust energy awareness programme with realistic energy and carbon emissions targets and goals.
Involvement of staff to reduce energy consumption and associated carbon emissions.
Inclusion of certified renewable energy in energy contracts to drive down carbon emissions.
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of business relationships and future developments.
Refer to part (c) of the Section 172(1) statement in the Strategic Report of these financial statements for details of how the company fosters business relationships with suppliers, customers and others.
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 auditor of the group and company is unaware. Additionally, the directors 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 auditor of the group and company is aware of that information.
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 group and 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 then 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;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and 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 company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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 30 April 2023 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'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 group's and parent 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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the 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 director's remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 director determines 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's and the 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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, health and safety, site maintenance and Dangerous Substances and Explosive Atmospheres Regulations 2002.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the group, together with the discussions held with the group at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to valuation of freehold property, the apportionment of the land element of freehold property, valuation of unlisted fixed asset investments, and recoverability of amounts due from group undertakings.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations.
Testing key revenue lines, in particular cut-off, for evidence of management bias.
Performing a physical verification of key assets.
Obtaining third-party confirmation of material bank, loan and stock balances.
Documenting and verifying all significant related party balances and transactions.
Testing all material consolidation adjustments.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
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.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,847,144 (2022 - £1,514,020 profit).
Platinum Retail Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is The Hollies, Chorleywood Road, Rickmansworth, Hertfordshire, WD3 4ER.
The group consists of Platinum Retail Limited and all of its subsidiaries.
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 and leasehold properties. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.
The consolidated group financial statements consist of the financial statements of the parent company Platinum Retail Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 30 April 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions and balances between group companies are eliminated on consolidation.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The group has net current liabilities of £1,111,618 after taking into account an amount, included in other creditors, of £2,789,109 owed to the director. The director has confirmed that he will continue to provide financial support to the group for as long as this is necessary.
The company has net current assets of £5,023,662 after taking into account an amount, included in other creditors, of £2,789,109 owed to the director. The director has confirmed that he will continue to provide financial support to the company for as long as this is necessary.
Accordingly, at the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operation for the foreseeable future, with the continued support of the director. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
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.
Revenue from the sale of petrol 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. This occurs at the point the buyer has used the petrol pump to fill their tank.
Negative goodwill represents the excess of the fair value of net assets acquired over the price paid for acquisition of a business. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation. Negative goodwill is considered to have a finite useful life and is amortised on a systematic basis over the period which the benefit is expected, which is 10 years.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
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:
Freehold land is not depreciated.
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 recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.
The stock figure per the accounts is comprised of wet stock, i.e. fuel.
Wet stock is valued at the most recent purchase cost, based on prevailing fuel prices at the year end.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors and bank loans 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
The costs of short-term employee benefits are recognised as a liability and an expense.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
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.
Government grants, which include the amounts received from the Coronavirus Business Interruption Loan Scheme that cover interest and fees payable to the lender, are recognised at the fair value of the grant received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. The income is recognised in other income on a systematic basis over the periods in which the associated costs are incurred, using the accrual model.
Rates holiday
Business rates holidays received are set off against the applicable rate expense for the period covered by the holiday.
Commissions receivable
Amounts included within other operating income relate to commissions receivable from site operators. Income is recognised on an accruals basis determined by a daily charge as set out in operator agreements between the parties.
In the application of the group’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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
At the end of each financial year, the directors assess investments in subsidiaries for any indicators of impairment. The directors believe that there are no indicators of impairment as the subsidiaries continue to trade profitably and have a net asset position at the year end.
Amounts owed from the group are assessed for the recoverability of the balance. The directors believe this balance to be recoverable due to subsidiary undertakings remaining to trade profitably and having a net asset position at the year end.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Deferred tax is calculated at the expected future tax rate. Tax rates are subject to change and thus this estimate is subject to change in future periods.
The directors have carried out an assessment of useful life of goodwill and it has been determined that 10 years is an appropriate amortisation policy.
Goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of goodwill has been impaired, for example due to a changed business climate. In order to determine if the value of goodwill has been impaired, the group relies on a number of factors, including historical results, business plans, forecasts and market data. Changes in the conditions for these judgements and estimates can significantly affect the assessed value of goodwill and its recoverable amount.
The directors have determined the fair value of the freehold and leasehold land and buildings as at 30 April 2023, using the EBITDA multiple method. A number of properties owned by the group were valued during the year by an independent firm of Chartered Surveyors. The directors have considered the valuation bases as applied by the independent firm of Chartered surveyors and supplemented this with the director’s industry experience and economic factors, to determine the fair value of all freehold and leasehold land and buildings.
The group and company recognises depreciation at 2% straight line on its freehold buildings. The land value attributed to the company's land and buildings has been estimated at 10%, therefore depreciation is only charged on the remaining 90% which is the estimated cost of the buildings. This estimate is based on the expected value of the land element of the property based on the remedial work required and restrictions on development meaning the inherent value is significantly less than that of the building.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
From 1 April 2023 the main rate of corporation tax increased to 25%, previously 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:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
The group recognised negative goodwill which arose from the acquisition of the following subsidiaries:
The Dearnside Motor Company Limited in August 2016
Dove Retail Limited in November 2021
The group recognised goodwill which arose from the acquisitions of the following subsidiaries:
Linvick Limited in December 2019
R. O'Leary Limited in March 2020
Lockwood Filling Station in March 2022
The carrying value of land and buildings comprises:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
In all group companies, being the parent and its subsidiaries, the properties were valued at fair value by the directors at 30 April 2023 using the EBITDA multiple method. The directors have considered the valuation bases as applied an independent firm of Chartered surveyors and supplemented this with the director’s industry experience and economic factors, to determine the fair value of all freehold and leasehold land and buildings. The directors believe that there is no amendment to the value of the properties this year.
Freehold and leasehold land and buildings in the group are carried at valuation. If freehold and leasehold property was measured using the cost model, the carrying amounts would have been approximately £62,621,899 (2022: £42,301,342), being cost £65,756,649 (2022: £44,528,518) and depreciation £3,134,750 (2022: £2,227,176).
Freehold and leasehold land and buildings in the company are carried at valuation. If freehold and leasehold property was measured using the cost model, the carrying amounts would have been approximately £25,309,140 (2022: £13,888,919), being cost £27,165,601 (2022: £15,409,638) and depreciation £1,856,461 (2022: £1,520,719).
Details of the company's subsidiaries at 30 April 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The trade and assets of Lockwood Filling Station Limited were hived up into J Bros (Investments) Limited following the acquisition of the company in the prior year. Lockwood Filling Station Limited has remained dormant following the hive up and is currently in liquidation.
Included in trade creditors is a balance of £nil (2022: £354,395) which is secured by a fixed and floating charge over The Dearnside Motor Company Limited's assets.
There is a fixed and floating charge over the freehold land and buildings of the whole group's assets in favour of the lenders to the group.
The group has four bank loans, two of which bear interest at 2.65% per annum plus base rate, one which bears interest at 2.75% per annum plus base rate and one which bears interest at 2.05% per annum plus base rate. The loans have repayment terms of between three and five years, repayable in monthly or quarterly instalments, comprising both capital and interest.
The bank loans are secured by a first legal charge over the freehold property, a fixed and floating charge over the assets of the company and a composite guarantee between the company and its subsidiary undertakings.
The director has provided a personal guarantee of £1million for loans in Platinum Retail Limited and J Bros (Investments) Limited respectively, and there is a cross guarantee in place between Platinum Retail Limited and J Bros (Investments) Limited and its subsidiaries, Linvick Limited and R. O'Leary Limited.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
On 2 May 2023 the group completed on the acquisition of a filling station, for consideration of £4,475,000.
On 30 October 2023, the group entered into a new office lease. Annual rent is £55,500 per annum, with a lease term of 10 years.
On 22 September 2023, the group completed on the acquisition of two filling stations, for consideration of £5,000,000.
Included within bank loans at the balance sheet date are amounts of £22,316,400 which the company repaid following refinancing. New bank facilities totalling £32,300,000 were agreed with a new lender on 2 October 2023.
Group
At the year end, £2,789,109 was owed to the directors by the group (2022: £85,887 was owed by the director to the group). During the year, interest of £39,000 (2022: £nil) was paid to one of the directors.
At year end, the company held a bank loan totalling £22,316,400. In addition to being secured against the freehold property in the group, it was additionally secured against a property owned personally by the director. During the year, the group paid £40,000 (2022: 40,000) rent on this property and at the year-end owed £46,275 (2022: £44,066) to directors relating to the property.
During the year the group paid £nil (2022: £4,151) in consulting fees to an individual who was appointed director during the year.
Company
At the year end, £2,789,109 was owed to the directors by the company (2022: £85,887 was owed by the director to the company).
At year end, the company held a bank loan totalling £22,316,400. In addition to being secured against the freehold property in the group, it was additionally secured against a property owned personally by the director. During the year, the company paid £40,000 (2022: 40,000) rent on this property and at the year-end owed £46,275 (2022: £44,066) to directors relating to the property.
During the year the company paid £nil (2022: £4,151) in consulting fees to an individual who was appointed director during the year.
The controlling party of the group is the director, S R Sejpal.