Preliminary results of Caffyns plc
For the year ended 31 March 2008
29 May 2008
Caffyns plc, the leading motor distributor covering 15 car franchises in the south-east of England, announces its preliminary results for the year ended 31 March 2008.
Financial highlights
2008 |
2007 |
|
£'000 |
£'000 |
|
Revenue |
182,029 |
176,238 |
Profit before tax |
2,579 |
1,443 |
Earnings per share - basic |
73.9p |
40.4p |
Proposed final dividend |
17.0p |
17.0p |
Dividend per ordinary share |
25.0p |
25.0p |
Enquiries: Tel: 01323 730201
Simon Caffyn Chief Executive
Mark Harrison Finance Director
Chairman's Statement
During the first half, we made steady progress with pre-exceptional profit up 18% from £643,000 to £759,000. The second half saw a worsening in the economic environment with prices of essential goods such as food, transport and energy rising above inflation. This, coupled with the effects of tax increases in April 2007 and the developing credit crunch, had a significant effect on our margins caused by reducing customer confidence and competitive pressures.
Profit before tax for the year improved to £2.579m (2007 - £1.443m) after exceptional credits of £2.776m (2007 - £0.16m) with the underlying trading result a loss of £197,000 (2007 - profit £1.283m). Earnings per share increased from 40.4p to 73.9p.
Encouragingly, our turnover improved from £176.2m to £182.0m creating a broader customer base to service.
An interim dividend of 8.0p per ordinary share (2007 - 8.0p) was paid on 9 January 2008. An unchanged final dividend of 17.0p (2007 - 17.0p) is now being recommended which, if approved, will be payable on 23 July 2008 to shareholders on the register on 13 June 2008, giving a total dividend of 25.0p for the year (2007 - 25.0p).
As we finally emerge from the extensive redevelopment work of the last three years, I would like to again thank all Caffyns employees for their hard work and dedication to ensure we are stronger and better placed to take advantage of improvements in trading conditions.
In March 2008 we appointed Nicholas Hollingworth as a non-executive director. He brings considerable experience and expertise, particularly of the retail sector, and we welcome him to the board.
The year ahead promises to be difficult for all retailers. Attention to costs and basic trading principles will continue to be the focus for us this year. Whilst progress against plan in April is encouraging, the outlook for the six months to 30 September 2008 remains uncertain.
Brian A Carte
Chairman
29 May 2008
Chief Executive's Operating Review
Results and Key Performance IndicatorsThe year ended 31 March 2008 has seen the Company continue to make progress with turnover of £182m up from £176m in 2007. Our new franchise developments are now all complete and at various stages of progress in their individual business plans ranging from their first full year of operations to their third.
During the second half of the year we experienced increased pressure on gross profit margins and, whilst we have been able to establish our new franchise operations with improved sales, the expected early costs combined with lower margins have led to a full year trading loss of £197,000. However, profits from exceptional items of £2.776m, principally VAT refunds, give a final profit before tax of £2.579m, up from £1.443m last year.
As indicated in the announcement of our interim result, trading conditions in the second half of the year became difficult following the worsening crisis in the banking system, coupled with increasing prices of basic commodities and car tax costs. These events have given rise to challenging market conditions in our sector.
With net cash outflow in the year of £4.373m (2007 - inflow £1.180m) the proportion of total bank borrowings to shareholder funds at 31 March 2008 increased to 47% (2007-35%). While stocks temporarily peaked at the end of our financial year, they have now returned to more normal, lower levels.
Operational Developments
It is very unfortunate that the downturn in the economy coincided with the third year of our recovery plan. However, we continue to make good progress in establishing these new businesses and expect significant progress this year. While trading in April in line with plan, trading performance in the year ahead is dependent on consumer confidence.
A number of redevelopments are underway to reinvest the proceeds from earlier property sales and the VAT refund.
In Brighton, we are fully refurbishing our Audi dealership to the latest corporate standards. This has involved closing the onsite bodyshop and expanding the workshop and showroom facilities.
In our Lewes Land Rover dealership, we have relocated our valeting and service parking off site to allow improvements to the showroom and servicing facilities.
In Hailsham we are installing advanced bodyshop facilities to allow us to expand this profitable business and take on the authorised repairer status for the Volkswagen Audi Group, previously held in our Brighton Audi dealership.
Property
In May 2008 we completed on the sale of our former site in Worthing and the cash proceeds of £1.075m have now been received. We are making progress towards the sale of our site in East Grinstead although this remains dependent on a satisfactory planning permission being achieved.
The proposed development of our land in Hove has yet to achieve planning approval. An amended scheme is currently under consideration with the developer.
The company valued its portfolio of freehold premises as at 31 March 2008 but excluding three sites which were for sale as at that date and one further site undergoing a major refurbishment. The valuation was carried out on the basis of existing use value. The excess of the valuation over net book value as at 31 March 2008 was £6.9 million. In accordance with the company's accounting policies, this surplus has not been incorporated into the accounts.
Pensions
Against the backdrop of a difficult period for the stock market in general, it is encouraging to see that the pension scheme continues to show a small surplus.
IT
Developments include an upgrading of our current website to take advantage of the continued rapid growth in the use of this marketing medium. The new site will be launched later this year.
Similarly we are using the internet to enhance significantly our operational reporting, enabling easy comparison of best practice across the dealership network.
People & Training
During a difficult year we have seen high levels of commitment and professionalism across the Group for which I am most grateful. Much effort has been extended on improving processes across the Company which should deliver benefits during the coming year.
Training continues across all functional areas, fully supported by our Internal Auditing process reporting on best practice.
I am delighted to announce that Robert Bradbury has been promoted to Regional Director with responsibility for our Volkswagen dealerships.
VAT
As the Chairman stated in his half year report, HM Revenue & Customs confirmed in July 2007 that the VAT monies, paid to the Company in respect of a claim relating to VAT overpaid on demonstrator vehicle bonuses in March 2007, could be retained.
The monies received (less professional costs incurred) amounting to £2.9m, have been treated as exceptional income in the Company's Income Statement for the year ended 31 March 2008.
The Future
Trading conditions remain challenging but, through improved working practices, we started the year profitably despite stricter controls on vehicle stocks to counter falling used car values.
The economy is under pressure and consumers are assailed by increasing inflation on essentials such as fuel and food, whilst borrowing costs remain higher. Cost control and the maximising of gross profits will be essential if we are to realise our potential in uncertain market conditions in the forthcoming year.
Simon G M Caffyn
Chief Executive
29 May 2008
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2008
|
|
Note |
2008 £'000 |
2007 £'000 |
|
Revenue |
|
182,029 |
176,238 |
|
Cost of sales |
|
|
|
|
Exceptional item - VAT refund |
2 |
1,310 |
- |
|
Other costs of sales |
|
(158,351) |
(151,566) |
|
Total cost of sales |
|
(157,041) |
(151,566) |
|
Gross profit |
|
24,988 |
24,672 |
|
Distribution costs |
|
(16,191) |
(15,755) |
|
Administrative expenses |
|
|
|
|
Exceptional items |
2 |
- |
786 |
|
Other costs |
|
(7,094) |
(7,059) |
|
Total administrative expenses |
|
(7,094) |
(6,273) |
|
Exceptional items |
2 |
(134) |
(626) |
|
Operating profit analysed as: |
|
|
|
|
Before exceptional items |
|
393 |
1,858 |
|
Arising from exceptional items |
2 |
1,176 |
160 |
|
Finance expense |
|
(1,310) |
(1,232) |
|
Finance income (net) |
|
720 |
657 |
|
Finance income - exceptional interest on VAT refund |
|
1,600 |
- |
|
Net finance income / (expense) |
|
1,010 |
(575) |
|
Profit /(loss) before tax |
|
|
|
|
Before exceptional items |
|
(197) |
1,283 |
|
Arising from exceptional items |
2 |
2,776 |
160 |
|
Total profit before tax |
|
2,579 |
1,443 |
|
Tax |
3 |
(451) |
(280) |
|
Profit for the year attributable to equity shareholders of Caffyns plc |
|
2,128 |
1,163 |
|
Earnings per share |
5 |
73.9p |
40.4p |
CONSOLIDATED BALANCE SHEET
at 31 March 2008
|
|
2008 £'000 |
2007 £'000 |
|
Non-current assets |
|
|
|
Property, plant and equipment |
32,141 |
31,610 |
|
Goodwill |
481 |
481 |
|
Intangible assets |
9 |
31 |
|
Retirement benefit scheme |
1,864 |
344 |
|
|
34,495 |
32,466 |
|
Current assets |
|
|
|
Inventories |
27,238 |
23,846 |
|
Trade and other receivables |
8,837 |
9,047 |
|
Cash and cash equivalents |
29 |
35 |
|
Non current assets classified as held for sale |
990 |
990 |
|
|
37,094 |
33,918 |
|
Total assets |
71,589 |
66,384 |
|
Current liabilities |
|
|
|
Interest bearing loans and borrowings |
11,196 |
6,826 |
|
Trade and other payables |
22,801 |
21,575 |
|
Current tax payable |
626 |
230 |
|
Provisions |
27 |
3,203 |
|
|
34,650 |
31,834 |
|
Net current assets |
2,444 |
2,084 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Interest bearing loans and borrowings |
3,017 |
3,050 |
|
Preference shares |
1,237 |
1,237 |
|
Deferred tax liabilities |
2,542 |
2,218 |
|
|
6,796 |
6,505 |
|
Total liabilities |
41,446 |
38,339 |
|
Net assets |
30,143 |
28,045 |
|
Capital and reserves |
|
|
|
Share capital |
1,439 |
1,439 |
|
Share premium account |
272 |
272 |
|
Capital redemption reserve |
282 |
282 |
|
Non-distributable reserve |
3,892 |
3,915 |
|
Retained earnings |
24,258 |
22,137 |
|
Total equity attributable to shareholders of Caffyns plc |
30,143 |
28,045 |
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2008
|
|
Note |
2008 |
2007 |
|
|
|
£'000 |
£'000 |
|
Net cash from operating activities |
6 |
(1,597) |
4,202 |
|
Investing activities |
|
|
|
|
Proceeds on disposal of property, plant and equipment |
|
- |
1,351 |
|
Purchases of property, plant and equipment |
|
(2,023) |
(3,479) |
|
Acquisitions |
|
- |
(176) |
|
Net cash used in investing activities |
|
(2,023) |
(2,304) |
|
Financing activities |
|
|
|
|
Dividends paid |
|
(720) |
(691) |
|
Repayments of obligations under finance leases |
|
(33) |
(27) |
|
Net cash used in financing activities |
|
(753) |
(718) |
|
Net (decrease) / increase in cash and cash equivalents |
|
(4,373) |
1,180 |
|
Cash and cash equivalents at beginning of year |
|
(6,762) |
(7,942) |
|
Cash and cash equivalents at end of year |
|
(11,135) |
(6,762) |
|
|
|
|
|
|
|
|
|
|
|
|
31 March |
31 March |
31 March |
|
|
2008 |
2007 |
2006 |
|
|
£'000 |
£'000 |