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DIRECTORS' REPORT AND AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2024 |
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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their strategic report for the year ended 31 December 2024.
The Company holds freehold residential properties, which are let out on assured short-term tenancies, together with commercial property and some agricultural grazing land.
The Company remains the ultimate holding Company for the Group. The principal activities of the subsidiary companies continue to be: the sale of commercial vehicles; the servicing and repair of commercial vehicles; the sale of spare parts and the long term contract hire of commercial vehicles. Results, performance and key performance indicators The results of the Group, as set out in the attached financial statements, show a profit on ordinary activities before tax of £8.3m (2023: £10.0m). Shareholders’ funds of the Group total £65.5m (2023: £62.5m). The results and performance of the two main trading Companies within the Group are set out below: MC Truck & Bus Limited The results of the Company, as set out in the attached financial statements, show a turnover of £125m (2023 £122.2m) and a profit on ordinary activities before tax of £5.3m (2023 £4.1m). Shareholder funds of the Company stand at £11.5m (2023 £11.0m). Performance during 2024 improved on 2023, and the Company has produced very satisfactory results. Within our region the heavy truck market (over 16T) remained very similar to 2023 levels. Invoiced sales reduced slightly compared to 2023 but registrations in the year were up and the Company’s market share increased from 17.4% in 2023 to 21.0% in 2024, Volvo’s national market share was 18.2% for 2024 (2023 16.1%). Even with lower volumes, new vehicle sales increased from £77.6m in 2023 to £77.9m in 2024. Year-end stock reduced from £23.1m in 2023 to £17.0m in 2024 due to a reduction in new vehicle stock at year end, parts stock remained similar to 2023 levels. Although sales increased, profits from core aftermarket activities fell slightly compared to 2023 with overheads increasing faster than gross margins. Labour hours reduced slightly compared to 2023, whereas sales increased by 7% due to improvements in recovery rates. Overall parts sales increased by 5% compared to 2023 reflecting price increases, with volumes similar to 2023 levels. Total sales increased by 2.3% compared to 2023 with the overall gross margin percentage very similar and a small increase in the overall gross profit. Total overheads reduced by £1m compared to 2023, which added to the increase in gross margin caused the Company’s profit on ordinary activities to increase from £4.1m in 2023 to £5.3m in 2024. Over the past couple of years’ the Company has carried out an extensive refurbishment program to all of its locations in order to further enhance the customer experience and is proud to have been awarded Volvo’s “Dealer of the Year” for 2024.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The results of the Company, as set out in the attached financial statements, show a profit on ordinary activities before tax of £3.4m (2023 £5.3m). Shareholders’ funds of the Company total £29.2m (2023 £27.3m).
Utlilisation reduced compared to 2023 due to increases in vehicle supply causing excess capacity in the market. This also had the effect of depressing used vehicle values which reduced disposal profits. However, the Company was able to increase gross margins (excluding disposals) from 19.5% in 2023 to 21.3% in 2024. The fleet reduced by a further 4% during 2024, further reducing exposure, generating cash flow and profits on disposal. Due to asset additions Company’s overall gearing increased from 2.2 in 2023 to 2.4 in 2024, with total debt increasing from £60.6m in 2023 to £69.7m in 2024. Asset additions were 495 in 2024 at a cost of £43.6m with 554 units disposed. Used values continued to be volatile during the year with more availability in the market and excess capacity. This caused disposal profits to reduce again from £3.4m in 2023 to £1.4m in 2024. The company shows all disposal profits and losses as part of the gross margin within these financial statements, as this reflects either an over or under depreciation of assets hired out over their useful life. Unexpired contract revenue stands at £57.5m (2023 £58.4m) which reflects the long-term nature of the contract portfolio. As with many vehicle rental businesses the company has a balance sheet with negative current assets totaling £13.9m, a slight decrease from £14.5m in 2023. However, under current accounting conventions no account is made of the future gross contractual revenue which for 2025 totals £26m. Business Environment The UK commercial vehicle market, both sales and rental, is mature and highly competitive with other businesses and manufacturers offering similar products and services. The total market is cyclical in nature and tends to follow movements in GDP, so new vehicle sales volumes can vary markedly from one year to the next.
The Group’s success is dependent on retaining and increasing the vehicle parc within its area of operation, so that it can generate parts and labour sales. This is further enhanced by using MC Rental Ltd to finance vehicle sales and rent vehicles to customers on a long term contract hire basis. In so doing this generates secure long term predictable revenue streams.
This is achieved by developing strong relationships with its customer base and by providing exceptional customer service which differentiates the Group from its competitors.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Board of Directors, in line with their duties under S172 of the Companies Act 2006, act in a way they consider would most likely promote the success of the business for the benefit of its members as a whole, and in so doing have regard to a range of matters when making decisions for the long term. Important decisions and matters of strategic importance to the Group are made in light of S172 considerations.
Through open dialogue with key stakeholders we have developed an understanding of their needs. As part of the decision-making process the Board consider the impact of decisions on relevant stakeholders, whilst having regard to more broader factors such as the impact on the community, the environment and likely long-term consequences. Our plans are designed to be of long-term benefit to the company by providing our customers with products and services which fit their needs and provide added value at the right price. Group representatives meet with our key suppliers regularly and at all levels, to ensure performance is on track to deliver our business objectives. Employees are crucial to the success of the business and we aim to be a responsible and attractive employer, who provides excellent pay and benefits together with the opportunity for career progression. Our intention is to behave responsibly and ensure that management operate the business responsibly, with high standards of conduct and good governance, and in so doing will contribute to the long-term success of the business. Principal Risks and Uncertainties The main risk facing the Group is the volatility of the used vehicle market when vehicles come to the end of their contract. However, the Group constantly reviews its depreciation policy in light of changes in used values, during the year the Group experienced a profit on disposal of £1.4m (2023: profit £3.5m). The Group is also reliant on its manufacturer partners to develop and market competitive products which provide a sound commercial argument for our customers. We believe that with both the Volvo and Isuzu brands we are partnered with industry leading manufacturers who are technologically advanced, environmentally aware and who offer excellent whole life costs. The commercial vehicle market can be seen as a bell-weather for the UK economy and Group profitability could be adversely affected by worsening economic conditions. A slowing economy could dampen business confidence, reduce investment in new vehicles and lead to a reduction in aftermarket sales. Any credit risk is mitigated by having a diverse customer base, operating over a wide range of industry sectors and also by having strong credit control processes in place. The Group has a large property portfolio, which is held at market value, any material changes within the UK commercial property market could adversely affect these valuations.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company and Group prepare detailed budgets and cash flow forecasts together with rolling 5 year projections. Based on this information the Group is expected to generate positive cash flows for the foreseeable future due to ongoing profitability and asset disposals.
The Company and Group has undertaken stress testing on various sales assumptions. Based on current trading the decline in sales needed for the Company and Group to extinguish its cash reserves within the next 12 months was not deemed plausible. Working capital requirements are funded by retained earnings and forecasts show that there is sufficient liquidity for the business to continue in operation. The directors therefore have the reasonable expectation that the Company and Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
The Group will continue to focus on securing long term contractual revenue and providing improved levels of customer service to help achieve this aim.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their report and the financial statements for the year ended 31 December 2024.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £6,106,972 (2023 - £7,784,338).
Dividends have been paid for the current year totalling £3,000,000 (2023 - £4,000,000).
The directors who served during the year were:
Information relating to business activities, likely future developments in the business, its financial position, its exposure to risks and the directors' assessment of going concern have been disclosed within the Group Strategic Report in accordance with S414c(ii) of the Companies Act 2006.
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MCG (HOLDINGS) LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Group's policy is to provide employees with information about the Group through the staff newsletter. Regular meetings are held between local management and employees to allow a free flow of information and ideas.
Disabled employees The Group's policy is to recruit disabled workers for those vacancies that they are able to fill. All necessary assistance with initial training courses is given. Once employed, a career plan is developed so as to ensure suitable opportunities for each disabled person. Arrangements are made, wherever possible, for retaining employees who become disabled, to enable them to perform work identified as appropriate to their aptitudes and abilities
See the strategic report for details of engagement with customers, suppliers and other stakeholders.
Energy consumption
Overall the gross Group emissions for the year ended 31 December 2024 were 5,733,474 kWh (2023: 5,923,129 kWh) and 1,184 tCO2e (2023: 1,244 tCO2e). The Group produced 8.3 tonnes (2023: 8.6 tonnes) of CO2e per £ million turnover for the year ended 31 December 2024.
Energy efficiency action
During the year we invested in another Solar PV system which was commissioned in July. During the reporting year we produced 465,000 kWh saving 96 tCO2, of which 285,000 kWh was used within the group and 180,000 kWh exported to the grid. For 2025 we anticipate these systems will produce around 550,000 kWh saving around 115 tonnes of CO2.
Methodology used
The data has been complied in fulfilment of other regulatory reporting requirements for the group GHG Protocol Corporate Accounting and Reporting Standard and the 2019 UK Government Environmental Reporting Guidelines. The energy use in kWh was identified from meter readings and supplier invoices where available.
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MCG (HOLDINGS) LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
There have been no significant events affecting the Group since the year-end.
The auditors, S&W Audit (formerly CLA Evelyn Partners Limited), will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MCG (HOLDINGS) LTD
We have audited the financial statements of MCG (Holdings) Ltd (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2024, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, including a summary of 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).
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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MCG (HOLDINGS) LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MCG (HOLDINGS) LTD (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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MCG (HOLDINGS) LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MCG (HOLDINGS) LTD (CONTINUED)
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 Auditors' 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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained a general understanding of the Group and the parent Company’s legal and regulatory framework through enquiry of management concerning their understanding of relevant laws and regulations, the entity’s policies and procedures regarding compliance, and how they identify, evaluate and account for litigation claims. We also drew on our existing understanding of the Group and the parent Company’s industry and regulation.
We understand that the Group and the parent Company complies with the framework through: • Outsourcing accounts preparation and tax compliance to external experts. In the context of the audit, we considered those laws and regulations which determine the form and content of the financial statements, which are central to the Group and the parent Company’s ability to conduct its business, and/or where there is a risk that failure to comply could result in material penalties. We identified the following laws and regulations as being of significance in the context of the Group and the parent Company: • The Companies Act 2006 and FRS 102 for the preparation and presentation of the financial statements. The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur. The areas identified in this discussion were:
∙Revenue may be deferred inappropriately to manipulate financial results.
∙Manipulation of the financial statements, especially revenue, via fraudulent journal entries.
∙Revenue and cost of sales may be misstated due to inaccurate cut-off at year-end.
∙Investment properties and freehold properties held at fair value may be materially overstated.
These areas were communicated to the other members of the engagement team not present at the discussion. The procedures we carried out to gain evidence in the above areas included:
∙Challenging management regarding the assumptions and judgements used in the key accounting estimates and revenue recognition policy, including comparison to post year-end data as appropriate.
∙Completeness testing on revenue to verify that all sales in the year were correctly recorded.
∙Testing of cut-off of purchase and sales invoices to ensure recognised in the correct accounting period.
∙Testing journal entries, focusing particularly on postings to unexpected or unusual accounts and those posted at unusual times.
∙Conducting physical inventory counts and reconciling them with the inventory records to ensure accuracy.
∙Challenging management regarding the assumptions used in valuation estimates and comparison to market data.
Overall, the senior statutory auditor was satisfied that the engagement team collectively had the appropriate
competence and capabilities to identify or recognise irregularities.
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MCG (HOLDINGS) LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MCG (HOLDINGS) LTD (CONTINUED)
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 Auditors' 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.
for and on behalf of
Statutory Auditors
Brockbourne House
77 Mount Ephraim
Kent
TN4 8BS
Date:
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 21 to 45 form part of these financial statements.
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COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 21 to 45 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
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CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
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CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
MCG (Holdings) Limited (the Company) is a private company limited by shares and incorporated in England and Wales. Its registered head office is located at Beddow Way, Forstal Road, Aylesford, Maidstone, Kent, ME20 7BT.
The Company's principal activity is that of a holding company. It has interests in seven subsidiaries, all domiciled and incorporated in England and Wales: MC Rental Limited (company number: 02336572), MC Truck & Bus Limited (company number: 01241061), M C Group Limited (company number: 02035458), Train Yard Fitness Limited (company number: 13440709), Borrowed From Limited (company number: 14101312), By Fleur Limited (formerly We Are The Lost Girls Limited) (company number: 14111517) and Daisy Lily Limited (company number: 14114399) The principal activities of the subsidiary companies continue to be: the sale of commercial vehicles; the servicing and repair of commercial vehicles; the sale of spare parts; the long term contract hire of commercial vehicles; the running of a personal fitness space; the hiring of designer clothes and accessories; and online retail. The following subsidiaries are exempt from the requirements of the requirements of the Companies Act 2006 relating to the audit of their individual accounts by virtue of section 479A: Train Yard Fitness Limited Borrowed From Limited By Fleur Limited (formerly We Are The Lost Girls Limited) Daisy Lily Limited
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
Monetary amounts in these financial statements are stated in pounds sterling and are rounded to the nearest whole £1, except where otherwise stated.
The following principal accounting policies have been applied:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Consolidated Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The Group has net current liabilities of £3,156,105 (2023: £4,422,672) which is in common with vehicle rental businesses generally. However, under existing accounting conventions no account is taken for the future gross contractual revenue which, for the next 12 months, stands at £26,021,937 (2023: £27,666,788) excluding break clauses.
The parent Company and Group prepare detailed budgets and cash flow forecasts together with rolling 5 year projections. Based on this information the Group is expected to generate positive cash flows for the foreseeable future due to ongoing profitability and asset disposals. The Group has undertaken stress testing on various sales assumptions. Based on current trading the decline in sales needed for the Group to extinguish its cash reserves within the next 12 months was not deemed plausible. Working capital requirements are funded by retained earnings and forecasts show that there is sufficient liquidity for the business to continue in operation. The directors therefore have the reasonable expectation that the parent Company and Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. Revenue from the sale of trucks is recognised at the point in time when control of the goods has transferred to the customer. This is deemed to occur upon delivery of the truck to the customer, which is when the customer obtains legal title and physical possession, and the risks and rewards of ownership have transferred. Sale of Parts Revenue from the sale of parts is recognised upon delivery to the customer. Delivery is considered the point at which the customer takes possession of the parts and the company has no further performance obligations. This reflects the transfer of control and completion of the earnings process. Workshop Sales Revenue from workshop services is recognised upon completion of the work. This is the point at which the service has been fully performed, and the customer has accepted the outcome. Where
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Provision of services
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
Freehold property is stated at fair value at the balance sheet date. Gains or losses on revaluation are recognised through the Consolidated Statement of Comprehensive Income unless the asset is carried at a revalued amount where the impairment loss is a revaluation decrease. Depreciation is not charged on freehold property. This represents a departure from the Companies Act requirement concerning the depreciation of fixed assets, however the directors consider that the adoption of this policy is necessary to give a true and fair view.
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Investment property is carried at fair value determined annually by the directors and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. External valuations are obtained every two to three years to support the market valuations prepared by the directors. No depreciation is provided. Changes in fair value are recognised in the Consolidated Statement of Comprehensive Income.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Consolidated Statement of Comprehensive Income.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments. Financial liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities. Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial. Debt instruments are subsequently carried at their amortised cost using the effective interest rate method. Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
All borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the year in which they are incurred.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated Statement of Comprehensive Income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated Statement of Financial Position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition. The investment in the joint venture by the parent company is accounted for using the cost model within the parent company Statement of Financial Position. Any premium on acquisition is dealt with in accordance with the goodwill policy.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Critical areas of judgement In categorising leases as finance leases or operating leases, management makes judgements as to whether significant risks and rewards of ownership have transferred to the Group as lessee, or the lessee, where the Group is a lessor. At the end of the year, the Group held leases under hire purchase with a total liability of £70,242,995 (2023: £60,853,170). The Group makes estimates as to the useful economic life of assets and their residual value to determine the depreciation charge. This is based on knowledge of historic performance and the industry. The net book value of fixed assets totals £99,697,458 (2023: £88,541,286). The Group recognises revenue for repairs and maintenance contracts on the 'Reverse Rule of 78' basis as to fulfil the contract obligations an indeterminate number of events can occur. Deferred revenue totalling £339,451 (2023: £516,279) has been recognised under this method. This method is the directors' best estimate of how the costs relating to fulfilling the contract are incurred. Freehold land and buildings are held at fair value. The valuations at 31 December 2024 and 31 December 2023 have been based on the most recently available valuations from an external independent valuer on 23 May 2023, in accordance with the "RICS Valuation Professional Standards" and on the market comparable approach which reflects recent market transactions on arm's length terms for comparable properties. The value of freehold property is £18,101,833 (2023: £18,101,833), and of freehold investment property is £6,182,846 (2023: £6,419,265).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 29
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 30
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 31
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
12.Taxation (continued)
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was £
Page 32
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 33
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
15.Tangible fixed assets (continued)
Historical cost of assets held under the revaluation model
Page 34
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 35
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 36
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
An investment property with a fair value of £926,833 (2023: £926,833) as at the balance sheet date is held by the Company and utilised by the Group for its trading activities. Therefore, on a group basis it is recorded as freehold property within tangible fixed assets (note 15).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
17.Investment property (continued)
Freehold investment property for the Company and Group is held at fair value as determined annually by the directors and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. External valuations are obtained every two to three years to support the market valuations prepared by the directors.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 39
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 40
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 41
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
25.Deferred taxation (continued)
Page 42
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company's reserves are represented by the following:
Share premium account
Revaluation reserve
Fair value reserve
Profit and loss account
Page 43
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
30.Guarantees
The Company is a guarantor for the tenancy agreement of one of the subsidiaries' premises. In the event of the subsidiary failing to pay the rent or any other amounts due for losses, damages, costs and expenses, the Company has guaranteed to pay these amounts.
Page 44
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The ultimate controlling party is S J Dawson by virtue of his shareholding.
Page 45
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