TIDMCFYN
RNS Number : 7422P
Caffyns PLC
31 May 2018
Caffyns plc
Preliminary Results for the year ended 31 March 2018
Summary
2018 2017
GBP'000 GBP'000
Continuing operations*:
Revenue 213,725 212,581
Underlying** EBITDA 3,510 4,158
Underlying** profit before tax 1,390 2,051
Profit before tax from sale of business 4,684
Profit before tax (including discontinued
operations) 1,165 6,282
p p
Underlying** earnings per share 45.6 58.0
Earnings per share 38.2 186.3
Proposed final dividend per ordinary
share 15.0 15.0
Dividend per share for the year 22.5 22.5
* Following a business disposal that occurred in the previous
financial year, in April 2016, these results have been presented
between continuing and discontinued operations. Further detail
is provided in the notes below.
** Underlying profit before tax for the year represents profit
before tax of GBP1,165,000 adjusted for non-underlying charges
of GBP225,000 (see note 5). Underlying results exclude items
that have non-trading attributes due to their size, nature
or incidence. Underlying EBITDA represents Underlying profit
before tax adjusted for interest charges of GBP935,000 (see
note 6) and depreciation charges of GBP1,185,000.
Overview
-- Like-for-like new car unit sales down 9.2% against a 12.5% fall in our market sector
-- Like-for-like used car unit sales flat against 2017
-- Revenue from continuing operations up 0.5% to GBP213.7 million
-- Underlying profit before tax reduced to GBP1.4 million (2017:
GBP2.1 million) in challenging market conditions
-- Recommended dividend per ordinary share for the year
maintained at 22.5 pence (2017: 22.5 pence)
-- Property portfolio revaluation as at 31 March 2018 showed a
GBP10.3 million (2017: GBP10.1 million) surplus to net book value
(not recognised in the accounts)
Commenting on the results, Simon Caffyn, Chief Executive
said:
"We closed the year with a strong performance in the
registration-plate change month of March and entered the current
financial year with a stronger forward-order book than in the
previous year, which is a source of encouragement, although we
remain cautious about the outlook for the current year and
recognise our dependence on the key trading months of September and
March."
Enquiries:
Simon Caffyn, Chief
Caffyns plc Executive Tel: 01323 730201
Mike Warren, Finance
Director
HeadLand Francesca Tuckett Tel: 0203 805 4822
Operational and Business Review
The year under review has been a very challenging one for the
motor retail sector, but despite this I can report that Caffyns Plc
(the "Company") produced an underlying profit before tax of GBP1.4
million (2017: GBP2.1 million).
The challenges in the year came on three main fronts:
-- A declining new car market which showed an overall year-on-year fall of 11.0% in UK new car registrations, with a significant fall of 26% in diesel registrations;
-- Rates of vehicle excise duty were increased at the start of
our financial year on 1 April 2017 which caused some customers to
accelerate the timing of their purchases from April 2017 into March
2017. Whilst this benefitted our previous financial year, it
resulted in a very slow start to this current financial year with a
consequent negative impact on profitability;
-- The Government's re-rating of commercial properties was
implemented in April 2017 which resulted in an increase in the
Company's cost of business property rates in the current financial
year of GBP0.25 million.
Profit before tax was GBP1.2 million (2017: GBP6.3 million). The
prior financial year included a one-off gain of GBP4.7 million from
the disposal of the Company's Land Rover business. Basic earnings
per share were 38.2 pence (2017: 186.3 pence). Underlying earnings
per share for the year were 45.6 pence (2017: 58.0 pence).
Despite the challenging market, our own revenue from continuing
operations recorded a small increase to GBP213.7 million (2017:
GBP212.6 million), largely due to the resilience of our service and
parts operations.
In March 2018, the Company successfully completed the scheduled
refinancing of its bank facilities. Our Audi development at
Angmering remains on schedule to become operational in June
2018.
New and used cars
Our new unit sales fell by 9.2% on a like-for-like basis in the
year compared to the 11.0% reduction in total UK new car
registrations. Within this total, new car registrations in the
private and small business sector in which we principally operate
fell by 12.5%, so we again outperformed our specific sector.
However, we experienced pressure on new car margins and the
achievement of manufacturer volume-related bonus targets with the
result that new car gross profits were considerably down on last
year.
For used cars, unit sales volumes remained flat on a
like-for-like basis, although with an improvement in unit used car
margins. Over the last four-year period, the Company has recorded a
34% like-for-like growth in the number of used cars sold and we
continue to see this business providing a major opportunity for
further future growth. The number of used cars sold exceeded the
number of new cars sold in the year.
Throughout the year under review, we continued to upgrade our
website with multiple enhancements to our customers' online
searching capabilities, leading to an easier, more enjoyable
car-buying experience.
Aftersales
Despite the falls in the UK new car market in the financial year
under review, the number of one to three-year old cars in
circulation remains historically at very high levels. Our
three-year car parc has grown over the last four years and we are
encouraged that our service revenues in the year have continued to
rise, by 3.5% on a like-for-like basis. We continue to place great
emphasis on our customer retention programmes and in growing sales
of service plans. Our parts business also reported sales growth, up
by 3.2% on a like-for-like basis over the previous year.
Operations and redevelopment
Our Audi dealership in Angmering, developed to facilitate the
relocation and expansion of our Worthing business, is expected to
open for business as scheduled in June 2018. This facility will
comprise two state-of-the-art new car configurator areas in
addition to a ten-car showroom as well as extended used car display
areas. The aftersales facility will comprise a fourteen-bay
workshop and innovative drive-through service reception area. Once
relocated, the facility will enable the Worthing business to grow
considerably and benefit from the development of new housing in the
area. Our other two Audi businesses, at Brighton and at Eastbourne,
both performed well in the year with the Audi division making a
significant contribution to the Company's result.
As a result of operational performance issues, the financial
results from our Volkswagen division in the year were very
disappointing with new and used car sales declining from last
year's levels. However, we remain confident that the strength of
the brand, the excellent model range and exciting new products will
quickly lead to improvements in its future trading performance.
Our Volvo business in Eastbourne is in a period of transition as
we look to develop further our site and the manufacturer continues
to launch new models such as the XC40 (European Car of the Year)
which has been very positively received by customers. We are
assessing plans to expand our showroom facility to better
accommodate these extra models and the purchase in August 2017 of a
nearby commercial property will facilitate this expansion by
allowing our aftersales departments to be relocated into the newly
acquired building. The business traded profitably in the year and
we expect further profit growth for the business in the current
financial year.
In Tunbridge Wells, our SEAT business continued to perform well
and, in conjunction with the adjacent Skoda business, continues to
deliver healthy levels of profitability. Our Skoda business in
Ashford also performed well.
Our Vauxhall business in Ashford experienced very difficult
trading conditions in the year with customers' confidence in the
brand nationally at a low level. Vauxhall's new car registrations
in the year were down by almost a quarter and the impact of that
very significant reduction resulted in the business remaining in a
loss-making position. The takeover of Vauxhall in the UK by the PSA
Group and the recent announcement of a reduction in the number of
dealers should improve the profitability of the remaining
operators, of which the manufacturer has informed us we are
one.
Caffyns Motorstore, our used car business in Ashford, continued
to expand rapidly with further significant increases achieved in
sales volumes and in levels of profitability. The concept has been
very well received by our customers who particularly value the
reassurance of the Caffyns brand.
Groupwide projects
We remain focused on generating further improvements in the
three key areas of used car sales, used car finance and aftersales.
These helped to minimise the reductions in profitability in the
year under review, with very pleasing growth continuing to be
recorded in service labour sales. In addition, we continue to make
very good progress utilising technology to enhance the
customer-buying experiences from their first point of contact right
through the showroom buying process, as well as improving
aftersales retention.
Property
We operate primarily from freehold sites and our property
portfolio provides additional stability to our business model. As
in previous years, our freehold premises were revalued at the
balance sheet date by chartered surveyors CBRE Limited based on an
existing use valuation. The excess of the valuation over net book
value of our freehold properties at 31 March 2018 was GBP10.3
million (2017: GBP10.1 million). In accordance with our accounting
policies (which reflect those generally utilised throughout the
motor retail industry), this surplus has not been incorporated into
our accounts.
During the year, we incurred capital expenditure of GBP5.55
million (2017: GBP4.64 million). This included assets in the course
of construction, primarily the Audi development at Angmering, of
GBP3.87 million.
In August 2017, we acquired a commercial warehouse building in
Eastbourne which is located close to our existing Volvo business.
The intention is that this building will house our Volvo aftersales
operation which will in turn facilitate the expansion of the car
showroom at the existing site.
The Government implemented its rating revaluation for all
commercial property in April 2017. Although nationally this was not
targeted to raise additional revenues, the increases have fallen
disproportionately on the South-East region in which we operate,
where property values have increased the most over the previous
seven years since the last valuation exercise was undertaken. This
impact, net of a rates rebate in the year, resulted in our cost of
business property rates rising by GBP0.22 million to GBP1.03
million.
In the prior financial year, we acquired 2.1 acres of land
adjacent to our used car centre in Ashford which almost doubled the
footprint of our operations at Ashford and will enable us to grow
further our exciting Motorstore used car concept as well as
benefitting our Vauxhall and Skoda operations at the site.
As part of the sale of the Land Rover business in the prior
financial year, our freehold premises in Lewes were initially
leased to the purchaser for a minimum two-year period to April
2018, with a further one-year extension available at the
leaseholder's option. During the current financial year, we agreed
a further one-year extension which has now secured the tenancy
until April 2020. The Board continues to evaluate future
opportunities for the site.
Bank facilities
During the period the Company renewed and expanded its banking
facilities with HSBC Bank, now comprising a term loan of GBP7.5
million repayable over twenty years and a revolving-credit facility
of GBP7.5 million, both of which will become renewable in March
2023. HSBC Bank also provides an overdraft facility of GBP3.5
million, renewable annually. In addition, we have an overdraft
facility of GBP7.0 million provided by Volkswagen Bank, renewable
annually, together with a term loan, originally of GBP5.0 million,
which is repayable over the ten years to November 2023.
Bank borrowings, net of cash balances, at 31 March 2018 were
GBP14.0 million (31 March 2017: GBP8.6 million) and as a proportion
of shareholders' funds at 31 March 2018 were 52% (2017: 31%). The
increase in gearing in the year was primarily the result of the
investment in the Audi development at Angmering and the purchase of
an additional freehold building.
Taxation
The tax charge for the year ended 31 March 2018 was GBP0.1
million (2017: GBP1.2 million) which equated to an effective tax
rate on profits of 11.6% (2017: 18.4%). The current year effective
tax rate is lower than the standard rate of corporation tax in
force for the year of 19% due to an adjustment for an
over-provision of tax of GBP0.14 million (2017: GBPNil) in a prior
period. The lower effective tax rate in the previous financial year
was the result of a large tax-deductible expense arising from the
crystallisation of the Company's Save As You Earn share scheme in
September 2016.
The Company extinguished its brought forward capital losses in
the prior financial year and therefore has no current outstanding
trading or capital losses awaiting relief. Capital gains which
remain unrealised, where potentially taxable gains arising from the
sale of properties and goodwill have been rolled over into
replacement assets, amount to GBP11.9 million (2017: GBP12.1
million) which could equate to a future potential tax liability of
GBP2.0 million (2017: GBP2.0 million). The Company also has an
amount of GBP1.1 million (2017: GBP1.1 million) of recoverable
Advanced Corporation Tax ("ACT") and GBP0.8 million (2017: GBP0.9
million) of Shadow ACT. The directors remain confident in the
recoverability of the ACT although the Shadow ACT must first be
fully absorbed before the ACT balance itself can become available
to be utilised.
Pension Scheme
The Company's defined benefit scheme was closed to future
accrual in 2010. In common with many companies, the Board has
little control over the key assumptions in the valuation
calculations as required by the accounting standards and the
unprecedented low yields of gilts and bonds continues to have a
significant impact on the net funding position of the scheme.
Although it was pleasing to note no further deterioration in the
level of the discount rate in the year, the deficit at 31 March
2018 widened to GBP9.5 million (31 March 2017: GBP8.6 million),
mainly due to changes in the membership demographic. The deficit,
net of deferred tax, was GBP7.9 million (31 March 2017: GBP7.1
million).
During the year, the trustees appointed a fiduciary manager to
the Scheme and the Board, together with the independent pension
fund trustees, continues to review options to reduce the cost of
operating the Scheme. As part of the migration of the Scheme's
investment assets to the control of the fiduciary manager, actions
have been taken to reduce the risk profile of the assets and more
closely match the nature of the Scheme's assets to its liabilities.
Any additional actions that could further reduce the deficit over
the medium and longer term continue to be considered.
The pension cost under IAS 19 continues to be charged as a
non-underlying cost and amounted to GBP236,000 in the year (2017:
GBP199,000).
A formal triennial valuation of the Scheme was last carried out
as at 31 March 2014 and, in line with the recovery plan agreed with
the trustees following that valuation, the Company made a cash
payment into the scheme in the year of GBP313,650 (2017:
GBP306,750). This recovery plan payment for the coming and each
subsequent year will increase by 2.25% until superseded by a new
recovery plan to be agreed between the Company and the trustees. A
formal triennial actuarial valuation of the scheme is currently
being prepared as at 31 March 2017 and the Company remains
confident that this valuation, and an associated recovery plan,
will be completed before the scheduled deadline of 30 June 2018 as
stipulated by the Pension Regulator.
People
I am very grateful for the dedication of our employees and the
effort they apply to provide our customers with a first-class
purchasing experience. Across the Company the hard work and
professional application of our employees has helped to minimise
the fall in car sales volumes and to continue to grow our
aftersales operations.
Apprenticeships
The Company has a long tradition of investing in apprenticeship
programmes and this continued alongside the new Government
apprenticeship levy that was implemented from the start of our
financial year in April 2017. Despite early teething problems
experienced with the registration and accreditation processes of
the new levy regime, our own apprenticeship numbers have increased
year-on-year and we continue to see the benefits flow through the
business as more apprentices complete their training and become
fully qualified. As levy payments must currently be utilised within
only a two-year period, we do not anticipate we will be able to
fully utilise these and have accordingly expensed a proportion of
the levy payments made against our current year results. We remain
firmly committed to the long-term benefits of apprenticeships and
our recruitment programme continues with the aim of taking on an
increasing complement in the coming year to assist the Company to
grow.
Dividend
The Board remains confident in the future prospects of the
Company and has therefore declared an unchanged final dividend of
15.0 pence per ordinary share. If approved at the Annual General
Meeting, this will be paid on 3 August 2018 to ordinary
shareholders on the register at close of business on 6 July
2018.
Together with the interim dividend of 7.5 pence per Ordinary
share (2017: 7.5 pence) paid during the year, the total dividend
for the year will be 22.5 pence per Ordinary share (2017: 22.5
pence).
Strategy
The strategy to focus on representing premium and premium-volume
franchises as well as maximising opportunities for premium used
cars continues to be the right one in what is a rapidly changing
environment and the strength of our balance sheet allows us to
continue to invest in the future growth of our businesses.
We are concentrating on larger business opportunities in
stronger markets to deliver higher returns on capital from fewer
but bigger sites. We continue to deliver performance improvement,
in particular in our used car and aftersales operations.
Outlook
We closed the year with a strong performance in the
registration-plate change month of March and entered the current
financial year with a stronger forward-order book than in the
previous year, which is a source of encouragement. The current
consensus for the 2018 calendar year is for a further single-digit
fall in the UK new car market so we are cautious about the outlook
and remain dependent on the key months of September and March. Our
balance sheet is appropriately funded and our freehold property
portfolio is a source of stability, so we remain confident in the
longer-term prospects for the Company and ready to exploit future
business opportunities as they may arise.
S G M Caffyn
Chief Executive
30 May 2018
Group Income Statement
for the year ended 31 March 2018
Note 2018 2017
GBP'000 GBP'000
---------------------------------------- ------- ---------- ----------
Continuing operations:
Revenue 213,725 212,581
Cost of sales (189,495) (187,971)
Gross profit 24,230 24,610
Operating expenses
Distribution costs (15,601) (15,014)
Administration expenses (6,951) (7,386)
Operating profit before other income 1,678 2,210
Other income (net) 624 541
Operating profit 2,302 2,751
Operating profit before non-underlying
items 2,325 2,981
Non-underlying items within operating
profit (23) (230)
Operating profit 2,302 2,751
Finance expense 6 (935) (930)
Finance expense on pension scheme (202) (162)
Net finance expense (1,137) (1,092)
Profit before taxation 1,165 1,659
Profit before tax and non-underlying
items 1,390 2,051
Non-underlying items within operating
profit (23) (230)
Non-underlying items within finance
expense on pension scheme (202) (162)
Profit before taxation 1,165 1,659
Taxation 8 (135) (375)
Profit for the year from continuing
operations 1,030 1,284
Profit for the year from discontinued
operations 7 - 3,839
Profit for the year 1,030 5,123
Earnings per share
Basic 9 38.2p 186.3p
Diluted 9 38.1p 186.3p
Non-GAAP measure : Adjusted earnings
per share for continuing operations
Basic 9 45.6p 58.0p
Diluted 9 45.5p 58.0p
Group Statement of Comprehensive Income
for the year ended 31 March 2018
2018 2017
GBP'000 GBP'000
================================================= ======== ========
Profit for the year 1,030 5,123
--------------------------------------------------- -------- --------
Items that will never be reclassified to profit
and loss:
Remeasurement of net defined benefit liability (1,048) (3,725)
Deferred tax on remeasurement 178 633
--------------------------------------------------- -------- --------
Total other comprehensive expense, net of
taxation (870) (3,092)
--------------------------------------------------- -------- --------
Total comprehensive income for the year 160 2,031
--------------------------------------------------- -------- --------
Group Statement of Financial Position
at 31 March 2018
2018 2017
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 40,064 35,623
Investment property 6,893 6,986
Goodwill 286 286
Investment in subsidiary undertakings - -
47,243 42,895
Current assets
Inventories 30,398 29,904
Trade and other receivables 10,191 7,838
Current tax receivable 60 -
Cash and cash equivalents 3,375 2,321
44,024 40,063
Total assets 91,267 82,958
Current liabilities
Interest bearing overdrafts, loans and
borrowings 3,875 500
Trade and other payables 35,782 34,179
Current tax payable - 197
39,657 34,876
Net current assets 4,367 5,187
Non-current liabilities
Interest bearing loans and borrowings 13,500 10,375
Preference shares 812 812
Deferred tax liability 678 805
Retirement benefit obligations 9,497 8,554
24,487 20,546
Total liabilities 64,144 55,422
Net assets 27,123 27,536
Capital and reserves
Share capital 1,439 1,439
Share premium account 272 272
Capital redemption reserve 707 707
Non-distributable reserve 1,724 1,724
Retained earnings 22,981 23,394
Total equity attributable to shareholders
of Caffyns plc 27,123 27,536
Group Statement of Changes in Equity
for the year ended 31 March 2018
Capital
Share Share redemption Non-distributable Other Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
====================== ========== ========== ============ ================== ========= =========== ==========
At 1 April 2017 1,439 272 707 1,724 - 23,394 27,536
Total comprehensive
income
Profit for the year - - - - - 1,030 1,030
Other comprehensive
expense - - - - - (870) (870)
Total comprehensive
income for the year - - - - - 160 160
Transactions with
owners:
Dividends - - - - - (606) (606)
Share-based payment - - - - - 33 33
At 31 March 2018 1,439 272 707 1,724 - 22,981 27,123
for the year ended 31 March 2017
Capital
Share Share redemption Non-distributable Other Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================== ========== ========== ============ ================== ========= =========== ==========
At 1 April 2016 1,439 272 707 1,724 132 22,422 26,696
Total comprehensive
income
Profit for the year - - - - - 5,123 5,123
Other comprehensive
expense - - - - - (3,092) (3,092)
Total comprehensive
income for the year - - - - - 2,031 2,031
Transactions with
owners:
Dividends - - - - - (603) (603)
Purchase of own shares
for treasury - - - - - (919) (919)
Issue of shares -
SAYE scheme - - - - - 310 310
Share-based payment - - - - 21 - 21
Transfer - SAYE scheme - - - - (153) 153 -
At 31 March 2017 1,439 272 707 1,724 - 23,394 27,536
Group Cash Flow Statement
for the year ended 31 March 2018
Note 2018 2017
GBP'000 GBP'000
-------------------------------------------- ----- -------- --------
Net cash inflow from operating activities 11 662 1,743
Investing activities
Proceeds on disposal of property, plant 43 -
and equipment
Proceeds generated on sale of Land Rover
business, net of costs - 6,707
Purchases of property, plant and equipment
and investment property (5,545) (4,636)
Net cash (outflow)/inflow from investing
activities (5,502) 2,071
Financing activities
Secured loans repaid (8,000) (500)
Secured loans received 11,500 -
Purchase of own shares for treasury - (919)
Issue of shares - SAYE scheme - 310
Dividends paid (606) (603)
Net cash inflow/(outflow) from financing
activities 2,894 (1,712)
Net (decrease)/increase in cash and cash
equivalents (1,946) 2,102
Cash and cash equivalents at beginning
of year 2,321 219
Cash and cash equivalents at end of year 375 2,321
2018 2017
GBP'000 GBP'000
-------------------------------------------- ----- -------- --------
Cash and cash equivalents 3,375 2,321
Bank overdraft (3,000) -
Net Cash and cash equivalents 375 2,321
Notes
for the year ended 31 March 2018
1. GENERAL INFORMATION
Caffyns plc is a company domiciled in the United Kingdom. The
address of the registered office is Saffrons Rooms, Meads Road,
Eastbourne BN20 7DR. The registered number of the Company is
105664.
This financial information has been extracted from the
consolidated financial statements which were approved by the
Directors on 30 May 2018.
2. ACCOUNTING POLICIES
The financial information has been prepared under International
Financial Reporting Standards (IFRSs) issued by the IASB and as
adopted by the European Commission (EC). This financial information
has been prepared on the same basis as in 2017.
Whilst the financial information included in this announcement
has been computed in accordance with IFRSs, this announcement does
not itself contain sufficient information to comply with IFRSs.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 March 2018 or
2017, but is derived from those accounts. Statutory accounts for
the year ended 31 March 2017 have been delivered to the Registrar
of Companies and those for the year to 31 March 2018 will be
delivered following the Company's annual general meeting. The
auditors have reported on those accounts; their reports were
unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain
statements under section 498(2) or (3) Companies Act 2006 or
equivalent preceding legislation.
A copy of the annual report for the year ended 31 March 2018
will be available at www.caffynsplc.co.uk and will be posted to
shareholders by 25 June 2018.
Segmental reporting
Based upon the management information reported to the chief
operating decision maker, the Chief Executive, in the opinion of
the directors, the Company only has one reportable segment. There
are no major customers amounting to 10% or more of the Company's
revenue. All revenue and non-current assets derive from, or are
based in, the United Kingdom.
3. GOING CONCERN
The financial statements have been prepared on a going concern
basis which the directors consider appropriate for the reasons set
out below.
The Company meets its day to day working capital requirements
through short-term stocking loans and bank overdraft and
medium-term revolving credit facilities and term loans. At the
year-end, the medium-term banking facilities included a term loan
of GBP7.5 million and a revolving credit facility of GBP7.5 million
from HSBC, its primary bankers, both facilities are renewable in
March 2023, and a short-term overdraft facility of GBP3.5 million
which is renewed annually in August. The Company also has a 10-year
term loan from VW Bank with a balance outstanding at 31 March 2018
of GBP2.875 million which is renewable in 2024 and a short-term
overdraft facility of GBP7.0 million which is renewed annually in
August. In the opinion of the directors, there is a reasonable
expectation that all facilities will be renewed at their scheduled
expiry dates. The overdraft and revolving credit facilities include
certain covenant tests which were passed at 31 March 2018. The
failure of a covenant test would render these facilities repayable
on demand at the option of the lenders.
The directors have undertaken a detailed review of trading and
cash flow forecasts for a period in excess of one year from the
date of this Annual Report which projects that the facility limits
are not exceeded over the duration of the forecasts. These
forecasts have made assumptions in respect of future trading
conditions, particularly volumes and margins of new and used car
sales, aftersales and operational improvements together with the
timing of capital expenditure. The forecasts take into account
these factors to an extent which the directors consider to be
reasonable, based on the information that is available to them at
the time of approval of these financial statements. These forecasts
indicate that the Company will be able to operate within the
financing facilities that are available to it and meet the covenant
tests with sufficient margin for reasonable adverse movements in
expected trading conditions.
The directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. For those reasons, they continue to adopt the
going concern basis in preparing the 2018 Annual Report.
4. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of financial statements requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expense. Actual results may
differ from these estimates.
In preparing the consolidated financial statements, the
significant judgements made by management in applying the Company's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 March 2017.
5. NON-UNDERLYING ITEMS
2018 2017
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Net profit/(loss) on disposal of property,
plant and equipment 31 (1)
Other income (net) 31 (1)
Within operating expenses:
Service cost on pension scheme (34) (37)
Redundancy costs - (43)
Property lease dilapidations 60 (149)
VAT compliance costs (80) -
(54) (229)
Non-underlying items within operating
profit (23) (230)
Net finance expense on pension scheme (202) (162)
Non-underlying items within net finance
income (202) (162)
Total non-underlying items before taxation (225) (392)
Taxation credit on non-underlying items 26 80
Total after tax (199) (312)
The following amounts have been presented as non-underlying
items in these financial statements:
There were no management redundancy costs (2017: GBP43,000).
In the prior year, the Company notified its intention to
exercise a break clause of its lease for a site in Tonbridge and
made a provision of GBP149,000 for remedial work on the property
and professional fees associated with the break. In June 2017 the
Company duly exercised the break clause and negotiated a total cost
for the remedial work on the property of GBP80,000 with a further
GBP9,000 incurred in associated professional fees in the year. The
remaining provision held of GBP60,000 was credited to operating
expenses as a non-underlying item.
In September 2017, the Company received a periodic VAT
inspection from HM Revenue & Customs which identified certain
items of non-compliance with relevant legislation. To date, a sum
of GBP20,000 has been settled and a further provision of GBP60,000
has been taken against current year profits as a non-underlying
item to allow for items still to be resolved.
6. FINANCE EXPENSE
2018 2017
GBP'000 GBP'000
---------------------------------------------- ------------ ------------
Interest payable on bank borrowings 186 190
Vehicle stocking plan interest 591 569
Financing costs amortised 86 99
Preference dividends (see note 10) 72 72
---------------------------------------------- ------------ ------------
Finance expense 935 930
Interest payable on bank borrowings is after capitalising interest
on additions to freehold properties of GBP127,000 (2017: GBP45,000)
at a rate of 2.8% (2017: GBP22,000, rate: 2.3%).
7. DISCONTINUED OPERATIONS
In the prior financial year, in April 2016, the Company sold the
business and assets (excluding the freehold property) of its Land
Rover business to Harwoods Limited ("Harwoods"). Cash consideration
of GBP7.5 million comprised GBP5.5 million for goodwill together
with GBP0.2 million for property, plant and equipment and GBP1.9
million for inventories less GBP0.1 million in respect of
liabilities transferred. The total consideration was received at
completion on 29 April 2016. Ownership of the freehold property in
Lewes from which Harwoods will continue to operate the Land Rover
business remains with the Company, and is being leased to Harwoods
for a period of up to three years from 29 April 2016 subject to a
two-year tenant-only break clause.
As a result of this transaction, the operating activities
attributed to that business, as set out below, have been disclosed
as a discontinued operation.
2018 2017
GBP'000 GBP'000
--------------------------------- ---------- ---------
Revenue - 5,828
Cost of sales - (5,516)
--------------------------------- ---------- ---------
Gross profit - 312
Operating expenses - (370)
--------------------------------- ---------- ---------
Operating loss - (58)
--------------------------------- ---------- ---------
Finance expense - (3)
--------------------------------- ---------- ---------
Loss) before taxation - (61)
Taxation credit - 12
--------------------------------- ---------- ---------
Loss attributed to discontinued
operations - (49)
Profit on sale of business
net of deferred tax - 3,888
--------------------------------- ---------- ---------
Profit for the period from
discontinued operations - 3,839
--------------------------------- ---------- ---------
The results of the business shown above represent its trading
from the start of the prior financial year until disposal on 29
April 2016. Depreciation charged in arriving at these results was
GBPnil (2017: GBP18,000).
The carrying value of assets and liabilities on disposal are
shown below.
2018 2017
GBP'000 GBP'000
-------------------------------------------- ---------- ---------
Proceeds generated on sale of business - 7,512
Sale of property, plant and equipment - (218)
Transfer of inventories - (1,921)
Transfer of liabilities - 116
-------------------------------------------- ---------- ---------
- 5,489
Associated transaction costs:
Professional fees - (470)
Adjustments arising on completion - (230)
Provision for onerous costs - (105)
-------------------------------------------- ---------- ---------
Net transaction costs - (805)
-------------------------------------------- ---------- ---------
Net gain on sale of business - 4,684
-------------------------------------------- ---------- ---------
Deferred tax expense - (796)
-------------------------------------------- ---------- ---------
Profit on sale of business net of deferred
tax - 3,888
-------------------------------------------- ---------- ---------
8. TAXATION
2018 2017
GBP'000 GBP'000
---------------------------------------------------------- --------- ----------
Current tax
UK corporation tax (227) (338)
Adjustments recognised in the period 143 -
for current tax of prior periods
Total (84) (338)
Deferred tax
Origination and reversal of temporary
differences 1 (919)
Adjustments recognised in the period
due to change in rate of corporation
tax - 98
Adjustments recognised in the period (52) -
for deferred tax of prior periods
Total (51) (821)
Total tax charged in the Income Statement (135) (1,159)
2018 2017
The tax charge arises as follows: GBP000 GBP'000
---------------------------------------------------------- --------- ----------
On normal trading (161) (455)
On Non-underlying items (see note 5) 26 80
On Continuing operations (135) (375)
On Discontinued operations (see note 7) - (784)
(135) (1,159)
The charge for the year can be reconciled
to the profit per the Income Statement
as follows:
2018 2017
GBP'000 GBP'000
Profit before tax 1,165 6,282
Tax at the UK corporation tax rate of 19%
(2017: 20%) (221) (1,256)
Tax effect of expenses that are not deductible
in determining taxable profit (25) (63)
Difference between accounts profits and
taxable profits on capital asset disposals (2) 112
Other differences between accounts profits
and taxable profits (76) (48)
Movement in rolled over and held over gains 98 (2)
Re-measurement of deferred tax due to change
in rate of corporation tax - 98
Adjustments to tax charge in respect of 91 -
prior years
Tax charge for the year (135) (1,159)
9. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on
the earnings attributable to ordinary shareholders divided by
the weighted average number of shares in issue during the year.
Treasury shares are treated as cancelled for the purposes of
this calculation.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted to allow for the issue of
shares and the post-tax effect of dividends and/or interest,
on the assumed conversion of all dilutive options and other
dilutive potential ordinary shares.
Reconciliations of earnings and weighted average number of shares
used in the calculations are set out below:
Adjusted Basic
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ---------- --------- --------- ---------
Profit before tax 1,165 6,282 1,165 6,282
Adjustments:
Profit before tax relating - (4,623) - -
to discontinued operations
Non-underlying items
(note 5) 225 392 - -
Adjusted profit before
tax 1,390 2,051 1,165 6,282
Taxation (note 8) (161) (455) (135) (1,159)
Earnings 1,229 1,596 1,030 5,123
Earnings per share 45.6p 58.0p 38.2p 186.3p
Diluted earnings per
share 45.5p 58.0p 38.1p 186.3p
2018 2017
GBP'000 GBP'000
Continuing operations:
Underlying earnings from continuing
operations 1,229 1,596
Earnings per share 45.6p 58.0p
Diluted earnings per share 45.5p 58.0p
Non-underlying losses from continuing
operations (199) (312)
Losses per share (7.4p) (11.3p)
Diluted losses per share (7.4p) (11.3p)
Total earnings from continuing
operations 1,030 1,284
Earnings per share 38.2p 46.7p
Diluted earnings per share 38.1p 46.7p
Discontinued operations:
Earnings from discontinued operations - 3,839
Earnings per share - 139.6p
Diluted earnings per share - 139.6p
The number of fully paid ordinary shares in circulation at the
year-end was 2,694,790 (2017: 2,694,790). The weighted average
shares in issue for the purposes of the earnings per share
calculation were 2,694,790 (2017: 2,750,015). The shares granted
under the Company's SAYE scheme are dilutive and the weighted
average number of dilutive shares under option at fair value was
7,616 (2017: 45,703) giving a total diluted weighted average number
of shares of 2,702,406 (2017: 2,805,074).
10. DIVIDS
Paid 2018 2017
GBP'000 GBP'000
----------------------------------------------------- --------- --------
Preference
7% Cumulative First Preference 12 18
11% Cumulative Preference 48 48
6% Cumulative Second Preference 12 12
----------------------------------------------------- --------- --------
Included in finance expense (see note 6) 72 72
----------------------------------------------------- --------- --------
Ordinary
Interim dividend paid in respect of the current
year of 7.5p (2017: 7.5p) 202 202
Final dividend paid in respect of the March
2017 year end of 15.0p (2016: 13.5p) 404 401
----------------------------------------------------- --------- --------
606 603
----------------------------------------------------- --------- --------
Proposed
In addition, the directors are proposing a final dividend in respect
of the year ended 31 March 2018 of 15.0 pence per share which
will absorb GBP404,000 of shareholders' funds (2017: 15.0 pence
per share absorbing GBP404,000). The proposed final dividend is
subject to approval by shareholders at the forthcoming Annual
General Meeting and has not been included as a liability in these
financial statements.
11. NOTES TO THE CASH FLOW STATEMENT
2018 2017
GBP'000 GBP'000
------------------------------------------------------ ---------- ----------
Profit before taxation for continuing operations 1,165 1,659
Profit/(loss) before tax for discontinued operations
(note 7) - (61)
Profit before tax for the year 1,165 1,598
Adjustment for net finance expense 1,137 1,092
2,302 2,690
Adjustments for:
Depreciation of property, plant and equipment
and investment properties 1,185 1,196
Change in retirement benefit obligations (341) (350)
(Gain)/loss on disposal of property, plant
and equipment (31) 1
Share-based payments 33 21
Operating cash flows before movements in working
capital 3,148 3,558
(Increase)/decrease in inventories (494) 1,100
(Increase)/decrease in receivables (2,353) 611
Increase/(decrease) in payables 1,637 (2,034)
Cash generated by operations 1,938 3,235
Tax paid (341) (557)
Interest paid (935) (935)
Net cash derived from operating activities 662 1,743
In 2017, within the amount of net cash derived from operating
activities is cash inflow of GBP664,000 attributable to
discontinued operations. Accordingly, the net cash from operating
activities in respect of continuing operations during 2017 was
GBP1,079,000.
Reconciliation of net debt
Revolving
Bank loans credit Net debt
GBP000 facility GBP000
GBP000
------------------------- ------------- ---------- -----------
At 1 April 2016 3,875 7,500 11,375
Repayment (500) - (500)
Proceeds - - -
At 31 March 2017 3,375 7,500 10,875
Current liabilities 500 - 500
Non-current liabilities 2,875 7,500 10,375
At 31 March 2017 3,375 7,500 10,875
At 1 April 2017 3,375 7,500 10,875
Repayment (500) (7,500) (8,000)
Proceeds 7,500 4,000 11,500
At 31 March 2018 10,375 4,000 14,375
Current liabilities 875 - 875
Non-current liabilities 9,500 4,000 13,500
At 31 March 2018 10,375 4,000 14,375
In addition to the above, the Company held a net cash balance at
bank of GBP375,000 (2017: GBP2,321,000) as at 31 March 2018.
12. CONTINGENT LIABILITIES
In September 2015, Volkswagen Aktiengesellschaft announced that
certain diesel vehicles manufactured by Volkswagen, Skoda, SEAT and
Audi, which contain 1.2, 1.6 and 2.0 litre EA 189 diesel engines
were fitted with software which is thought to have operated such
that when the vehicles were experiencing test conditions, the
characteristics of nitrogen oxides ("NOx") were affected. The
vehicles remain safe and roadworthy.
Technical measures have been approved by the German type
approval authority, the Kraftfahrt-Bundesamt (the "KBA") in respect
of Volkswagen and Audi branded vehicles, by the UK type approval
authority, the Vehicle Certification Agency (the "VCA") in respect
of Skoda and certain SEAT branded vehicles, and by the Ministerio
de Industria, Energía y Turismo (the "MDI") in respect of SEAT
branded vehicles. The KBA and VCA have confirmed for all affected
vehicles that the implementation of the technical measures does not
adversely impact fuel consumption figures, CO2 emissions figures,
engine output, maximum torque and noise emissions. The MDI is also
content that the technical measures be applied to those SEAT
vehicles for which they are the relevant approval authority.
We understand that to date in the region of 840,000 affected UK
vehicles have now had the technical measures applied.
Notwithstanding the above, claims on behalf of multiple
claimants, arising out of or in relation to their purchase,
ownership or acquisition on finance of a Volkswagen Group vehicle
affected by the NOx issue, have been brought or intimated against a
number of Volkswagen entities and dealers, including Caffyns. To
date, one firm of solicitors acting on behalf of sixteen claimants
has sent a letter before action to Caffyns in respect of the NOx
issue, claiming breach of contract and a breach of the Consumer
Protection from Unfair Trading Regulations 2008. As litigation
progresses further, there is the potential for the number of
claimants bringing claims against Caffyns to increase.
A claim in respect of one claimant has been issued protectively
in the High Court (due to the limitation period being close to
expiry), served and stayed by consent pending the determination of
the Group Litigation Order ("GLO") application. Another claim in
respect of four claimants has been issued protectively in the High
Court and served.
On 28 October 2016, one of the claimant firms served its
application for a GLO. The application for the GLO was finally
heard by the Senior Master on 27-29 March 2018. At that hearing the
Senior Master indicated that she would recommend to the President
of the Queen's Bench Division that a GLO be made in the terms of
the draft Order which was before her. The President of the Queen's
Bench Division has since provided his consent to the GLO, and a
sealed copy of the final GLO is currently awaited from the
Court.
At present, the litigation is in its early stages, and therefore
at this stage it is too early to assess reliably the merit of any
such claim. Accordingly, no provision for liability has been made
in these financial statements.
Notwithstanding the early stage of the litigation, Volkswagen
has agreed to indemnify Caffyns for the reasonable legal costs of
defending the litigation and any damages and adverse legal costs
that Caffyns may be liable to pay to the claimants as a result of
the litigation and the conduct of the Volkswagen Group. The
possibility, therefore, of an economic cost to Caffyns resulting
from the defence of the litigation is remote.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LLFIREIIIVIT
(END) Dow Jones Newswires
May 31, 2018 02:00 ET (06:00 GMT)
Caffyns (LSE:CFYN)
過去 株価チャート
から 6 2024 まで 7 2024
Caffyns (LSE:CFYN)
過去 株価チャート
から 7 2023 まで 7 2024