Annual Report

Euro Car Parts Limited

Financial statements for the year ended

31 December 2009

BusinEss REviEw &FinanCiaL statEmEntsEuRo CaR PaRts LimitEdFor the year ended 31 december 2009

Company no. 2680212

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Financial statements for the year ended 31 December 2009

“2009 has undoubtedly been our most successful year... so far”sukhpal singh ahluwalia

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31 December 2009

Company information

Company registration number 2680212

Registered office Euro House Fulton Road Wembley Industrial Estate Wembley Middlesex HA9 0TF

directors S S Ahluwalia P K Ahluwalia C J Barella D W Beak D J Bevan N G Brown P S Creasey M Gray S J Horne A Mangrola M Shah

secretary P S Creasey

Bankers Barclays Bank plc Eagle Point Capability Green Luton LU1 3US

auditor GrantThorntonUKLLP CharteredAccountants Registered Auditors Churchill House Chalvey Road East Slough Berkshire SL1 2LS

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Contents

a message from the Chairman............................................. 5

Report of the directors ..................................................... 6 - 14

Report of the independent auditor ................................15 - 16

Principal accounting policies .........................................17 - 18

Profit and loss account .........................................................19

Balance sheet ....................................................................... 20

Cash flow statement .............................................................21

notes to the financial statements ................................. 22 - 30

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31 December 2009

A message from The Chairman

Euro Car Parts has been through a step change in terms of its operation in the last five years. By most measures (sales, branches, people, profits) ECP has nearly tripled in size and during 2009 we became the UK’s largest car and van parts distributor.

During this time, we have evolved from a German, Scandinavian and French car parts specialist into a full ‘All-Makes’ supplier with well over 100,000 different parts stocked – by far the biggest range in the business. Our purchasing operations and relationships with major parts manufacturers have been strengthened, so that parts from original equipment factories worldwide can be supplied to UK independent garages at highly competitive prices.

This continuing volume growth has produced a record profit performance in 2009.

We have continued to re-invest our cash flow into the building blocks for future growth. Not just into wider ranges, but into technical training, IT systems, electronic cataloguing, powerful marketing programmes, new Ecommerce platforms and targeted staff incentives. Above all, we are investing in expansion of our branch network and the logistics infrastructure that supports it.

During 2009, we opened in 9 new locations – all of which performed above expectations – and anticipate our network exceeding 70 branches in 2010. This expansion, together with the staff recruitment and training which enables it, will proceed apace in the current year. Our biggest step forward will come in August 2010, when our new 256,000 sq. ft. National Distribution Centre in the Midlands becomes fully operational.

2009 has undoubtedly been our most successful year ... so far. May I take the opportunity to thank all ECP staff, our customers and other stakeholders who have worked so hard to make this possible.

sukhpal singh ahluwalia

9 February 2010

2006 £m

2007 £m

2008 £m

2009 £m

Sales 88.6 118.8 145.1 186.9

Gross Margin 39.8 54.4 65.1 83.8

Profit before Tax 3.1 3.6 6.6 17.0

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Report of the directors

The directors present their report and the financial statements of the Company for the year ended 31 December 2009.

Business Review 2009

Current Market SituationWe believe that the UK automotive parts aftermarket grew by about 2% over the previous year, resulting from the continuing increase in car and van parc. However, within this overall figure, we have seen a significant shift of Service Maintenance and Repair (SMR) work from vehicle manufacturers’ franchised dealer networks into the lower cost independent garages and autocentres sector. Although primarily price driven, this shift has been magnified by corporate fleets taking advantage of EU Block Exemption Regulations by using independent garages for car servicing. Also the continuing closure of franchised dealer outlets has meant that there is no convenient alternative to the independent garage in many rural areas.

The independent garage sector (including national fastfits and autocentres) – the sector in which Euro Car Parts (ECP) mainly operates – has therefore seen growth of around 5%. It is against this background that our 29% sales growth should be judged.

Market ProspectsWe see the UK independent parts aftermarket continuing to grow by about 1 - 2% per annum over the next few years, driven by increasing car population, average vehicle age and continuing shift away from the franchised sector. There is still unsatisfied demand for low-cost personal mobility, which is unlikely to be met by public transport in most areas of the UK.

The effect of the UK Government Scrappage Scheme, which is expected to end shortly, has been to remove 300,000 cars from the 10+ year old car parc, which numbers c. 10 million vehicles. The majority of these were reasonably serviceable and efficient low annual mileage cars, maintained in the independent sector. They have been replaced by small, fuel-efficient cars, 90% of which were built overseas, with Korean manufacturers being

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31 December 2009

the main beneficiaries, which will be mainly maintained in the franchised sector for the next 3 years. The net effect has been a substantial hit to the UK’s trade balance and transfer of jobs from the UK. However, because of the relatively small sum of £300 million allocated to this scheme (compared to the corresponding German scheme on which £4,350 million was spent) the effect on the independent aftermarket will be manageable at around 1% per annum for the next 3 years.

ECP’s main markets – independent garages, DIY motorists, national autocentre chains and smaller bodyshops – are seen as resilient to the low growth that is forecast for the general UK economy. Low new car sales and economic pressures will drive a higher proportion of consumer spend to these sectors.

Another significant trend is the increasingly complex digital electronics controlling passenger car systems - it is estimated that 35% of the cost of a new car is in electronics – and this presents a major technical challenge to independent garages. Through our Euro Garage Solutions division, we are able to help our customers make the necessary investments in equipment, training and technical support.

Euro Car Parts GrowthFrom our roots as a specialist supplier of parts for German cars, ECP gradually extended the range of marques covered until we announced ourselves as a full ‘all-makes’ supplier in early 2006. We now stock over 100,000 different car parts and significant growth is being achieved from gradually increasing our market share of all-makes parts through our existing network.

Last year we became the UK’s largest car and van parts distributor. With our strong portfolio of products, brands and suppliers we feel confident that we will continue to increase share in all of the local markets in which we operate.

Also during 2009 we opened nine completely new branches, bringing our total number of trading units to 62. We are delighted to report that all nine are trading above expectations, as are the branches opened in 2008. We believe we have the right formula to successfully find, open, staff and

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launch new branches and the resources are in place for us to continue this programme. Not only will this create additional sales in areas where we can’t currently offer a good delivery service, it will further strengthen our Ecommerce and National Account propositions.

Our business with large national chains provides huge potential as Euro Car Parts is increasingly being regarded by them as a potential principal trading partner, as our UK geographical coverage approaches completion.

The current year’s trading has started well, with sales reaching record levels. This reflects our continuous investment in marketing, e-commerce and store development. The ECP team has coped admirably with disruptions caused by the harsh winter weather, in the knowledge that thousands of tonnes of road salt will generate additional mechanical parts business as we go through the year.

Investment in New Branches and Logistics InfrastructureWe plan to accelerate our programme of new branch openings, following the successful formula of the last two years. When complete, our network will be able to provide a delivery service to car and van repairers accounting for 98% of the UK market, with a ‘within-the-hour’ service to 75%. Although our preference is to open on ‘green field’ sites, we will also consider suitable acquisitions of other parts distributors.

A new 256,000 sq. ft. National Distribution Centre (NDC) will be strategically located in the centre of the UK close to the main motorway networks and will be open in August 2010. Incorporating our Import Centre and some other existing central functions, the NDC will provide nightly stock orders to every ECP branch.

The IT and logistics systems have been carefully designed to minimise double handling and lower unit distribution costs, whilst enabling a superb quality of service to our customers. This service differentiation gives us the strength to resist local price-based competition.

Our new internal logistics system will give ECP the capacity to support our ambitious growth plans. It also gives us capacity to launch some totally new product programmes in 2010.

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31 December 2009

Upstream, we have made considerable progress in forging electronic communication links with major suppliers. Combined with end-to end demand planning software, we expect to achieve both higher availability levels and substantially improved stock-turns as systems are bedded in.

At the customer interface, we have continued to invest in low-carbon delivery vans and motor bikes. Our Datatrak GPS deployment and routing system has enabled us to improve our load factors by 16% over 2008. Further efficiency savings are anticipated as Datatrak becomes fully integrated with our ADP K8 business system.

Product Range DevelopmentEuro Car Parts has been built on immediate availability of a very wide range of parts – in fact we now have over 100,000 different parts always in stock, more than double the range of our nearest competitor.

We partner with top original equipment brands such as ATE, Bilstein, Bosch, Continental, Corteco, Denso, Exedy, Exide, Hengst, Hella, Lemforder, LUK, Sachs, SKF and Valeo. During 2009 we secured a long term agreement for ECP to be the exclusive UK distributor of the highly regarded Pagid (TMD) brake. These key supplier relationships have been further strengthened since Euro Car Parts became a shareholder in ATR International A.G., the leading €3.5 billion pan-European buying group.

We have the resources to buy additional stock in bulk when the opportunity arises to secure advantageous prices and credit terms. Throughout the recent severe weather, ECP had ample stock of seasonal items such as batteries and antifreeze, whilst some our less well-funded competitors were unable to supply. We also believe in offering choice to our customers. So for popular applications and older cars, we also offer a ‘budget’ alternative, world-sourced in bulk from original equipment pedigree suppliers. These offer incredible value for money and allow our garage customers to provide affordable repairs to the budget conscious motorist.

ECP has developed major expertise in many of the most ‘technical’ product areas, such as diesel & petrol injection, emission control systems, vehicle electronics and climate control parts. We have located the manufacturers and then brought into range many specialised parts, previously regarded as ‘franchised dealer only’.

During 2009, we have invested heavily in ECP’s own diesel remanufacturing plant via its wholly owned subsidiary Seebeck 31 Limited and have produced the first ‘common rail’ pumps and injectors. Common Rail diesel systems have been fitted to about 40% of new cars sold in the UK over the last 3 years, so the aftermarket potential is huge. Another example of our determination to keep ahead of customers expectations are our dramatically increased ranges of remanufactured electronics, particularly of electronic control units (ECUs). These complex items normally fail because of a fault in a single micro-electronic circuit component. Because replacement ECUs are very expensive as a ‘brand-new’ item, often the vehicle is uneconomic to repair and might have to be scrapped prematurely. Our range of low-cost remanufactured ECUs is a double saving for the environment - both the control unit and the vehicle get a new lease of life.

Exclusively distributed by Euro Car Parts in the UK

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ECP has also become the top supplier to U.K. garages of parts for Japanese and Korean cars. These are the most challenging vehicles for an aftermarket parts supplier because of the wide range of marques/models. The presence of grey imports (used cars imported directly from Japan, which have different parts to European-specification models) further complicates the supplier’s task. We reached this position by investing heavily in expert programme builders, electronic cataloguing, specialist staff training and active promotion. The direct trading relationships formed with Japanese and Korean original equipment manufacturers will be invaluable as the programme continues to expand.

Cataloguing, Website and I.T. DevelopmentHaving exclusive access to our own electronic parts cataloguing database gives us a competitive advantage over distributors using proprietary systems. During 2009, investment in our database has more than doubled with 12 full-time cataloguers currently engaged on the project.

Cataloguing of automotive parts is notoriously complex, but we believe we have already created the industry’s best database ... wide ranging, complete, compact, accurate, up to date and easy to interrogate.

Our 700+ telephone sales advisers, based in our branches all over the UK, are already finding it quicker and easier to accurately identify our customers’ needs, leaving more time for proactive selling and CRM activities.

The ECP catalogue database is also the cornerstone of our fast-developing B2C and B2B Ecommerce activities. Much of the development for these programmes has been done by our own team of web developers.

May 2009 saw the completion of our £2.5 million investment in the ADP K8 business system. We must congratulate all involved in the planning and smooth implementation of this huge I.T. project, which underpins our future growth strategy.

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31 December 2009

Marketing & Promotion InvestmentECP is well known for the scale of our trade marketing activities and 2009 saw our largest ever investment in this area. We issued 9 editions of the famous ECP Newsletter, each mailed to our circulation list of 37,000 named trade customers. These showcased our huge range of products and choice of brands, with amazing price offers on many products.

Investment in PeopleThe ECP team was 1,910 strong, at December 2009, an increase of 25% over 12 months. Our training department has been strengthened and their activities included:

· Over 300 ECP staff now in formal training leading to various vocational and management NVQ qualifications

· Continuation of our award-winning apprenticeship scheme for school leavers

· At least 1 day of vehicle technical training for each of our 700+ sales advisers, so that they talk knowledgeably to garage customers.

Considerable attention has been given to our Recruitment, Retention and Reward strategy to support and drive our expansion plans.

The need for clear, concise, convenient communication grows with the size of the company and we feel we have made major advances in 2009. In addition to our daily brief and weekly interactive web conferences, in January we introduced a programme of visits and meetings whereby regional and branch staff take part in two-way discussions with relevant line and functional managers with an agenda appropriate to the individual situation.

We are also delighted to report on a significant strengthening of the senior team during 2009 with some key appointments to the Board and newly recruited Executive Directors and senior managers. With complementary skill sets combined with the ECP ‘will to win’, this team gives us great confidence in the future of our company.

Our Vision and ValuesVisitors and recruits to Euro Car Parts frequently comment on our ethos and how different it is to some of our major competitors. Ultimately it is the vision and values of a company that determine its success, so we hold these to be of prime importance:

· We will consistently deliver our customers’ expectations and thereby strengthen our market leadership in partnership with strong global brands

· We will provide our customers with fast, easy access to value-for-money, quality products

· We will be entrepreneurial, fast-paced, tenacious and a “fun to work with” business – with a strong work ethic and will-to-win.

· We will see things from our stakeholders’ perspectives, act innovatively, decisively, knowledgeably and behave with integrity and honesty.

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Key performance indicatorsThe Company’s key performance indicators are revenue, margin, costs and cash flow. These allow the board to monitor both the growth as well as the profitability of the Company against internal and external factors that affect the business. Further details on the Company’s financial performance is included within the Chairman message.

Risk managementThe Company’s principal financial instruments comprise borrowings, cash and cash equivalents. Other financial assets and liabilities such as trade debtors and trade creditors arise directly from operating activities.

Foreign currency riskApproximately 31% of the goods purchased for resale are purchased in foreign currency and the Company is therefore exposed to foreign currency fluctuations. Forward foreign exchange contracts are used to reduce the exposure.

Interest rate riskThe Company invests surplus cash in across a number of fixed and floating rate interest yielding bank accounts. The Company has asset-based and other borrowings at variable interest rates. Part of the Company’s interest income and expense are therefore affected by the movements in interest rates. The Company does not undertake active hedging of this risk, which it deems to be low.

Business performance riskThe risk that the Company may not perform as expected either due to internal factors or due to competitive pressures in the markets in which it operates is managed by a number of measures: ensuring the appropriate management team is in place, budget and business planning, monthly reporting and variance analysis, financial controls, key performance measures, regular forecasting, constant price monitoring, having fast response times and by maintaining strong relationships with its customers and suppliers.

Going concernNo material uncertainties that cast significant doubt about the ability of the company to continue as a going concern have been identified by the directors.

The business review above provides a summary of the Company’s excellent performance in 2009 resulting in significantly increased profitability and cash balances. In addition having assessed the likely risks facing the Company and the steps taken to mitigate them, the directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain outlook for the UK economy.

The directors believe that through the provision of fast easy access to value for money quality parts the Company is well positioned to capitalise on opportunities for continued growth through improved product availability and service of its ever expanding customer base. Existing cash resources and facilities are believed to be more than adequate to fund the investment required to progress short to medium term growth plans.

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31 December 2009

The directors therefore have a reasonable expectation that the Company has adequate resources to continue its operational existence for the foreseeable future. Therefore they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

EmployeesThe Company recognises that it is essential to maintain a highly skilled workforce. It is policy to promote from within the organisation wherever the possibility exists. It is also the policy of the Company that training, career development and promotion opportunities should be available to all employees.

Disabled employeesIt is Company policy to appoint staff on the basis of their abilities. Applications for employment by disabled persons are given full and fair consideration for all vacancies in accordance with their particular aptitudes and abilities. In the event of employees becoming disabled, every effort is made to retrain them in order that their employment with the company may continue.

Employee involvementThe Company has continued its practice of keeping employees informed of all matters affecting them as employees and the financial and economic factors affecting the performance of the Company.

Health and SafetyHealth and safety measures are given particular attention by the Directors and a written policy exists and is known throughout the Company.

Directors and Directors’ responsibilitiesThe directors who served the Company during the year were as follows :-

S S Ahluwalia P K Ahluwalia C J Barella (appointed 11 November 2009) D J Bevan D W Beak N G Brown (appointed 09 September 2009) P S Creasey M J Dorward (resigned 13 November 2009) M Gray (appointed 11 November 2009) S J Horne (appointed 11 November 2009) Dr F R Johnston (resigned 04 August 2009) A Mangrola M Shah K S Trim (resigned 04 August 2009)

The directors are responsible for preparing the financial statements in accordance with applicable law and regulations.

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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 Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit and loss of the Company for that period. In preparing these financial statements, the directors are required to:

- Select suitable accounting policies and then apply consistently

- Make judgments and 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 Company will continue in business.

The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In sofar as the directors are aware:

- There is no relevant audit information of which the Company’s auditor is unaware; and

- The directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information

DividendsDuring the year no dividends were paid (2008 £50,000).

DonationsDuring the year the Company made the following contributions:

2009 2008 £ £Charitable 11,945 5,625

AuditorGrant Thornton UK LLP, having expressed their willingness to continue in office, will be deemed reappointed for the next financial year in accordance with section 487(2) of the Companies Act 2006 unless the company receives notice under section 488(1) of the Companies Act 2006.

On Behalf of the Board

sukhpal singh ahluwaliaDirector 9 February 2010

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31 December 2009

Report of the independent auditor to the members of Euro Car Parts Limited

We have audited the financial statements of Euro Car Parts Limited for the year ended 31 December 2009 which comprise the principal accounting policies, profit and loss account, the balance sheet, the cash flow statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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.

Respective responsibilities of directors and auditorAs explained more fully in the directors’ responsibilities statement set out in the report of the directors, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/UKNP.

Opinion on financial statementsIn our opinion the financial statements:

· give a true and fair view of the state of the company’s affairs as at 31 December 2009 and of its profit for the year then ended;

· have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

· have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on matters prescribed by the Companies Act 2006In our opinion the information given in the report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements.

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Matters on which we are required to report by exceptionWe 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, or returns adequate for our audit have not been received from branches not visited by us; or

· the financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors’ remuneration specified by law are not made; or

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

Paul Creasey Senior Statutory Auditor For and on behalf of Grant Thornton UK LLP Statutory Auditor Chartered Accountants Slough

9 February 2010

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31 December 2009

Principal accounting policies

Basis of accountingThe financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards.

The company is not preparing consolidated accounts as all of its subsidiaries were either dormant during the year ended 31 December 2009, or the results of the entities whilst trading and under the control of the company were not material to the group. These accounts therefore present information for the company only and not of the group it heads.

The principal accounting policies of the company have remained unchanged from the previous year, and are set out below.

TurnoverTurnovershownintheprofitandlossaccountrepresentsamountsreceivableforgoodsprovidedintheUnitedKingdomnetofvalueaddedtaxandtradediscounts.Turnoverisrecognisedwhengoodsaredeliveredtothecustomer.

DepreciationDepreciationiscalculatedsoastowriteoffthecostofanassetovertheusefuleconomiclifeofthatassetasfollows:

LeaseholdProperty -2%perannumImprovementstoLeaseholdProperties -10%-25%perannumFixtures,FittingsandEquipment -10%-25%perannumMotorVehicles -25%perannum

StocksStocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Leasing and hire purchase commitmentsAssets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the company, and hire purchase contracts, are capitalised in the balance sheet and are depreciated over their useful lives. The capital elements of future obligations under the leases and hire purchase contracts are included as liabilities in the balance sheet.

The interest elements of the rental obligations are charged in the profit and loss account over the periods of the leases and hire purchase contracts and represent a constant proportion of the balance of capital repayments outstanding.

Rentals payable under operating leases are charged in the profit and loss account on a straight line basis over the lease term.

Pension costsThe company operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the company. The annual contributions payable are charged to the profit and loss account.

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Deferred taxationDeferred tax is recognised in respect of all timing differences where the transaction or events that give the company an obligation to pay more tax in the future have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates that have been enacted or substantively enacted by the balance sheet date and it is measured on a non-discounted basis.

Foreign currenciesMonetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date unless a foreign exchange contract exists. In that circumstance the relevant rate per the contract is used. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit.

Financial instrumentsFinancial 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 entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

Investment in subsidiary undertakingsFixed asset investments are shown at cost less provision for impairment.

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31 December 2009

Profit and loss account

2009 2008 Note £ £Turnover 1 186,931,749 145,146,310Cost of sales (103,160,411) (80,083,348)Gross profit 83,771,338 65,062,962Other operating charges 2 (67,673,143) (59,198,444)Other operating income 3 28,605 32,047

Operating profit 4 16,126,800 5,896,565

Interest receivable and similar income 1,011,221 1,211,358Interest payable and similar charges 7 (127,955) (473,765)

Profit on ordinary activities before taxation 17,010,066 6,634,158

Tax on profit on ordinary activities 8 (4,480,000) (1,943,182)

Profit for the financial year 12,530,066 4,690,976

All of the activities of the company are classed as continuing.The company has no recognised gains or losses other than the results for the year as set out above.

the accompanying accounting policies and notes form part of these financial statements.

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Balance sheet

2009 2008 Note £ £Fixed assetsTangible assets 10 12,431,880 10,987,176Investments 11 138,173 138,173 12,570,053 11,125,349Current assetsStocks 12 35,328,211 24,419,527Debtors 13 16,104,166 11,983,373Debtors due after one year 13 14,463,132 13,667,058Cash at bank 15,025,144 4,062,502 80,920,653 54,132,460Creditors: amounts falling due within one year 14 (55,877,097) (38,653,998)Net current assets 25,043,556 15,478,462Total assets less current liabilities 37,613,609 26,603,811Creditors: amounts falling due after more than one year 15 (4,433,326) (6,000,057) 33,180,283 20,603,754Provisions for liabilitiesDeferred taxation 17 (188,099) (141,636) 32,992,184 20,462,118Capital and reservesCalled-up equity share capital 22 100 100Share premium account 1,087,437 1,087,437Profit and loss account 23 31,904,647 19,374,581Shareholders’ funds 24 32,992,184 20,462,118

These financial statements were approved by the directors and authorised for issue on 9 February 2010, and are signed on their behalf by:

sukhpal singh ahluwaliaDirector Euro Car Parts LimitedCompany No. 2680212


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31 December 2009

Cash flow statement

2009 2008 Note £ £Net cash inflow from operating activities 25 18,341,238 6,336,026Returns on investments and servicing of finance 25 883,266 737,593Taxation 25 (3,355,001) (425,622)Dividend 25 - (50,000)Capital expenditure and financial investment 25 (2,999,322) (3,803,634)

Cash inflow before financing 12,870,181 2,794,363Financing 25 (1,907,539) 2,639,929

Increase in cash 25 10,962,642 5,434,292


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Notes to the financial statements

1 turnoverThe turnover and profit before tax are attributable to the one principal activity of the company. An analysis of turnover is given below: 2009 2008 £ £United Kingdom 186,931,749 145,146,310

2 other operating charges 2009 2008 £ £Distribution costs 45,887,520 39,925,181Administrative expenses 21,785,623 19,273,263 67,673,143 59,198,444

3 other operating income 2009 2008 £ £Other operating income 28,605 32,047

4 operating profitOperating profit is stated after charging/(crediting): 2009 2008 £ £Depreciation of owned fixed assets 1,130,438 831,519Depreciation of assets held under hire purchase agreements 416,905 481,100Loss on disposal of fixed assets 7,275 28,099Operating lease costs:Plant and equipment 756,442 787,558Other - land and buildings 2,729,250 2,502,411Net profit on foreign currency translation (1,540,908) (625,372)

2009 2008 £ £Auditor’s remuneration - audit of the financial statements 52,995 51,975Auditor’s remuneration - other fees:- Taxation services 35,865 25,497- Corporate finance - 127,025- Employee benefit and taxation advice 71,500 -

5 Particulars of employees The average number of persons employed by the company during the financial year, including the directors, amounted to 1,749 (2008 - 1,504).The aggregate payroll costs of the above were: 2009 2008 £ £Wages and salaries 36,397,283 29,444,088Social security costs 3,231,352 2,733,160Other pension costs 66,161 29,928 39,694,796 32,207,176

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31 December 2009

6 directorsRemuneration in respect of directors was as follows: 2009 2008 £ £Emoluments receivable 1,766,375 499,570Value of company pension contributions to money purchase schemes 3,064 1,200 1,769,439 500,770Emoluments of highest paid director: 2009 2008 £ £Total emoluments 1,250,000 137,250The number of directors who accrued benefits under company pension schemes was as follows: 2009 2008 No NoMoney purchase schemes 1 1 During the year, Euro Car Parts Limited entered into transactions as part of its normal trading to secure directors’ services, as follows: 2009 2008 £ £Purchases from D J Bevan 104,619 99,002Purchases from MCIS Services Limited 62,250 61,500Purchases from Dr F R Johnston 18,815 25,397Purchases from MCT Life Skills Limited 15,750 62,268

D J Bevan is a director of the Company and Dr F R Johnston was a director of the company who resigned on 4 August 2009.MCIS Services Limited was related by virtue of M J Dorward being a common director. M J Dorward resigned as a director on 13 November 2009.MCT Life Skills Limited was a related party by virtue of K S Trim being a common director. K S Trim resigned as a director on 4 August 2009.

7 interest payable and similar charges 2009 2008 £ £Interest payable on bank borrowing 232 8,830Finance charges payable under hire purchase agreements 47,945 113,080Other similar charges payable 79,778 351,855 127,955 473,765

8 taxation on profit on ordinary activities(a) Analysis of charge in the year 2009 2008 £ £Current tax:UK Corporation Tax based on the results for the year at 28% (2008: 28.5%) 4,594,603 1,950,668Over provision in prior year (161,066) (32,155)Total current tax 4,433,537 1,918,513Deferred tax:Origination and reversal of timing differences 46,463 24,669Tax on profit on ordinary activities 4,480,000 1,943,182

24



(b) Factors affecting current tax chargeThe tax assessed on the profit on ordinary activities for the year is lower (2008: higher) than the standard rate of corporation tax in the UK of 28% (2008: 28.5%). 2009 2008 £ £Profit on ordinary activities before taxation 17,010,066 6,634,158Profit on ordinary activities by rate of tax 4,762,818 1,890,735Expenses not deductible for tax purposes 174,151 366,121Capital allowance for period in excess of depreciation (92,418) (68,112)Adjustments to tax charge in respect of previous periods (161,066) (32,155)Other short term timing differences (16,611) 18,981Group relief claimed (233,337) (256,870)Difference in tax rate relating to timing differences - (187)Total current tax (note 8(a)) 4,433,537 1,918,513

9 dividendsDividends on shares classed as equity 2009 2008 £ £Paid during the year:Dividends on ordinary shares - 50,000

10 tangible fixed assets Improvements Fixtures, Leasehold to Leasehold Fittings and Motor Property Properties Equipment Vehicles Total £ £ £ £ £CostAt 1 January 2009 4,312,312 4,639,160 6,008,697 337,428 15,297,597Additions - 844,404 1,870,854 304,965 3,020,223Disposals - - (27,821) (33,545) (61,366)At 31 December 2009 4,312,312 5,483,564 7,851,730 608,848 18,256,454DepreciationAt 1 January 2009 113,255 1,387,154 2,656,031 153,981 4,310,421Charge for the year 72,298 503,269 853,432 118,344 1,547,343On disposals - - (14,961) (18,229) (33,190)At 31 December 2009 185,553 1,890,423 3,494,502 254,096 5,824,574Net book valueAt 31 December 2009 4,126,759 3,593,141 4,357,228 354,752 12,431,880At 31 December 2008 4,199,057 3,252,006 3,352,666 183,447 10,987,176

Included within the net book value of £12,431,880 is £2,700,676 (2008 - £3,624,394) relating to assets held under hire purchase agreements. The depreciation charged to the financial statements in the year in respect of such assets amounted to £416,905 (2008 - £481,100).

25



31 December 2009

11 investmentsInvestments in Subsidiary Undertakings Shares £CostAt 1 January and 31 December 2009 138,173Net book valueAt 31 December 2009 138,173At 31 December 2008 138,173

At 31 December 2009, the company held 100% of the allotted share capital of the following undertakings: Country of Class of share Nature of registration capital held businessEuro Garage Solutions Limited England & Wales A £1 Ordinary Dormant B £1 OrdinaryEuro Car Parts (Northern Ireland) Limited England & Wales A £1 Ordinary Dormant B £1 OrdinaryEuro Car Parts Logistics Limited England & Wales A £1 Ordinary In Administration B £1 OrdinaryEuro Car Parts Limited Republic of Ireland €1 Ordinary DormantSeebeck 31 Limited England & Wales £1 Ordinary Repair of diesel systems

12 stocks 2009 2008 £ £Finished goods and goods in transit 35,328,211 24,419,527

13 debtorsAmounts falling due within one year: 2009 2008 £ £Trade debtors 13,946,377 10,433,759Other debtors 1,219,986 381,161Prepayments and accrued income 937,803 1,168,453 16,104,166 11,983,373Amounts falling due after more than one year: 2009 2008 £ £Amounts owed by group undertakings 14,463,132 13,667,058

The amounts owed by group undertakings are secured but only part interest bearing.

26



14 Creditors amounts falling due within one year 2009 2008 £ £Bank loans 769,548 932,625Trade creditors 42,566,514 28,995,023Amounts owed to group undertakings 129,975 129,975Amounts owed to related parties 8,046 31,476Corporation tax 2,661,158 1,582,622Other taxation and social security 3,055,387 2,761,416Amounts due under hire purchase agreements 604,375 782,106Other creditors 362,449 529,341Accruals and deferred income 5,719,645 2,909,414 55,877,097 38,653,998

15 Creditors amounts falling due after more than one year 2009 2008 £ £Bank loans 3,992,460 4,785,755Amounts due under hire purchase agreements 440,866 921,181Director’s loan accounts - 293,121 4,433,326 6,000,057The bank loans are re-payable as follows:Amounts repayable Unsecured Secured Total £ £ £In less than 1 year 741,023 28,525 769,548In more than 1 year but not more than 2 years 223,432 365,723 589,155In more than 2 years but not more than 5 years 984,580 2,242,047 3,226,627In more than 5 years - 176,678 176,678Total 1,949,035 2,812,973 4,762,008

Variable interest rates are payable at rates between 0.9% and 1.85% above lenders base rate.Secured loans relate to property where lender has a charge over the associated property.The amount owed to SS Ahluwalia was unsecured.Amounts under hire purchase agreement are secured on their respective assets.

16 Commitments under hire purchase agreementsFuture commitments under hire purchase agreements net of future finance lease charges are as follows: 2009 2008 £ £Amounts payable within 1 year 604,375 782,106Amounts payable between 1 and 2 years 358,160 717,462Amounts payable between 2 and 5 years 82,706 203,719 1,045,241 1,703,287

27



31 December 2009

17 deferred taxationThe movement in the deferred taxation provision during the year was: 2009 2008 £ £Provision brought forward 141,636 116,968Profit and loss account movement arising during the year 46,463 24,668Provision carried forward 188,099 141,636The balance of the deferred taxationprovision is comprised of: 2009 2008 £ £Accelerated capital allowances 304,683 237,598Other timing differences (116,584) (95,962) 188,099 141,636There is no unprovided deferred taxation.

18 Commitments under operating leasesAt 31 December 2009, the company had annual commitments under non-cancellable operating leases as set out below. 2009 2008 Land & Other Land & Other Buildings Items Buildings Items £ £ £ £Operating leases which expire:Within 1 year 179,339 153,779 32,750 372,146Within 2 to 5 years 621,882 316,652 596,665 313,215After more than 5 years 1,928,028 - 1,872,996 2,118 2,729,249 470,431 2,502,411 687,479

19 ContingenciesThe company has given indemnities in respect of guarantees issued to HM Revenue and Customs on its behalf in the normal course of business. The indemnities given at 31 December 2009 amounted to £75,000 (2008: £500,000).

20 other commitmentsThe company has contracted for £3,595,645 (2008: £2,542,379) in respect of the purchase of foreign currencies on forward contracts. The fair value of the financial instrument at the year end is estimated at £3,599,388 (2008: £3,163,941).The company is also committed to pay £163,458 (2008: £42,000) in relation to computer hardware.

28



21 Related party transactionsDuring the year, Euro Car Parts Limited entered into transactions as part of its normal trading with other related parties and, at 31 December 2009, the following amounts were outstanding: 2009 2008 £ £Amounts due to/(from) related undertakingsAmounts due to directors for provision of services 10,000 33,700Euro Car Parts Limited (registered in the Republic of Ireland) (1,954) (1,954)Amounts due from/(to) group undertakingsProperty Holdings (Euro) Limited 527,878 545,091Draco Limited 12,963,711 11,952,343Seebeck 31 Limited 1,009,757 -Euro Car Parts Logistics Limited (100,775) 1,107,063Euro Car Parts Northern Ireland Limited (67,314) (67,314)Euro Garage Solutions Limited (100) (100)S S Ahluwalia has provided interest bearing loans to the company. The amount owed to S S Ahluwalia at the year end is £nil (2008: £293,121). During the year, interest accrued on this loan amount £8,902 (2008: £66,598).During the year, Euro Car Parts Limited loaned its ultimate parent undertaking, Draco Limited, a further £1,011,368 (2008: £2,167,362). The amount due at the end of the year is £12,963,711 (2008: £11,952,343). Interest accruing in the year totalled £936,681 (2008: £1,004,512).During the year Euro Car Parts Limited loaned its subsidiary Seebeck 31 Limited £997,107 (2008: £nil).The amount due at the end of the year is £1,009,757 (2008: £nil). Interest accruing in the year totalled £12,650 (2008: £nil).Amounts written off sums due from group undertakings in the year amounted to £nil (2008: £650,000).

22 share capitalAuthorised share capital: 2009 2008 £ £1,000 Ordinary shares of £1 each 1,000 1,000Allotted, called up and fully paid: 2009 2008 No £ No £Ordinary shares of £1 each 100 100 100 100

23 Profit and loss account 2009 2008 £ £Balance brought forward 19,374,581 14,733,605Profit for the financial year 12,530,066 4,690,976Dividends paid in the year - (50,000)Balance carried forward 31,904,647 19,374,581

29



31 December 2009

24 Reconciliation of movements in shareholders’ funds 2009 2008 £ £Profit for the financial year 12,530,066 4,690,976Dividends paid in the year - (50,000)Opening shareholders’ funds 20,462,118 15,821,142Closing shareholders’ funds 32,992,184 20,462,118

25 notes to the statement of cash flowsReconciliation of operating profit to net cash outflow from operating activities 2009 2008 £ £Operating profit 16,126,800 5,896,565Depreciation 1,547,343 1,312,619Loss on disposal of fixed assets 7,275 28,099Increase in stocks (10,908,684) (2,989,788)Increase in debtors (4,916,867) (5,090,276)Increase in creditors 16,485,371 7,178,807Net cash inflow from operating activities 18,341,238 6,336,026

Returns on investments and servicing of finance 2009 2008 £ £Interest received 1,011,221 1,211,358Interest paid (80,010) (360,685)Interest element of hire purchase (47,945) (113,080)Net cash inflow from returns on investments and servicing of finance 883,266 737,593Taxation 2009 2008 £ £Taxation (3,355,001) (425,622)Dividend 2009 2008 £ £Dividends paid in year - (50,000)Capital expenditure and financial investment 2009 2008 £ £Payments to acquire investments - (8,197)Payments to acquire tangible fixed assets (3,020,223) (3,968,194)Receipts from sale of tangible fixed assets 20,901 172,757Net cash outflow for capital expenditure & financial investment (2,999,322) (3,803,634)

30



Financing 2009 2008 £ £(Repayment of)/increase in bank loans (956,372) 2,352,759Capital element of hire purchase (658,046) 127,349(Repayment of)/receipt from director’s long-term loans (293,121) 159,821Net cash inflow from financing (1,907,539) 2,639,929Reconciliation of net cash flow to movement in net debt 2009 2008 £ £Increase in cash in the period 10,962,642 5,434,292Net cash outflow/(inflow) from bank loans 956,372 (2,352,759)Cash outflow/(inflow) in respect of hire purchase 658,046 (127,349)Cash outflow/(inflow) from director’s long-term loans 293,121 (159,821) 1,907,539 (2,639,929)Change in net debt 12,870,181 2,794,363Net debt at 1 January 2009 (3,652,286) (6,446,649)Net debt at 31 December 2009 9,217,895 (3,652,286)

Analysis of changes in net (debt)/funds At At 31 1 January Cash December 2009 flows 2009 £ £ £Net cash:Cash in hand and at bank 4,062,502 10,962,642 15,025,144 4,062,502 10,962,642 15,025,144Debt:Debt due within 1 year (932,625) 163,077 (769,548)Debt due after 1 year (5,078,876) 1,086,416 (3,992,460)Hire purchase agreements (1,703,287) 658,046 (1,045,241) (7,714,788) 1,907,539 (5,807,249)Net (debt)/funds (3,652,286) 12,870,181 9,217,895

26 Post balance sheet eventOn 11 January 2010 the company issued bonus shares at par by way of a capitalisation of reserves to value of £31,900,000.

27 ultimate parent companyThe directors consider that the controlling party and ultimate parent undertaking of this company is Draco Limited, registered in Jersey.

31



31 December 2009

“I expect 2010 to be our most successful year... ever”sukhpal singh ahluwalia

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