The directors present the strategic report for the period ended 31 March 2024.
The company was formed 6 March 2023 as part of restructuring the Sattin family interests. Southern Tyre Co Limited and Firststeady Limited became subsidiaries of Coalbrook Investments Limited on 13 July 2023.
The group principal activities during the year was the sale of tyres to wholesale and retail markets and fast fit services to the retail market. The business operated from twenty-four sites during the year, spread out across the south east of the United Kingdom, and is looking to expand into new areas.
2024 was a profitable year for the year, although there were many challenges to face. The group carefully monitored its plans to ensure it appropriately responded to the continually changing business environment, and has been able to exceed the profitability of the previous year and maintain a strong balance sheet.
The group monitors its operational running costs with focus being on operational productivity and continued focus on customer requirements and giving value for money, both wholesale and retail. The group has a policy of paying its suppliers promptly achieving over 99% within payment terms.
There will always be risk and uncertainty regarding the future performance of any business. The directors believe that the principal risks and uncertainties relate to world economic problems dating from as far back as 2008 exacerbated by Covid-19 and Brexit, and complicated by currency fluctuations and changes in government legislation and industry regulations.
Economic risk
The company's strategy continues to be to minimise costs, have cash reserves and bank facilities and to avoid exposure to unnecessary risks.
Currency risk
The groups policy is to hedge exposure to currency fluctuations on a short term basis by using short term foreign exchange forward contracts.
Legislative risk
In the UK and Europe tyres sold are required to be manufactured to EU standards. Failure to comply with changes in legislation and regulations can result in large fines and penalties. It is the groups policy to comply with legislation and closely monitor changes in legislation and regulations.
The key financial and other performance indicators during the year were as follows:
| 2024 £'000 |
|
|
Turnover | 54,934 |
|
|
Gross profit | 17,386 |
|
|
Gross margin | 32% |
|
|
Administrative expenses | (17,179) |
|
|
Operating profit | 533 |
|
|
Profit after tax excluding revaluation | (521) |
|
|
Current assets as % of current liabilities | 94% |
|
|
Debtor days | 31 days |
|
|
Average number of employees | 338 |
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|
Gross margin percentage
Gross margin is the ratio of profit, after deduction of cost of goods sold, to sales, as a percentage. This varies with the mix between wholesale and retail, and different product lines.
Operating profit
Cost of sales and administrative costs are analysed by expense type within cost centre and location and are measured against budgeted and previous year expenditure.
Profit after tax
The group has made a loss for the period however a profit is expected to be achieved next year due to strong profits being made each year by subsidiaries.
Liquidity ratios
The groups “quick ratio” (current assets as a percentage of current liabilities) is showing good liquidity and ensuring sufficient funds are available for operations. The group operates strict controls on customer credit so minimising bad debt risk and this is born out by the debtor days key performance indicator, which slightly over 30 days. The business also values its credit rating status and ensures that trade creditors are paid promptly, in line with payment terms.
The directors of Southern Tyre Co Limited are required to act in a way that they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in so doing have regard, among other matters to:
The likely consequences of any decision in the long term;
The interests of the Company’s employees;
The need to foster the Company’s business relationships with suppliers, customers and others;
The impact of the Company’s operations on the community and the environment;
The desirability of the Company maintaining a reputation for high standards of business conduct; and
The need to act fairly as between members of the Company.
To achieve their duties under Section 172 the directors pride themselves in ensuring that the Company is properly financed so that going concern should never be an issue. There is a fair dividend policy that ensures that the shareholders are adequately rewarded and the company retains sufficient profits to maintain a healthy balance sheet.
The directors/shareholders are involved in the day to day running of the business and have a team of managers who report regularly and meet on a monthly basis and there are bonus schemes to incentivise the staff. The company scores well on their gender pay reporting.
Good supplier relationships are fostered by the directors and managers and the Company ensures that suppliers are paid within their terms. This is borne out in their Purchase Payment Reporting.
The Company continually reviews its pricing structure to ensure that the best deals are offered to their customers. The Company takes proactive steps by continually reviewing financial information.
The directors produce five year plans to ensure the succession of the business, taking into account the local environment and communities in which their sites operate.
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 March 2024.
The results for the period are set out on page 11.
No ordinary dividends were paid. The directors made a payment of a dividend £997,050 in June 2024. A dividend of £17,500,000 was received from subsidiaries during the year.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
BK Plus Audit Limited were appointed as auditor to the group 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.
The parent and its subsidiaries have been assessed as to whether energy and carbon disclosures are required. Both Coalbrook Investments Limited and Firststeady Limited do not satisfy two or more of the disclosure criteria. As a result they have not been included in the below report. The report solely consists of Southern Tyre Co Limited.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2024 UK Government’s Conversion Factors for Company Reporting.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £'000 turnover.
The company is committed to reducing its carbon footprint and has undertaken several initiatives over the last ten years.
There is an ongoing program at all sites to replace lighting with LED energy saving lighting. A review of all electricity usage monitoring is being implemented.
The company frequently review which vehicles are most efficient and have changed the size of vehicle delivering the tyres from warehouses to depots and have increased the amount of direct supplies to depots.
The company continue to have a program in place for training staff in repairing electric vehicles and are reviewing the feasibility of installing charging points at all sites.
The company already have a system where all the casings (used tyres) are collected from sites for recycling. Oil and metal is also recycled where possible. We continue to review recycling options for the parts we replace.
We have audited the financial statements of Southern Tyre Co Limited (the 'company') for the year ended 31 March 2024 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).
Basis for 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.
Other information
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 period 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.
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.
From the preliminary stages of the audit, we ensure our understanding of the entity is up to date. This includes, but is not limited to, current knowledge of their activities, the business and control environments, and their compliance with the applicable legal and regulatory frameworks. This information supports our risk identification and the subsequent design of audit procedures to mitigate those risk; ensuring that the audit evidence obtained is sufficient and appropriate to support our opinion.
In response to the risks identified, specific to this entity, we designed procedures which included, but were not limited to:
Enquiry of management and those charged with governance around actual and potential litigation and claims;
Reviewing minutes of meetings of those charged with governance, where available;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £136,060.
Coalbrook Investments Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 7 Hackhurst Lane, Hackhurst Ind Estate, Lower Dicker, Nr Hailsham, Hailsham, East Sussex, BN27 4BR.
The group consists of Coalbrook Investments Limited and all of its subsidiaries. The subsidiaries were acquired 13 July 2023 and therefore their results were consolidated from this date.
The company was incorporated on 6 March 2023 and therefore the accounting period exceeds 12 months.
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 £'000.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Coalbrook Investments Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.
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. 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 contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, 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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The directors have assessed the valuation of properties using their knowledge and have considered current market conditions when calculating the fair value of properties.
A stock provision is applied based on the age and coverage of individual stock lines.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
All remuneration was paid from subsidiary companies during the year.
The actual charge for the period can be reconciled to the expected charge/(credit) for the period based on the profit or loss and the standard rate of tax as follows:
More information on impairment movements in the period is given in note .
More information on impairment movements in the period is given in note .
The fair value of the investment property has been arrived at on the basis of a valuation carried out at 31 March 2024 by the directors in consultation with local experts. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
Details of the company's subsidiaries at 31 March 2024 are as follows:
Southern Tyre Co Limited has purchases with suppliers that deal in foreign currencies. In order to minimise exposure to currency risk the company takes out short term foreign exchange forward contracts. These contracts mature between one and three months.
The company takes out forward currency contracts to partially cover currency risks on assets and liabilities denominated in foreign currencies. Outstanding at the year end: £1,220,000 (2022 £750,000) less than 3 months.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above is expected to reverse when freehold and investment properties previously revalued are subsequently sold to third parties.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The following amounts were outstanding at the reporting end date:
The following subsidiaries have taken advantage of the exemption from audit available under S479A of the Companies Act 2006:
Firststeady Limited, registered number 00610394
Coalbrook Investments Limited has provided guarantee in respect of all outstanding liabilities of the above subsidiary undertakings as at 31 March 2024.