The directors present the strategic report for the year ended 31 December 2023.
The principal activity of the company is that of a holding company.
Haydock Commercial Vehicles Limited
The principal activity of the trading subsidiary company, Haydock Commercial Vehicles Limited ('Haydock'), continues to be a Scania truck franchise dealer which provides truck sales and aftersales services for trucks and ancillary equipment within the heavy truck market.
In the year ended 31 December 2023, the turnover of Haydock 66.5% from £179m to £298m. New vehicle sales increased by 90% due to increased Scania fleet vehicle retail volumes.
The used vehicle market anticipated an increase in volume numbers for the year. The used vehicle department did not achieve its overall revenue target and the sales volume target.
Used vehicle sales increased by 0.7% on the prior year. The overall gross contribution decreased on prior year.
In aftersales there was an increase in both service and parts revenues, service sales increased by 9.6% and parts by 9.5% on the prior year along with a margin increase on the prior year.
The group recognises key performance indicators (KPI’s) as an integral part of monitoring the progress of the business. KPI’s are identified in the annual business plan and appropriate targets set. KPI targets are set for the Sales, service and parts operations which are closely monitored.
The increase in trade debtors is due to an increase in retail debtors at year end. The net assets have moved in line with profit and dividends in the year.
The increase in trade creditors is due to the increase in new vehicle stock at year end.
The group continues to make improvements to the properties to meet the dealer standards.
The cash balance remains strong at the year end. The group policy is to have internally generated cash and committed bank facilities to satisfy working capital requirements. Cash flow forecasts are prepared on a daily basis.
The management continue to monitor closely non-financial KPI’s including employee head count, staff turnover, technical training and all other Dealer Operating Standards. Management have reviewed these KPI’s and confirm that the group’s performance against these is satisfactory for the year.
The principal risk to the group is the reliance on a single manufacturer franchise for the majority of the business activities. The group has a franchise agreement with Scania Great Britain Limited. The commercial vehicle sector remains competitive both locally and nationally.
Credit risk is mitigated by the diversity and volume of different customers who operate across a wide range of industry sectors with no reliance on any one customer or sector. The group maintains contact with customers regularly reviews limits, terms and aged debtors. The group has credit insurance in place.
The group is considered an essential supplier to certain businesses in the logistics and transport sectors. We anticipate that there will be strong demand from these sectors, which are considered essential industries, and therefore demand within these industries has not been negatively impacted.
The group is continuing with investment in capital expenditure.
The new and used vehicle sales remain in a competitive market and the group’s objectives are to increase the volumes in both new and used vehicles. The aftersales forecasts are to optimise the margins through productivity and efficiencies. Activity levels and customer confidence remain strong and the group is always looking for market opportunities for growth.
The group’s key performance indicators are as follows:
| 2023 | 2022 |
|
|
|
Turnover | £298m | £179m |
Operating profit | £8.6m | £8.4m |
Profit after tax | £5.8m | £6.2m |
This section acts as the group’s Section 172 statement. In accordance with the Companies Act 2006. This section also constitutes with the group’s statements on engagement with, and having due regard and interest for our employees and other key stakeholders.
The principal aim of the group is to make sufficient profit from its trading operations to sustain its commercial viability, to finance its continued development and to undertake other activities consistent with its ultimate purpose. In setting out the strategic direction the directors, in carrying out their duties also take into account the principal risks facing the business.
Stakeholders
Our key stakeholders are our employees who are at the heart of our purpose and work to service our customers. We are focused on responding to the needs of, and building long-term relationships with our customers. Other key stakeholders are the producers and suppliers of the goods we purchase from and the communities in which we operate.
Decision making
Key decisions are made by the board of directors and are presented at Board and executive meetings. Directors are briefed on any potential impacts and risks from our customers, employees and other stakeholders including our suppliers, the community and environment and how they are to be managed. The Directors take these factors into account before making a final decision which together they believe is in the best interests of the group and its employees.
Long-term sustainability
We aim to make sufficient profit to sustain the group’s commercial viability, with consideration to the needs of our customers, employees and other stakeholders and the community. This is to ensure we are conducting all our business relationships with integrity. The long term sustainability is key to the decision making especially in challenging times since the Coronavirus pandemic.
Employees
The talent and hard work of the people within the group is recognised as one of the business’s most valuable assets. Hearing employee’s opinions and ensuring they are taken into account in decision-making is crucial to the long term sustainability of the group. Directors engage with employees in many different ways, including regular dialogue, email updates and company newsletters.
Customers
The main focus of the business is to achieve excellent customer service. The feedback comes from regular communication with our customers. The franchise holder sets customer standards which are independently measured and reported to the franchise holder.
Producers and suppliers
We work closely with our producers of Scania trucks and supply chain. The main supplier being Scania the manufacturer of the truck we sell and the supplier of the truck parts we sell. Performance of the main supplier Scania are measured in all areas of their supply chain such as lead times on new trucks supplied to lead times of the replacement parts. Scania have measures to prevent modern slavery in its business and supply chains.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 12.
Ordinary dividends were paid amounting to £4,750,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with section 172 of the Companies Act, the group has a requirement to report on a need to foster the group's business relationships with suppliers, customers and others. The relationships are considered in the decision making of the group, the details of which are included in the strategic report.
Following the merger of MHA Moore & Smalley with MHA, the company's independent auditor has now become MHA. The auditor, MHA, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We measure and report on energy use and carbon emissions in compliance with SECR covering energy use and associated emissions relating to gas and electricity and other fuels with intensity ratio’s and information relating to energy efficiency actions. SECR reporting is implemented in the Companies (Directors report) and LLP Partnerships 2018 regulations.
Methodology was used in conjunction with government GHG reporting conversion factors.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per square foot.
We are committed to responsible energy management and will practise energy efficiency throughout Cheshire 3 Holdings group, wherever it is cost effective. We recognise that the climate change is one of the most serious environmental challenges currently threatening the global community and we understand that we have a role to play in reducing greenhouse gas emissions. We will establish a strong focus on continuous improvements and initiatives regarding our processes and services to improve our energy performance.
We have implemented the improvement and policies below for the purpose of increasing the businesses energy efficiency in 2023:
Continual replacement of LED lighting throughout the sites where required;
Continued environmental awareness with input from all members of staff;
Continual review of energy tariffs;
Electric vehicles added to fleet; and
Electric onsite charge points for vehicles at all sites.
We have audited the financial statements of Cheshire 3 Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 group and parent 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 parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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 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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations;
Enquiries with management about any known or suspected instances of fraud;
Auditing the risk of fraud in revenue, including through the testing of income cut off at the period end and through sales transaction testing to provide comfort that revenue is completely stated in the financial statements;
Examination of board minutes;
Examination of journal entries and other adjustments to test for appropriateness and identify any instances of management override of controls; and
Review of legal and processional expenditure to identify any evidence of ongoing litigation or enquiries.
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: 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 as it prepares group accounts. The company’s profit for the year was £4,676,389 (2022 - £5,283,115 profit).
Cheshire 3 Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .
The group consists of Cheshire 3 Holdings Limited and all of its subsidiaries.
The company's and the group's principal activities and nature of its operations are disclosed in the Directors' Report.
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, including the provisions of the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008.
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. 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: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in these group financial statements.
The consolidated financial statements incorporate those of Cheshire 3 Holdings Limited and all of its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 December 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, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
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.
Any non-controlling interest in the acquiree is recognised at the non-controlling interest’s share of the acquiree’s net identifiable assets, liabilities and provisions for contingent liabilities recognised at the acquisition date.
In determining the appropriateness of the going concern assessment the directors have taken into account the following matters:
the assets, future profitability and headroom on the loan facilities are considered sufficient to meet covenant requirements, even after sensitising the forecasts;
the net current asset position of the group;
adequate sources of funds are in place;
the level of forecast earnings;
no labour difficulties are envisaged in the current market;
the current franchise from Scania will continue; and
full consideration has been given to contingent liabilities.
The future financial position and the results of operations, the business remains profitable. Given the financial strength of the group, the varied nature of industries we sell to, and with continued focus on credit risk and cost control, the Board are confident that there will be no impact the going concern status of the group, and therefore have prepared the financial statements on a going concern basis.
The directors have prepared forecasts for Haydock Commercial Vehicles Limited (the main trading entity of the group), for the period of at least 12 months from the signing of these financial statements, which demonstrate that the company and group can continue to operate within its available financial resources. The group continues to rely on strong, long term relationships with Scania and its bankers.
Haydock Commercial Vehicles Limited has confirmed it intends on provide financial assistance to enable Cheshire 3 Holdings Limited to meet their liabilities to third parties as and when they fall due and that no demand for repayment will be made in respect of intercompany amounts owing to Haydock Commercial Vehicles Limited until at least 12 months from date of signing the financial statements for the year ended 31 December 2023. Additionally the directors have confirmed that Haydock Commercial Vehicles Limited has the financial resources and capacity to meet these demands as and when they fall due.
The directors have concluded that, at the time of preparing these financial statements that the group has adequate financial resources to continue in operational existence for at least 12 months from the date of signing these financial statements. The directors therefore continue to adopt the going concern basis in preparing these financial statements.
Turnover is derived from the provision of goods and services to customers during the period. Turnover is shown net of value added tax.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), 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.
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 income statement.
In the separate accounts of the company, interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
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.
Shortfalls between the carrying value of fixed assets and their recoverable amounts, being the higher of fair value less costs to sell and value-in-use, are recognised as impairment losses. Impairments of revalued assets, are treated as a revaluation loss. All other impairment losses are recognised in profit or loss.
Any impairment loss recognised for goodwill is not reversed. For fixed assets other than goodwill, recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Reversals of impairment losses are recognised in profit or loss or, for revalued assets, as a revaluation gain. On reversal of an impairment loss, the depreciation or amortisation is adjusted to allocate the asset’s revised carrying amount (less any residual value) over its remaining useful life
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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 statement of financial position 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.
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 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, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Interest expense is recognised on the basis of the effective interest method and is included in interest payable and other similar expenses.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax. Current tax assets are recognised when tax paid exceeds the tax payable.
Current and deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited to other comprehensive income or equity, when the tax follows the transaction or event it relates to and is also charged or credited to other comprehensive income, or equity.
Current tax assets and current tax liabilities and deferred tax assets and deferred tax liabilities are offset, if and only if, there is a legally enforceable right to set off the amounts and the entity intends either to settle on the net basis or to realise the asset and settle the liability simultaneously.
Current tax is based on taxable profit for the year. Current tax assets and liabilities are measured using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax liabilities are recognised in respect of all timing differences that exist at the reporting date. Timing differences are differences between taxable profits and total comprehensive income that arise from the inclusion of income and expenses in tax assessments in different periods from their recognition in the financial statements. Deferred tax assets are recognised only to the extent that it is probable that they will be recovered by the reversal of deferred tax liabilities or other future taxable profits.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
For defined contribution schemes the amount charged to profit or loss is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either other creditors or other debtors.
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.
Repairs and maintenance contracts
Amounts received on all repair and maintenance agreements, are accumulated in a vehicle maintenance account on the balance sheet, with relevant costs being set against the income incurred. Where a contract shows an actual or foreseeable deficit at the end of a financial year which is not expected to reverse, the additional costs are recognised and charged to the profit or loss. Except for the above, where contracts will continue beyond the end of the financial year, the balance is carried forward to the following year and any remaining amounts are released to profit or loss at the end of the contract.
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.
In categorising leases as finance leases or operating leases, management makes judgements as to whether significant risks and rewards of ownership have transferred to the group as lessee.
Management make judgements on an annual basis as to whether a contract is expected to generate a deficit and if so additional costs are recognised and written off to profit or loss.
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.
In making decisions regarding the depreciation of fixed assets, management must estimate the useful life of said assets to the business. A change in estimate would result in a change in the depreciation charged to profit or loss in each year. The net book value of fixed assets at the year end was £7,872,889 (2022 - £7,833,844). Depreciation charged during the year was £754,583 (2022 - £752,435).
Used vehicle stocks are written down to their estimated market values which is deemed a key area of estimation by the directors. The carrying value of used vehicle stock at the year end is estimated to be £4,554,564 (2022 - £5,405,468) stated after provisions of £1,321,836 (2022 - £1,426,358).
A provision for dilapidations is recognised when the group has an obligation to restore leased property to its original condition upon expiry of the lease, and the amount of the restoration costs can be reliably estimated. The directors deem this to be a key area of estimation. At the year end the provision is estimated to be £294,177 (2022 - £294,177).
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 4).
Corporation tax is calculated at 23.52% (2022 - 19.00%) of the estimated assessable profit for the year. In the 3 March 2021 Budget it was announced that the UK tax rate will increase to 25% from 1 April 2023 and this rate was substantively enacted on 24 May 2021. Deferred tax balances at the year-end have been measured at 25% (2022 - 25%).
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:
Details of the company's subsidiary at 31 December 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Included within stock is a provision for slow moving and obsolete stock of £1,433,728 (2022 - £1,522,814), the movement in the year of £89,084 (2022 - £564,301) relates to the utilisation of the provision of £597,490 (2022 - £390,333) and additional provisions of £508,406 (2022 - £954,634).
New vehicle stock is held on consignment with a corresponding credit included within trade creditors. The creditors are secured over the related vehicles.
Trade debtors are stated after provision for bad and doubtful debts of £52,544 (2022 - £55,977).
Trade creditors relating to used vehicles of £53,400 (2022 - £14,466) are secured against the stocks to which they relate.
Group creditors are interest free and repayable with 13 months notice.
Bank loans were repaid in full during the year. Interest was charged at 2.25% above Bank of England base rate.
Bank loans and overdrafts were secured by fixed and floating charges over the assets of the company dated 1 October 2019 in favour of HSBC Bank Plc as at the previous reporting date. This charge was satisfied in full during the year.
The dilapidations provision represents management's best estimate of the group's liability to put leasehold properties right at the end of the lease under lease contracts where repairs have been made to the space occupied, where this is a requirement of the lease agreement. This is expected to be utilised at the end of the lease contracts in place.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The majority of the deferred tax liability above relates to accelerated capital allowances. It is expected to reverse over the useful lives of the assets to which it relates.
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.
There were outstanding contributions included in other creditors amounting to £53,954 at the end of the year (2022 - £49,219).
The company's ordinary shares, which carry no right to fixed income, each carry the right to one vote at general meetings of the company.
On 16 January 2023, the company purchased 22 A Ordinary £1 shares from a director. The shares were subsequently cancelled.
Par value of shares repurchased by the company.
The acquisition of Cheshire 2 Holdings Limited was achieved by issuing equity shares in Cheshire 3 Holdings Limited as part of the consideration for the acquisition of 94.5% of the shares in Cheshire 2 Holdings Limited. The difference between the fair value and the nominal value of the shares issued was £3,222,524, and as this transaction met the requirements, management have chose to apply merger relief and £3,222,524 has been credited to reserves.
Cumulative profit and loss, net of distributions to owners.
There is a guarantee in favour of Driver & Vehicle Licensing Agency (DVLA) for £200,000 (2022 - £200,000).
There were fixed and floating charges over all assets of the group dated 1 October 2019 at the previous reporting date. This charge was satisfied in full during the year.
The group has given commitments to repurchase vehicles from customers. These commitments amount to £8,287,500 (2022 - £3,994,268) and may crystallise at various times within the next 5 years. The directors are confident of selling these vehicles as part of normal business activities at a value not significantly different from their repurchase price. An estimate of the exposure between the repurchase price and the market value at the buyback date of £Nil (2022 - £23,000) has been included in accruals.
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:
The operating leases represent leases to the subsidiary company.
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
The remuneration of key management personnel is as follows.
The total remuneration of close family members of members of key management personnel was £148,581 (2022 - £147,813).
During the year the group was charged rent of £483,040 (2022 - £483,040), consultancy of £120,000 (2022 - £185,000) and legal fees of £Nil (2022 - £2,055) to companies with common shareholders. The company made sales of £235,672 (2022 - £161,129) to entities with common shareholders. At the balance sheet date the amount owed by those entities was £Nil (2022 - £Nil).
During the previous year, loan note repayments totalling £2,235,256 were made to key management personnel. No interest was charged on these loan notes and no balances were outstanding at the current or previous reporting dates.