REGISTERED NUMBER: 00721312 (England and Wales)

Group Strategic Report,

Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 December 2025

for

Pentagon Investments Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

7

Consolidated Profit and Loss Account

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

Mrs H Marshall

I E Marshall

M E Marshall

SECRETARY:

Mrs S A Robson

REGISTERED OFFICE:

12 Chequers Road

West Meadows Industrial Estate

Derby

DE21 6EN

REGISTERED NUMBER:

00721312 (England and Wales)

AUDITORS:

Bates Weston Audit Ltd

Statutory Auditors

Chartered Accountants

The Mills

Canal Street

Derby

DE1 2RJ

BANKERS:

Bank of Scotland

33 Old Broad Street

London

BX2 1LB

SOLICITORS:

Browne Jacobson LLP

Castle Meadow Road

Nottingham

NG2 1BJ

The group comprises the holding company, Pentagon Investments Limited, and the four trading subsidiaries, Mertrux Limited, Lawrence Vehicles Limited, Pentagon Vehicle Rentals Limited, and Meadow Group Services Limited.

Financial Overview

Profit on ordinary activities before taxation was £9.3m (2024: £11.5m). The group has seen an decrease in turnover of £22.6m, Mertrux Limited saw a decrease in turnover of £9.2m, and Lawrence saw a decrease of £17.9m.

Financial Performance

Staff costs have increased by 4.5% due to an increase in salaries. Overall, the group plans to expand.

Pentagon Investments Limited owns certain properties occupied by its subsidiaries. Third party rental income remains consistent year on year.

Mertrux Limited operates a truck, van and used car retailing business with its associated trades. It holds four Mercedes Benz and Fuso points of representation in the East Midlands. The main business activity remains the sale of commercial vehicles to national and local businesses. Truck sales in terms of units have increased by 10% whilst van sales in terms of units have decreased by 12%. The overall result for the company is a decrease in turnover of £9.2m. Gross profit margin has slightly decreased in this competitive market by 2.0% to 6.0%.

Lawrence Vehicles Limited retails heavy trucks with its associated activities via a DAF franchise. The company has two main branches, one in Lancashire and the other based in Lothian. The company also has one parts depot. Turnover in the year decreased by 7.7%. Gross profit has marginally decreased by 0.3% to 4.6%. This company remains a key performer in the group.

Pentagon Vehicle Rentals Limited is a vehicle rental company focusing on the light van and commercial vehicle market. Turnover decreased in the year by 1.4% and the gross profit margin has decreased by 1.1% to 16.6%.

Meadow Group Services Limited provides the central management and support services for the group. The majority of turnover relates to management fees for work performed for group companies. The company also offers financing and insured warranty products for its customers as an agent and is registered with the Financial Conduct Authority.

Key Performance Indicators (KPIs)

Turnover: £340.2m (decrease of £22.6m)

Gross profit margin: 5.2%

Stock days: monitored to manage working capital.

Non-financial KPIs: Health & safety incident rates remain low; employee retention stable.

Principal Risks and Uncertainties

The management of the business and the nature of the group's strategy are subject to a number of risks.

The directors feel that the principal risk is that of not achieving turnover and the group closely monitors this. There is also the risk of gross profit reduction and cost increases against anticipated performance. The group operates within an industry where margins are low and therefore to be profitable, high volume sales need to occur. This again is closely monitored by the directors with any necessary action undertaken.

SECTION 172(1) STATEMENT

The directors consider, both individually and together, that they have acted in a way 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 (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Companies Act 2006) in the decisions taken during the year ended 31 December 2025.

ENGAGEMENT WITH EMPLOYEES

Within the bounds of confidentiality, staff at all levels are kept fully informed of matters that affect the progress of the company and group and are of interest to them as employees.

Disabled persons are given full and fair consideration for all types of vacancy. If an existing employee becomes disabled, such steps as are practical and reasonable are taken to retain him/her in employment. Where appropriate, assistance with rehabilitation and suitable training are given. Disabled persons have equal opportunities for training, career development and promotion, except insofar as such opportunities are constrained by the practical limitations of their disability.

ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS

The directors have had regard to the need to foster the company's business relationships with suppliers,

customers and others.

FUTURE DEVELOPMENTS

The group intends to expand its service offerings, enhance digital capability and invest in operational efficiency. Fleet upgrades and enhancement of dealership infrastructure remain part of the medium-term strategy.

ON BEHALF OF THE BOARD:

I E Marshall - Director

8 May 2026

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2025.

PRINCIPAL ACTIVITIES

The principal activities of the group in the year under review were those of retail truck, van and car dealers and their allied trades.

The holding company is responsible for the co-ordination of the activities of the group, its overall financial control and its future development.

DIVIDENDS

Interim dividends per share were paid during the year as follows:

Ordinary £1

-

£143.6241

- 1 August 2025

Ordinary B6 £1

- £813.726

- 30 June 2025

The total distribution of dividends for the year ended 31 December 2025 will be £ 7,010,219 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2025 to the date of this report.

Mrs H Marshall

I E Marshall

M E Marshall

Other changes in directors holding office are as follows:

G R Robson ceased to be a director after 31 December 2025 but prior to the date of this report.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The group’s financial assets and liabilities consist of trade debtors and creditors, cash balances, bank loans and overdrafts and stocking loans.

The directors manage the group’s exposure to financial risk by researching the credit worthiness of customers and by seeking advice from the group’s providers of finance and its other external financial advisers.

The group does not trade in foreign currencies.

The group does not trade speculatively in derivatives or similar instruments.

STREAMLINED ENERGY AND CARBON REPORTING

This section includes our mandatory reporting of energy and greenhouse gas emissions for the period 1 January 2025 to 31 December 2025, pursuant to the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, implementing the government's Streamlined Energy and Carbon Reporting (SECR) policy.

Our methodology to calculate our greenhouse gas emissions is based on the 'Environmental Reporting Guidelines January 2019, using the appropriate factors from the UK Government GHG Conversion Factors for Company Reporting (2025).

We report using a financial control approach to define our organisational boundary. We have reported all material emission sources required by the regulations for which we deem ourselves to be responsible and have maintained records of all source data and calculations.

During the reporting period, the steady increase in the number of electric and hybrid vehicles on fleet has continued where operational needs permit. It is now a policy that all new company cars should be EVs, and a higher proportion of workshop and parts vehicles are also now EVs. An increase in the use of biodiesel (HVO) as a proportion of the total diesel usage has resulted in a substantial decrease in the emissions resulting from this scope.

The table below includes total energy consumption (reported as kWh) and greenhouse gas emissions for the sources required by the regulations, along with our intensity ratio.

01/01/2025 - 31/12/2025

01/01/2024 - 31/12/2024

Total Energy Consumption - Used for Emissions Calculation (kWh)

7,810,044

8,552,706

Gas Combustion Emissions, Scope 1 (kgCO2e)

450.61

467.67

Propane Emissions, Scope 1 (kgCO2e)

2.93

2.98

Purchased Electricity Emissions, Scope 2 (kgCO2e)

213.99

256.59

Vehicle Fuel Combustion Emissions, Scope 1 (kgCO2e)

618.96

830.67

Vehicle Fuel Combustion Emissions, Scope 3 (kgCO2e)

0.71

1.07

Total Gross Reported Emissions (kgCO2e)

1,287.21

1,558.98

Turnover (£m)

340.16

362.74

Intensity Ratio: Turnover (kgCO2e / £m)

3.78

4.30

Mertrux are currently having solar PV with battery storage installed to their four sites to enable the charging of EV trucks and as part of a more general drive towards net zero. Solar is also still intended to be added to Lawrence Vehicles Ltd sites who have had electric truck charging points installed at all of their sites in recent months.

DISCLOSURE IN THE STRATEGIC REPORT

The matters required to be disclosed under SI (2008) 410 Sch 7 relating to employees are contained within the Group Strategic Report as applicable in accordance with s414C(11) of the Companies Act 2006.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 the group and of the profit or loss of the group 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;

-	state whether applicable 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 company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

ON BEHALF OF THE BOARD:

Mrs S A Robson - Secretary

8 May 2026

Opinion

We have audited the financial statements of Pentagon Investments Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2025 which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Financial Statements, 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 December 2025 and of the group's 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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 UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and 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.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 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 the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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 Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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 group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

Based on our understanding of the company and industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to the motor trade industry and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. Audit procedures performed by the engagement team included:

-

Enquiry of management around actual and potential litigation and claims;

-

Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

-

Reviewing minutes of meetings of those charged with governance;

-

Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities 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 Report of the Auditors.

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 a Report of the Auditors 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.

Wayne Thomas FCA (Senior Statutory Auditor)

for and on behalf of Bates Weston Audit Ltd

Statutory Auditors

Chartered Accountants

The Mills

Canal Street

Derby

DE1 2RJ

11 May 2026

TURNOVER

3

340,164

362,744

Cost of sales

322,512

340,462

GROSS PROFIT

17,652

22,282

Administrative expenses

8,493

8,674

9,159

13,608

Other operating income

231

24

OPERATING PROFIT

5

9,390

13,632

Interest receivable and similar income

6

477

668

9,867

14,300

Interest payable and similar expenses

7

529

2,825

PROFIT BEFORE TAXATION

9,338

11,475

Tax on profit

8

2,546

2,867

PROFIT FOR THE FINANCIAL YEAR

6,792

8,608

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

6,792

8,608

Profit attributable to:

Owners of the parent

6,792

8,608

Total comprehensive income attributable to:

Owners of the parent

6,792

8,608

FIXED ASSETS

Intangible assets

11

11

15

Tangible assets

12

28,596

27,382

Investments

13

-

-

28,607

27,397

CURRENT ASSETS

Stocks

14

95,842

81,292

Debtors

15

16,792

15,061

Cash at bank and in hand

10,256

29,540

122,890

125,893

CREDITORS

Amounts falling due within one year

16

98,259

100,594

NET CURRENT ASSETS

24,631

25,299

TOTAL ASSETS LESS CURRENT LIABILITIES

53,238

52,696

CREDITORS

Amounts falling due after more than one year

17

(504

)

(558

)

PROVISIONS FOR LIABILITIES

20

(1,262

)

(448

)

NET ASSETS

51,472

51,690

CAPITAL AND RESERVES

Called up share capital

21

51

51

Capital redemption reserve

22

111

111

Retained earnings

22

51,310

51,528

SHAREHOLDERS' FUNDS

51,472

51,690

The financial statements were approved by the Board of Directors and authorised for issue on 8 May 2026 and were signed on its behalf by:

Mrs H Marshall - Director

I E Marshall - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

13,026

13,273

Investments

13

350

350

13,376

13,623

CURRENT ASSETS

Debtors

15

8,715

11,968

Cash at bank

962

854

9,677

12,822

CREDITORS

Amounts falling due within one year

16

16,176

19,899

NET CURRENT LIABILITIES

(6,499

)

(7,077

)

TOTAL ASSETS LESS CURRENT LIABILITIES

6,877

6,546

CAPITAL AND RESERVES

Called up share capital

21

51

51

Capital redemption reserve

22

111

111

Retained earnings

22

6,715

6,384

SHAREHOLDERS' FUNDS

6,877

6,546

Company's profit for the financial year

7,341

781

The financial statements were approved by the Board of Directors and authorised for issue on 8 May 2026 and were signed on its behalf by:

Mrs H Marshall - Director

I E Marshall - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£'000

£'000

£'000

£'000

Balance at 1 January 2024

51

47,755

111

47,917

Changes in equity

Dividends

-

(4,835

)

-

(4,835

)

Total comprehensive income

-

8,608

-

8,608

Balance at 31 December 2024

51

51,528

111

51,690

Changes in equity

Dividends

-

(7,010

)

-

(7,010

)

Total comprehensive income

-

6,792

-

6,792

Balance at 31 December 2025

51

51,310

111

51,472

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£'000

£'000

£'000

£'000

Balance at 1 January 2024

51

10,438

111

10,600

Changes in equity

Dividends

-

(4,835

)

-

(4,835

)

Total comprehensive income

-

781

-

781

Balance at 31 December 2024

51

6,384

111

6,546

Changes in equity

Dividends

-

(7,010

)

-

(7,010

)

Total comprehensive income

-

7,341

-

7,341

Balance at 31 December 2025

51

6,715

111

6,877

Cash flows from operating activities

Cash generated from operations

28

(3,188

)

29,179

Interest paid

(529

)

(2,617

)

Interest element of hire purchase payments paid

-

(208

)

Tax paid

(3,720

)

(3,018

)

Net cash from operating activities

(7,437

)

23,336

Cash flows from investing activities

Purchase of intangible fixed assets

-

(17

)

Purchase of tangible fixed assets

(6,107

)

(6,955

)

Sale of tangible fixed assets

820

1,262

Interest received

477

668

Net cash from investing activities

(4,810

)

(5,042

)

Cash flows from financing activities

Capital repayments in year

(27

)

(2,746

)

Equity dividends paid

(7,010

)

(4,835

)

Net cash from financing activities

(7,037

)

(7,581

)

(Decrease)/increase in cash and cash equivalents

(19,284

)

10,713

Cash and cash equivalents at beginning of year

29

29,540

18,827

Cash and cash equivalents at end of year

29

10,256

29,540

1.	STATUTORY INFORMATION

Pentagon Investments Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Consolidation

The consolidated accounts incorporate the accounts of Pentagon Investments Limited and all of its subsidiary undertakings. The acquisition method of accounting has been adopted.

Goodwill arising on consolidation was written off against reserves on acquisition. This will be charged to the profit and loss account on disposal of the business to which it relates.

In the company's financial statements, investments in subsidiary undertakings are stated at cost less amounts written off.

Turnover

Turnover represents the amounts (excluding value added tax) derived from the provision of goods and services to third party and group customers during the year. Turnover is recognised when the group has transferred the significant risks and rewards of ownership to the buyer and it is probable that the group will receive the agreed upon payment.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Computer software is being amortised evenly over its estimated useful life of ten years.

Tangible fixed assets

Tangible fixed assets are stated at historical cost less accumulated depreciation and any accumulated impairment loss. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is provided on all fixed assets, with the exception of loose tools, to write off the cost less the estimated residual value in annual instalments over their estimated useful lives as follows :-

Assets in the course of construction

- not provided

Freehold property

- 2% straight line on cost or revaluation

Short leasehold

- over the period of the lease

Plant and machinery

- 15% on cost

Fixtures, fittings, tools and equipment

- 10% to 20% on cost

Motor vehicles and equipment

- 15% to 50% on cost

Computer equipment

- 25% on cost

Vehicles are written off systematically on a straight line basis by reference to their estimated residual value at proposed date of disposal over a range of 2 to 8 years. Loose tools are accounted for on a renewals basis.

Freehold land is not depreciated.

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 within 'cost of sales' and 'administrative expenses' in the profit and loss account.

Investment property

Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in fair value is recognised in profit or loss.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for slow moving and obsolete items. In the case of work in progress, cost includes direct labour. Cost represents the invoiced cost of materials, parts and vehicles on an average cost basis.

At each reporting date, stock is assessed for impairment. If impaired, the carrying amount is reduced and the impairment loss is recognised immediately in the profit and loss account.

Vehicles held on consignment are included within stocks in the Balance Sheet when the terms of the consignment agreement and normal commercial practice indicate that the group enjoys the principal benefit equivalent to owning the stock, being the ability to sell it, and carries the principal risks of ownership which are the cost of stockholding, safekeeping and some risks of obsolescence. When these criteria are not met, consignment stocks are not accounted for in the Balance Sheet but disclosed in the notes to the financial statements.

Deferred tax

Deferred tax arises from timing differences that are differences between taxable total profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

A deferred tax asset is recognised only when it is more likely than not that there will be suitable taxable profits from which the future reversal of underlying timing differences and losses can be deducted.

Provision is made at current rates for taxation deferred in respect of all material timing differences.

Fixed asset investments

Fixed asset investments are valued at cost less provisions for permanent diminution in valuations.

Hire purchase and leasing commitments payable

Assets obtained under hire purchase contracts are capitalised in the Balance Sheet and are depreciated over their estimated useful lives.

The interest element of these obligations is charged to the profit and loss account on a basis which gives a constant periodic rate of interest, on the outstanding hire purchase liability. The capital element of the future payments is treated as a liability.

Rentals paid under operating leases are charged to the profit and loss account as incurred.

Pension costs and other post-retirement benefits

The group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Once the contributions have been paid the group has no further payment obligations. The contributions are recognised as an expense when they fall due. Amounts not paid are shown in accruals in the Balance Sheet. The assets of the plan are held separately from the group in independently administered funds.

Hire purchase and finance lease receivables

The net investment in assets held by third parties under hire purchase contracts and finance leases in which a residual interest is retained, is accounted for as a current asset within Debtors. Revenue is recognised on a straight line basis over the term of the contract and is included within Turnover.

Operating lease receivables

Where the company or its subsidiaries enters into a lease as lessor which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as an operating lease. The asset is recorded in the Balance Sheet as a tangible fixed asset and is depreciated over its estimated useful life or the term of the lease, whichever is shorter. Revenue is recognised on a straight line basis over the term of the contract and is included within Turnover.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investment with original maturities of three months or less.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Judgements in applying accounting policies and key sources of estimation

In the application of the group's accounting policies the directors are required to make judgement estimates and assumptions about the carrying amounts of the group's assets and liabilities. These are based on historical experience and other factors that are considered relevant and are reviewed on a regular basis and recognised in the period in which the estimate is revised. Actual results may differ from these estimates.

The following are the critical judgements and where relevant the key sources of estimation uncertainty:

Tangible fixed assets are depreciated over their useful economic lives taking in to account their residual values where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing the asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken in to account. Residual values consider such things as future market conditions, the remaining life of the asset and projected disposal values.

The recoverability of debtors is assessed on the likelihood and circumstances of the particular cost.

The value of stock is assessed for impairment. In re-assessing the stock value, factors such as slow movement and obsolescence are taken in to account.

As regards to the fair value of the properties held for investment purposes, the directors have considered the portfolio on an aggregate basis given the tenants, rental including any receivable, and capital growth potential in the foreseeable future.

3.

TURNOVER

Turnover is wholly attributable to the principal activities of the group and is generated principally within the United Kingdom.