Company registration number 02863409 (England and Wales)
CORKILLS VOLKSWAGEN LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CORKILLS VOLKSWAGEN LIMITED
COMPANY INFORMATION
Directors
A B M Kermode
A Cotton
T Worrall
J Chisnall
Secretary
A Cotton
Company number
02863409
Registered office
Corkills Wigan
Pennyhurst street
Wigan
Lancashire
WN3 4AS
Auditor
UHY Hacker Young Manchester LLP
St James Building
79 Oxford Street
Manchester
M1 6HT
CORKILLS VOLKSWAGEN 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
Statement of cash flows
11
Notes to the financial statements
12 - 24
CORKILLS VOLKSWAGEN LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
Business review
The company's primary business activities for the year ending December 2023 were the sale of new and used cars, the servicing and repairs of motor vehicles and the sale of motor vehicle parts.
Turnover for the year was £34.6m (2022: £34.8m). Profit before tax was £246.9k (2022: £429.2k) which was lower than 2022 performance and reflects the difficulties faced in 2023.
The profit for the year, before tax, depreciation and interest was £614k (2022: £746k)
The profit for the year after taxation amounted to £189.9k (2022 - £373.1k).
Principal risks and uncertainties
The management of the business and the nature of the company's strategy are subject to a number of risks. The directors have set out below the principal risks facing the business.
Company, people and reputation
The company has invested heavily in its people and its reputation over a number of years. It is therefore reliant on these individuals to a degree in delivery the company result and reinforcing the underlying company brand. The company undertakes a regular review of remuneration and packages to ensure that it attracts and retains the best people.
Competition
The company competes with other franchised vehicle dealerships, independent used vehicle sellers, private buyers and sellers, internet based dealers, independent service and repair shops and vehicle manufacturers who have entered the retail market. The company competes for the sale of new and used vehicles, the performance of warranty repairs, non-warranty repairs, routine maintenance business and for the provision of spare parts. The principal competitive factors in service and parts sales are price, familiarity with a manufacturer's brands and models and the quality of customer service.
Used vehicle price variation
Used vehicle prices can decline significantly. As a significant proportion of the business comprises used vehicle sales, these declines can have a material impact on the business. The impact of declines in used vehicle prices can result in reduced profits on sales and also write-downs in the value of used vehicle stock.
Volkswagen Group supply of new and improved products
The company is reliant on new vehicle products from Volkswagen Group. This exposes the company to risks in a number of areas as the company is dependent on Volkswagen Group in respect of:
availability of new vehicle products
quality of new vehicle products
pricing of new vehicle products
The directors are confident that future new products from Volkswagen Group will continue to be competitively priced and high quality and therefore consider that this "manufacturer risk" is minimal. It is, in any case, mitigated by the other core business areas of the company, including used vehicle sales, parts sales and service work.
Financial key performance indicators
The board monitors 13 industry-standard key performance indicators against national average, brand average and best performer figures.
CORKILLS VOLKSWAGEN LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
A B M Kermode
Director
12 September 2024
CORKILLS VOLKSWAGEN 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 the sale of new and used motor vehicles, the servicing and repairs of motor vehicles and the sale of motor vehicle parts.
Results and dividends
The profit for the year, after taxation, amounted to £249,156 (2022 - £373,137).
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A B M Kermode
A Cotton
T Worrall
J Chisnall
Financial instruments
The company's operations expose it to a variety of financial risks which include interest rate risk, liquidity risk and credit risk. The company has in place risk management policies, which are implemented by the company's finance department., These policies, which are consistent with those from the previous year, seek to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and related finance costs.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company uses a mixture of long-term and short-term debt finance.
The company makes efforts to manage the financial risk by the monitoring of cashflow to ensure that the company is able to meet its foreseeable debts as they fall due and to invest any cash assets profitably.
Interest rate risk
Bank borrowings are used in peak periods, however due to the limited use of this facility and recent stability in low interest rate provision, the directors do not deem it necessary to hedge against interest rate fluctuations. Given the current level of Bank of England base rate of 5%, the directors consider the fluctuation in interest rate a risk and will continue to monitor this and consider the impact on the economy.
Credit risk
The company's principal financial assets are stock and trade debtors. The credit risk associated with stock is limited and therefore the principal credit risk arises from its trade debtors.
In order to manage credit risk the directors set limits for customers based on a combination of payment history and third party credit references. These credit limits are reviewed regularly by the directors together with the aged debtors and collection history.
Future developments
The primary focus of the company continues to be the growth in trading operations and maximising opportunities within the industry.
Auditor
UHY Hacker Young Manchester LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
CORKILLS VOLKSWAGEN LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
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.
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
A B M Kermode
Director
12 September 2024
CORKILLS VOLKSWAGEN LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CORKILLS VOLKSWAGEN LIMITED
- 5 -
Opinion
We have audited the financial statements of Corkills Volkswagen 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, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
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.
CORKILLS VOLKSWAGEN LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CORKILLS VOLKSWAGEN 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
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.
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, we considered the following:
the nature of the industry and sector, control environment and business performance.
any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance,
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
the matters discussed among the audit engagement team and involving relevant internal specialists, including tax, and industry specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: valuation of used vehicle stocks and recognition of supplier incentives. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks the company operates in, focussing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and tax legislation.
CORKILLS VOLKSWAGEN LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CORKILLS VOLKSWAGEN LIMITED (CONTINUED)
- 7 -
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty. These included the company's FCA regulatory requirements.
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
Enquiring of management and those charged with governance concerning actual and potential litigation claims;
In addressing the risk of fraud through inappropriate valuation of used vehicle stocks, assessing net realisable value of stock items sold after the year end was above cost or assessing their value with reference to third party data sources if unsold.
In addressing the risk of fraud through inappropriate recording of supplier incentives, ensuring amounts recorded as due were then subsequently acknowledged as such by the supplier;
In assessing the risk of fraud through management override of controls, testing the appropriateness of journal entries and assessing whether judgements made in making accounting estimates are indicative of potential bias.
In assessing the risk of fraud through revenue recognition, testing a sample of sales to ensure recorded correctly, reviewing credit notes issued following the year end and testing cut off has been applied correctly.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 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.
Ian McMahon FCCA FMAAT
Senior Statutory Auditor
For and on behalf of UHY Hacker Young Manchester LLP
12 September 2024
Chartered Accountants
Statutory Auditor
St James Building
79 Oxford Street
Manchester
M1 6HT
CORKILLS VOLKSWAGEN LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
34,601,985
34,861,179
Cost of sales
(31,695,291)
(31,856,876)
Gross profit
2,906,694
3,004,303
Administrative expenses
(2,558,849)
(2,491,789)
Other operating income
91,091
69,788
Operating profit
4
438,936
582,302
Interest payable and similar expenses
7
(191,968)
(153,053)
Profit before taxation
246,968
429,249
Tax on profit
8
(57,034)
(56,112)
Profit for the financial year
189,934
373,137
The profit and loss account has been prepared on the basis that all operations are continuing operations.
CORKILLS VOLKSWAGEN LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
9
2,835,542
2,853,445
Current assets
Stocks
10
3,367,123
3,201,168
Debtors
11
729,351
1,141,312
Cash at bank and in hand
474,546
222,376
4,571,020
4,564,856
Creditors: amounts falling due within one year
12
(4,117,737)
(4,197,376)
Net current assets
453,283
367,480
Total assets less current liabilities
3,288,825
3,220,925
Creditors: amounts falling due after more than one year
13
(679,269)
(786,042)
Provisions for liabilities
Deferred tax liability
15
191,934
207,195
(191,934)
(207,195)
Net assets
2,417,622
2,227,688
Capital and reserves
Called up share capital
17
250,000
250,000
Revaluation reserve
18
539,921
539,921
Profit and loss reserves
1,627,701
1,437,767
Total equity
2,417,622
2,227,688
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 12 September 2024 and are signed on its behalf by:
A B M Kermode
Director
Company registration number 02863409 (England and Wales)
CORKILLS VOLKSWAGEN LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
250,000
548,257
1,056,294
1,854,551
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
373,137
373,137
Other movements
-
(8,336)
8,336
-
Balance at 31 December 2022
250,000
539,921
1,437,767
2,227,688
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
189,934
189,934
Balance at 31 December 2023
250,000
539,921
1,627,701
2,417,622
CORKILLS VOLKSWAGEN LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
24
912,523
(171,314)
Interest paid
(191,968)
(153,053)
Net cash inflow/(outflow) from operating activities
720,555
(324,367)
Investing activities
Purchase of tangible fixed assets
(159,896)
(218,006)
Proceeds from disposal of tangible fixed assets
2,187
28,189
Net cash used in investing activities
(157,709)
(189,817)
Financing activities
Repayment of bank loans
(106,773)
(122,500)
Net cash used in financing activities
(106,773)
(122,500)
Net increase/(decrease) in cash and cash equivalents
456,073
(636,684)
Cash and cash equivalents at beginning of year
18,473
655,157
Cash and cash equivalents at end of year
474,546
18,473
Relating to:
Cash at bank and in hand
474,546
222,376
Bank overdrafts included in creditors payable within one year
(203,903)
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Corkills Volkswagen Limited is a private company limited by shares incorporated in England and Wales. The registered office is Corkills Wigan, Pennyhurst street, Wigan, Lancashire, WN3 4AS.
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.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Sales of motor vehicles, parts and accessories are recognised on the earlier of full payment by, or delivery date to, the customer. Any other manufacturer income in relation to achieving targets is recognised on an accrual basis. Servicing revenue is recognised on the completion of the agreed work.
Revenue from commissions receivable is recognised when the amount can be reliably measured and it is probable that the company will receive the consideration.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
2% on cost of building. Land not depreciated
Plant and equipment
20% on cost
Fixtures and fittings
10% - 33% on cost
Motor vehicles
25% on cost
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.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.6
Stocks
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
Consignment stock
Consignment vehicles which bear considerably more of the risks and responsibilities of ownership are regarded effectively as being under the control of the company and, in accordance with FRS 102 are included in stocks on the balance sheet, although legal title has not passed to the company. The corresponding liability is included within trade creditors and is secured directly on these vehicles.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments' of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
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.
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
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.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
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 leases asset are consumed.
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
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.
Key sources of estimation uncertainty
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.
Stock valuation
The company sells vehicles that are subject to changes in market demands. As a result it is necessary to consider the recoverability of the cost of stock and the associated provisioning required. When calculating the stock provision, management considered the nature and condition of the stock, as well as applying assumptions around anticipated saleability of finished goods.
Useful economic life of tangible assets
The annual depreciation change for tangible assets is sensitive to changes in the estimated useful economics lives and residual values of assets. The useful economic lives and residual values are re-assessed annually. They are amended where necessary to reflect current estimates.
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
32,728,178
32,384,343
Rendering of services
1,497,781
1,339,727
Commissions receivable
376,027
1,137,109
34,601,985
34,861,179
Analysis per statutory database
34,601,986
34,861,179
Statutory database analysis does not agree to the trial balance by:
1
-
All turnover arose within the United Kingdom.
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
20,227
13,071
Depreciation of owned tangible fixed assets
175,612
164,307
(Profit)/loss on disposal of tangible fixed assets
-
113
Operating lease charges
30,990
34,296
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Sales
26
25
Service
32
29
Office and management
6
10
Total
64
64
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,746,740
1,911,990
Social security costs
163,038
200,356
Pension costs
44,560
35,514
1,954,338
2,147,860
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
140,060
26,167
Company pension contributions to defined contribution schemes
2,201
-
142,261
26,167
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
64,515
38,931
Stocking interest
127,453
114,122
191,968
153,053
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
72,296
Deferred tax
Origination and reversal of timing differences
(15,262)
56,112
Total tax charge
57,034
56,112
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
246,968
429,249
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
58,087
81,558
Group relief
(42,566)
Permanent capital allowances in excess of depreciation
(2,801)
Depreciation on assets not qualifying for tax allowances
9,697
Remeasurement of deferred tax for changes in tax rate
(1,053)
14,757
Super deduction adjustment
(4,533)
Taxation charge for the year
57,034
56,112
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
9
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 January 2023
2,936,973
625,999
261,638
177,164
4,001,774
Additions
64,605
26,625
68,666
159,896
Disposals
(5,250)
(5,250)
At 31 December 2023
2,936,973
690,604
288,263
240,580
4,156,420
Depreciation and impairment
At 1 January 2023
393,249
503,837
171,925
79,318
1,148,329
Depreciation charged in the year
66,309
49,333
28,401
31,569
175,612
Eliminated in respect of disposals
(3,063)
(3,063)
At 31 December 2023
459,558
553,170
200,326
107,824
1,320,878
Carrying amount
At 31 December 2023
2,477,415
137,434
87,937
132,756
2,835,542
At 31 December 2022
2,543,724
122,162
89,713
97,846
2,853,445
Included within freehold land and buildings is land at the value of £354,825 (2022: £354,825) which is not depreciated.
Land and buildings were revalued in 2014 by Colliers International Chartered Surveyors, independent valuers not connected with the company on the basis of open market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
Freehold land and buildings
2023
2022
£
£
Cost
2,624,908
2,624,908
Accumulated depreciation
(816,491)
(771,089)
Carrying value
1,808,417
1,853,819
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
10
Stocks
2023
2022
£
£
Parts
83,682
115,885
Vehicles
3,283,441
3,085,283
3,367,123
3,201,168
All stock is pledged as security for the company's vehicle funding and bank facilities.
During the period an impairment loss of £5,923 (2022: £88,547) was recognised against stock.
Included within vehicle stock are consignment vehicles amounting to £640,646 (2022: £804,448).
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
238,221
325,067
Amounts owed by group undertakings
273,222
485,222
Other debtors
77,877
125,712
Prepayments and accrued income
140,031
205,311
729,351
1,141,312
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
122,500
326,403
Trade creditors
3,318,006
3,168,988
Amounts owed to group undertakings
184,365
211,989
Corporation tax
72,296
Other taxation and social security
111,843
105,300
Accruals and deferred income
308,727
384,696
4,117,737
4,197,376
The bank loan and overdraft are secured by a first legal charge over the company and groups freehold and leasehold land, buildings, charges and debentures over all of the company's assets and guarantees provided by the ultimate parent and director.
Vehicle funding is secured over the vehicles to which it relates.
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
679,269
786,042
14
Loans and overdrafts
2023
2022
£
£
Bank loans
801,769
908,542
Bank overdrafts
203,903
801,769
1,112,445
Payable within one year
122,500
326,403
Payable after one year
679,269
786,042
The loan is repayable over the period until 2028. Interest is payable at 2.91% above the Finance House Base Rate.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
50,106
65,366
Revaluations
145,704
145,704
Short term timing differences
(3,876)
(3,875)
191,934
207,195
2023
Movements in the year:
£
Liability at 1 January 2023
207,195
Credit to profit or loss
(15,261)
Liability at 31 December 2023
191,934
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
44,560
35,514
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.
Contributions totalling £9,187 (2022: £nil) were payable to the fund at the reporting date.
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
250,000
250,000
250,000
250,000
18
Revaluation reserve
This reserve records all prior period revaluations on freehold land and buildings.
Retained earnings
This reserve includes all current and prior period retained profits and losses, less dividends paid.
19
Financial commitments, guarantees and contingent liabilities
National Westminster Bank Plc holds an unlimited multi-lateral guarantee over the assets of Corkills Group (Holdings) Limited, Corkills Volkswagen Limited and Corkills Northwich Limited for security of the overdraft facility and bank loan. At 31 December 2023 the total contingent liability in respect of this guarantee amounted to £3,019,737 (2022: £2,096,591).
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
9,278
25,148
Between two and five years
27,835
37,113
37,113
62,261
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
21
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of vehicles
1,148,085
693,477
The company has a commitment at the reporting date totalling £1,148,085 (2022: £693,477) to repurchase vehicles from CBS, at agreed values. The group makes provisions for any vehicles it expects market value to be below repurchase commitment.
At the reporting date legal title had passed to CBS and the group does not have the risks and responsibilities of ownership.
22
Related party transactions
At the year end the company was owed £304,356 (2022: £516,513) by Corkills Northwich Limited, a fellow subsidiary of Corkills Group Holdings Limited. The amount consists of the balance within amounts owed to group companies and a separate trade debtor account with the same company. £2,341 (2022: £2,454) was owed to the same fellow subsidiary, This amount being included in trade creditors.
At the year end the company owed £184,365 (2022: £211,989) to Corkills Group Holdings Limited, the ultimate parent company.
23
Ultimate controlling party
The ultimate parent company is Corkills Group Holdings Limited which is controlled by the Trahat Trust, based in the Isle of Man.
Corkills Group Holdings Limited own 100% of the issued share capital in the company and is incorporated and registered in the Isle of Man. Group accounts are not available to the public.
24
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit for the year after tax
189,934
373,137
Adjustments for:
Taxation charged
57,034
56,112
Finance costs
191,968
153,053
(Gain)/loss on disposal of tangible fixed assets
-
113
Depreciation and impairment of tangible fixed assets
175,612
164,307
Movements in working capital:
(Increase)/decrease in stocks
(165,955)
170,476
Decrease in debtors
411,961
3,268
Increase/(decrease) in creditors
51,969
(1,091,780)
Cash generated from/(absorbed by) operations
912,523
(171,314)
CORKILLS VOLKSWAGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
25
Analysis of changes in net debt
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
222,376
252,170
474,546
Bank overdrafts
(203,903)
203,903
18,473
456,073
474,546
Borrowings excluding overdrafts
(908,542)
106,773
(801,769)
(890,069)
562,846
(327,223)
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