Company Registration No. 09069283 (England and Wales)
CAR SPARES (DISTRIBUTION) LIMITED
ANNUAL REPORT AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2023
CAR SPARES (DISTRIBUTION) LIMITED
COMPANY INFORMATION
Directors
M J Gardner Jnr
M J Gardner Snr
Secretary
T Gardner
Company number
09069283
Registered office
90 Summer Lane
Newtown
Birmingham
B19 3ND
Auditor
Cheesmans
4 Aztec Row
Berners Road
London
N1 0PW
Bankers
HSBC Bank Plc
34 Poplar Road
Solihull
West Midlands
B91 3AF
CAR SPARES (DISTRIBUTION) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 20
CAR SPARES (DISTRIBUTION) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Fair review of the business
The company’s turnover increased by £2,581,464, an 10.99% increase from 2022. This can be attributed to an increase in sales across all of our sites as the company looks to remain competitively priced and provide quality goods and in a timely manner, thereby retaining the current customer base. The addition of a new site at Redditch also contributed to the increase.
The company is looking to improve their market share within an increasingly competitive industry. The company anticipates that by ensuring relationships are upheld with suppliers we are able to continue to provide quality parts at competitive prices and thus maintain strong customer relationships.
The directors are optimistic that they can continue to grow and develop the business through expansion in new sites, increased workforce training and innovation. A new site in Stratford is planned to open in late 2024.
Overall, the directors are pleased with the company’s performance for the year despite facing continue challenges in 2023 with regards to the cost-of-living crisis, rising energy costs and supply chain disruption.
Principal risks and uncertainties
The directors continue to consider and act upon the risks and uncertainties relevant to the business:
Competition
Increasing competition within the market drives the company to grow and innovate within the sector. The company is currently looking into new technologies that can continue to improve our performance to ensure customers remain loyal to the company by offering competitive pricing, quality parts and exemplary customer service.
Labour supply
The UK’s withdrawal from the EU continue to generate labour shortages across the country. The company remains confident that by providing staff training, and implementing a new recruitment team, they will be able to meet their current labour requirements.
Risk of non-payment
The risk of customers being unable to pay their debts remains evident during the current economic climate. The company continues to use stringent measures when offering credit terms, alongside effective monitoring of customer accounts to reduce this risk.
Supply chain disruption
Global shipping issues including delays and rising costs are a prevalent risk to the company. Suppliers are nationally enduring higher prices as a result. The company continues to look to alternative suppliers to fulfil the needs of the business and provide consumers with the most favourable prices.
Rising energy costs
As energy costs remain high, the directors are constantly exploring ways to enhance sustainability in the business by incorporating renewable energy sources including installing solar panels across sites and implementing automatic LED lighting where appropriate.
Fluctuating fuel costs also impact the day-to-day running of the business. Fuel consumption is continually monitored along with more efficient routes of our deliveries allowing us to optimise our efficiency and reduce fuel consumption.
CAR SPARES (DISTRIBUTION) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators
The directors consider that the key performance indicators for the group are as follows:
Ability to maintain and improve gross profit margin
Optimising storage means the business is able to buy goods in bulk and enable the gross profit margin to increase
Expansion of the business through increased sites will help grow our customer base and thereby increase turnover
Staff efficiency per branch
Ensuring optimum staff efficiency through effective training and monitoring
Reviewing and tracking vacancies per branch, understanding our time to hire and completing a cost analysis of each department before any additional vacancies are agreed
Employee retention and engagement
With recruitment remaining a key objective for the business into 2024, particularly with the addition of new sites, the directors are dedicated to retaining and motivating all staff through effective management, career progression and ensuring that compensation packages and staff incentives are competitive.
M J Gardner Jnr
Director
13 September 2024
CAR SPARES (DISTRIBUTION) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of the retailing and wholesaling of motor accessories.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
M J Gardner Jnr
A Tuby
(Retired 31 July 2024)
M J Gardner Snr
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £2,726,994. The directors do not recommend payment of a final dividend.
Auditor
The auditor, Cheesmans, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
CAR SPARES (DISTRIBUTION) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
By order of the Board
T Gardner
Secretary
13 September 2024
CAR SPARES (DISTRIBUTION) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF CAR SPARES (DISTRIBUTION) LIMITED
- 5 -
Opinion
We have audited the financial statements of Car Spares (Distribution) Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
CAR SPARES (DISTRIBUTION) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF CAR SPARES (DISTRIBUTION) LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to the Employment Law, Health & Safety Law and UK tax legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journals to increase revenue or reduce expenditure and management bias in accounting estimates.
Audit response to risks identified
Challenging the assumptions and judgements made by management in their significant accounting estimates, in particular, those that involve the assessment of future events which are inherently uncertain – the key estimates determined in this respect are those relating to the useful economic lives of fixed and intangible assets and those relating to bad debt provisions; and
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also the risk of not detecting misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations or through collusion.
CAR SPARES (DISTRIBUTION) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF CAR SPARES (DISTRIBUTION) LIMITED (CONTINUED)
- 7 -
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.
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
Carol Cheesman
Senior Statutory Auditor
For and on behalf of Cheesmans
13 September 2024
Chartered Accountants
Statutory Auditor
4 Aztec Row
Berners Road
London
N1 0PW
CAR SPARES (DISTRIBUTION) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
1.3, 3
26,076,101
23,494,084
Cost of sales
(13,912,585)
(12,942,007)
Gross profit
12,163,516
10,552,077
Distribution costs
(485,496)
(423,833)
Administrative expenses
(8,120,906)
(6,783,911)
Other operating income
18,506
16,884
Operating profit
4
3,575,620
3,361,217
Interest receivable and similar income
7
53,312
3,511
Interest payable and similar expenses
8
(1,162)
(6,236)
Profit before taxation
3,627,770
3,358,492
Taxation
9
(873,353)
(631,498)
Profit for the financial year
2,754,417
2,726,994
The profit and loss account has been prepared on the basis that all operations are continuing operations.
CAR SPARES (DISTRIBUTION) LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
11
43,312
129,932
Tangible assets
12
850,257
493,575
893,569
623,507
Current assets
Debtors
13
999,150
1,041,257
Cash at bank and in hand
4,217,950
2,686,749
5,217,100
3,728,006
Creditors: amounts falling due within one year
14
(2,941,149)
(1,267,197)
Net current assets
2,275,951
2,460,809
Total assets less current liabilities
3,169,520
3,084,316
Provisions for liabilities
(165,102)
(107,321)
Net assets
3,004,418
2,976,995
Capital and reserves
Called up share capital
17
1
1
Profit and loss reserves
3,004,417
2,976,994
Total equity
3,004,418
2,976,995
The financial statements were approved by the Board of Directors and authorised for issue on 13 September 2024 and are signed on its behalf by:
M J Gardner Jnr
Director
Company Registration No. 09069283
CAR SPARES (DISTRIBUTION) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
1
2,398,253
2,398,254
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
2,726,994
2,726,994
Dividends
10
-
(2,148,253)
(2,148,253)
Balance at 31 December 2022
1
2,976,994
2,976,995
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
2,754,417
2,754,417
Dividends
10
-
(2,726,994)
(2,726,994)
Balance at 31 December 2023
1
3,004,417
3,004,418
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Car Spares (Distribution) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 90 Summer Lane, Newtown, Birmingham, B19 3ND.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This 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:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ – 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, 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 the financial statements of Car Spares (Distribution) Holdings Limited. These consolidated financial statements are available from its registered office, 90 Summer Lane, Newtown, Birmingham, B19 3ND.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
1.4
Intangible fixed assets - goodwill
Acquired goodwill is written off in equal annual instalments over its estimated useful economic life being 10 years.
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
During the year a review was undertaken on the depreciation policy of the company and it was decided that the it should be changed from 20% Straight Line. Tangible fixed assets are stated at their cost less depreciation. Depreciation is provided at the new rates calculated to write off the cost less estimated residual value of each asset over its expected useful life.
Leasehold improvements
Over the length of the lease
Plant and machinery
Over 10 years Straight Line
Fixtures, fittings & equipment
Over 6 / 10 years Straight Line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Impairment of fixed assets
At each reporting period end date, the company 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Cash at bank and in hand
Cash and cash equivalents include cash in hand and deposits held at call with banks.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Group relief
Where group relief is claimed, the claimant company pays the surrendering company an amount equal to the corporation tax saved.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Bad and doubtful debts
The recoverability of the trade debtors is considered by the directors and where this is considered an issue, due to the ageing of the debt, relevant provisions are accordingly made and are regularly assessed as new information becomes available.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
26,076,101
23,494,084
2023
2022
£
£
Other revenue
Interest income
53,312
3,511
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Depreciation of owned tangible fixed assets
96,179
70,752
(Profit)/loss on disposal of tangible fixed assets
(276)
3,609
Amortisation of intangible assets
86,620
86,620
5
Auditor's remuneration
The company uses common facilities with other group undertakings for which management charges are rendered by ,the ultimate parent undertaking, Included within those charges are audit fees of £14,700 (2022 - £13,125).
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Distribution
102
98
Administration
126
108
Management
15
15
Total
243
221
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
5,166,660
4,307,260
Social security costs
420,718
350,858
Pension costs
94,750
76,446
5,682,128
4,734,564
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
50,747
2,805
Other interest income
2,565
706
Total income
53,312
3,511
8
Interest payable and similar expenses
2023
2022
£
£
Other interest
1,162
6,236
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
674,000
539,300
Adjustments in respect of prior periods
97
(42,811)
Group tax relief
141,475
99,739
Total current tax
815,572
596,228
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
2023
2022
£
£
(Continued)
- 17 -
Deferred tax
Origination and reversal of timing differences
57,781
35,270
Total tax charge
873,353
631,498
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:
2023
2022
£
£
Profit before taxation
3,627,770
3,358,492
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
853,270
638,113
Tax effect of expenses that are not deductible in determining taxable profit
23,462
17,921
Permanent capital allowances in excess of depreciation
(58,766)
(17,406)
Under/(over) provided in prior years
99
(42,811)
Deferred tax
54,952
35,583
Other adjustments
336
98
Taxation charge for the year
873,353
631,498
10
Dividends
2023
2022
£
£
Interim paid
2,726,994
2,148,253
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
11
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
866,202
Amortisation and impairment
At 1 January 2023
736,270
Amortisation charged for the year
86,620
At 31 December 2023
822,890
Carrying amount
At 31 December 2023
43,312
At 31 December 2022
129,932
12
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
Cost
At 1 January 2023
220,300
28,600
688,137
937,037
Additions
167,671
3,670
312,101
483,442
Disposals
(50,617)
(50,617)
At 31 December 2023
387,971
32,270
949,621
1,369,862
Depreciation and impairment
At 1 January 2023
152,985
19,477
271,000
443,462
Depreciation charged in the year
12,631
1,735
81,813
96,179
Eliminated in respect of disposals
(20,036)
(20,036)
At 31 December 2023
165,616
21,212
332,777
519,605
Carrying amount
At 31 December 2023
222,355
11,058
616,844
850,257
At 31 December 2022
67,315
9,123
417,137
493,575
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
891,459
889,097
Corporation tax recoverable
80,590
Other debtors
1,070
Prepayments and accrued income
107,691
70,500
999,150
1,041,257
14
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
168,104
83,017
Amounts owed to group undertakings
2,103,498
232,514
Corporation tax
239,609
Other taxation and social security
472,825
582,507
Other creditors
1,193
551
Accruals and deferred income
195,529
128,999
2,941,149
1,267,197
15
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
165,102
107,321
2023
Movements in the year:
£
Liability at 1 January 2023
107,321
Charge to profit or loss
57,781
Liability at 31 December 2023
165,102
The deferred tax liability set out above is expected to reverse within the foreseeable future and relates to accelerated capital allowances that are expected to mature within the same period.
CAR SPARES (DISTRIBUTION) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
16
Retirement benefit schemes
Defined contribution schemes
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The charge to profit or loss in respect of defined contribution schemes was £94,750 (2022 - £76,446).
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Share of £1 each
1
1
1
1
18
Financial commitments, guarantees and contingent liabilities
There is an unlimited multilateral guarantee between the companies of the Car Spares (Distribution) Holdings group and HSBC Bank PLC whereby amounts due to and from HSBC Bank PLC can be offset, both in terms of capital and interest calculation. At 31 December 2023 there were no amounts that could be called under this arrangement.
19
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
54,287
-
The amounts disclosed in capital commitments are regarding solar panels for which non-refundable deposits had been paid for by the year end.
20
Ultimate controlling party
The company is a wholly owned subsidiary undertaking of Car Spares (Distribution) Holdings Limited, a company registered in England and Wales, in which the results of the company are consolidated. The registered office of the parent company is 90 Summer Lane, Newtown, Birmingham, B19 3ND.
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