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Company Caffyns PLC
TIDM CFYN
Headline

Half Yearly Report

Released 07:00 30-Nov-2012
Number 3801S07

RNS Number : 3801S
Caffyns PLC
30 November 2012
 



HALF YEAR REPORT                                                             

for the half year ended 30 September 2012

 

 

 

Summary

 

 


2012

2011


£'000

£'000




Revenue

82,571

86,709




Profit before tax

512

241




Adjusted profit before tax *

439

268





p

p




Basic earnings per share

15.4

6.4




Adjusted earnings per share *

13.4

7.9




Interim dividend per share

5.0

5.0




* Adjusted for non-underlying items (as restated)

 

Highlights

·     Profit before tax up to £512,000 from £241,000 last year

·     Like for like new car unit sales up by 18.9%

·     Successful property sale completed realising £1.3m

·     Inventory levels in the half year reduced by £4.6m

·     Brighton Volkswagen redevelopment completed

·     Basic earnings per share increased to 15.4p from 6.4p last year

·     Dividend maintained at 5.0p

The Chief Executive, Simon Caffyn, commented:

"Our improved profitability in the first half year has continued into the early part of our second half year. However, the trading for the full year will, as always, depend on our performance in the crucial month of March."

 

 

 

Enquiries:

 

Caffyns plc

Simon Caffyn, Chief Executive

Tel:

01323 730201


Mark Harrison, Finance Director







The HeadLand Consultancy

Tom Gough

Tel:

0207 367 5228




07717 896701

 

 

 

 

 

 

 

Interim Management Report

 

 

Summary

Operating Review

 

New and Used Cars

 

·     Our new unit sales were up by 18.9% on a like for like basis. Over the half year period, total new car registrations rose by 6.3%. Within this, the private and small business sector in which we operate rose by 12.8% so we are outperforming both the overall UK average and the specific sector in which Caffyns operates. 

 

·    Used car unit sales were down 5.9% on last year on a like for like basis, due largely to the reduction at our Brighton Volkswagen dealership which suffered disruption during a showroom upgrade.

Aftersales

·    The decline of the new car parc over the last three years has led to a consequential decline in the number of one to three year old cars in circulation. We have restricted the fall in our aftersales revenue to 2.7% on a like for like basis as compared to 2011 levels.

Working Capital

·     Inventory levels in the half year period reduced by £4.6m and debtors by a further £0.5m.

 

Operations

 

·    The refurbishment work at our Brighton Volkswagen dealership is now complete with an enlarged car showroom and aftersales facility.

·    Our loss-making Ford and Volvo business in Brighton was sold in July 2012 releasing working capital, comprising principally stocks, of £459,000. We closed our Ford retail dealership in Alton in September 2012 recording a non-underlying loss in the first half of the year of £194,000.

·    We have begun trading as a Seat authorised repairer in Tunbridge Wells alongside our Skoda dealership and Seat sales are expected to follow.

·    Our website presence continues to improve and in July we won the Motor Trader Award for the best mobile website and our dealer website was also highly commended.

 

Property

 

·    Capital expenditure in the six months was £565,000 (2011: £1.3m), of which £277,000 was incurred on the Brighton Volkswagen showroom upgrade. 

·    Our site in Goring-by-Sea was sold in May 2012 for £1.28m, giving rise to a gain on sale of approximately £0.8m.

 

·    On 31 July 2012 we exchanged contracts for the sale of our Volvo business in Hove. We have retained our lease on the premises and granted a sub-lease to the purchaser.

 

·    Following the closure of our Ford business in Alton, the agreement to sell the freehold property became unconditional in October 2012 and a non-underlying gain of £1.15m will be reported in the full year results.

 

Pensions

·    The IAS 19 net pension position at 30 September 2012 was a deficit of £8.9m net of tax (£11.8m gross of tax) compared with a deficit of £4.75m net of tax at 31 March 2012 (£6.26m gross of tax). The higher deficit reflects the impact on liabilities of a reduction in the discount rate from 5.1% at 31 March 2012 to 4.4% at 30 September 2012 and lower than expected investment returns.

 

·    The triennial valuation as at 31 March 2011 has now been completed and shows a deficit at that date of £14.4m. The Recovery Plan agreed with the trustees requires a cash payment of £375,000 in the year to 31 March 2013 followed by £346,000 in the year to 31 March 2014 increasing by 3.4% per annum thereafter.

People

 

·    In August we announced the resignation from the Board of the Operations Director, Guy Ainsley.

 

·    We are particularly pleased to report that in September we won the South East Regional Apprentice Large Employer of the Year Award and in November we were recognised as one of the top 100 Apprenticeship Employers of the Year in the UK.

Dividend

·    The Board has decided to maintain the interim dividend at 5.0p per Ordinary Share.  This will be paid on 11 January 2013 to shareholders on the register at close of business on 14 December 2012.

Current Trading and Outlook

 

Our improved profitability in the first half year has continued into the early part of our second half year. However, the trading for the full year will, as always, depend on our performance in the crucial month of March.

Simon G M Caffyn

Chief Executive

 

 

Condensed Consolidated Income Statement

 

for the half year ended 30 September 2012

 

 




Half year to 30 September 2011

Year ended 31 March 2012


 

 

Note

 Before non-underlying

Non-underlying

(note 3)

 

 

Total

Before non-underlying

(as restated)*

 

 

Total

Before non-underlying

(as restated)*

 

 

Total



£'000

£'000

£'000

£'000

£'000

£'000

£'000



















Revenue


74,684

7,887

82,571

85,510

86,709

154,375

170,192











(65,221)

(6,705)

(71,926)

(74,005)

(75,295)

(134,282)

(148,098)



















Gross profit


9,463

1,182

10,645

11,505

11,414

20,093

22,094










Operating expenses


(8,545)

(1,935)

(10,480)

(10,703)

(11,200)

(18,468)

(21,806)




























Operating profit/(loss) 


918

(753)

165

802

214

1,625

288










 

3

-

800

800

 

-

444

-

2,024



















Operating profit


918

47

965

802

658

1,625

2,312



















4

(479)

(15)

(494)

(534)

(534)

(1,061)

(1,093)









Net finance income on pension scheme


 

-

 

41

 

41

 

-

 

117

 

-

 

237



















Net finance (costs)/income


(479)

26

(453)

(534)

(417)

(1,061)

(856)



















Profit before taxation


439

73

512

268

241

564

1,456










5

(67)

(18)

(85)

(48)

(63)

192

(40)



















Profit for the period from continuing operations


372

55

427

 

220

178

756

1,416



















Continuing operations earnings per share








 

 










Basic

6



15.4p


6.4p


51.0p










Diluted

6



14.9p


6.2p


49.1p

 

 

 

*See note 2

 

 

Condensed Consolidated Statement of Comprehensive Income

 

for the half year ended 30 September 2012

 

 


Half year to

Half year to

Year to


30 September 2012

30 September 2011

31 March 2012


£'000

£'000

£'000









Profit for the period

427

178

1,416









Other comprehensive income








Actuarial losses recognised in defined benefit pension scheme

(5,749)

(1,619)

(1,196)





Deferred tax on actuarial losses

1,322

405

287









Other comprehensive income, net of tax

(4,427)

(1,214)

(909)









Total comprehensive income for the period

(4,000)

(1,036)

507





 

 

Condensed Consolidated Balance Sheet

 

at 30 September 2012

 

 








30 September 2012

30 September 2011

31 March 2012



£'000

£'000

£'000











Non-current assets










Property, plant and equipment


27,468

27,192

26,669

Investment property


530

536

532

Goodwill


286

286

286

Deferred tax asset


1,409

268

172











Total non-current assets


29,693

28,282

27,659











Current assets










Inventories


21,124

23,141

25,722

Trade and other receivables


6,201

5,543

6,712

Cash and cash equivalents


576

24

22

Non-current assets held for sale


2,108

2,704

3,180











Total current assets


30,009

31,412

35,636
















Total assets


59,702

59,694

63,295











Current liabilities










Interest bearing loans and borrowings


2,393

9,739

1,219

Trade and other payables


20,370

22,595

26,501

Tax liabilities


208

213

208











Total current liabilities


22,971

32,547

27,928











Net current assets/(liabilities)


7,038

(1,135)

7,708






Non-current liabilities










Interest bearing loans and borrowings


7,500

-

7,500

Preference shares


1,237

1,237

1,237

Retirement benefit obligations


11,805

6,896

6,260











Total non-current liabilities


20,542

8,133

14,997











Total liabilities


43,513

40,680

42,925











Net assets


16,189

19,014

20,370











Equity










Share capital


1,439

1,439

1,439

Share premium account


272

272

272

Capital redemption reserve


282

282

282

Non-distributable reserve


2,390

2,419

2,390

Other reserve


108

84

96

Retained earnings


11,698

14,518

15,891











Total equity


16,189

19,014

20,370











 

 

Consolidated Statement of Changes in Equity

 

for the half year ended 30 September 2012

 

 


 

Share

capital

£'000

 

Share

premium

£'000

Capital

redemption

reserve

£'000

Non-distributable

reserve

£'000

Other reserve

£'000

 

Retained earnings

£'000

 

 

Total

£'000









At 1 April 2012

1,439

272

282

2,390

96

15,891

20,370

















Total comprehensive income
















Profit for the period

-

-

-

-

-

427

427









Other comprehensive income

-

-

-

-

-

(4,427)

(4,427)

















Total comprehensive income for the period

-

-

-

 

-

-

(4,000)

(4,000)









Transactions with owners:
















    Dividends

-

-

-

-

-

(193)

(193)









    Share based payment

-

-

-

-

12

-

12

















At 30 September 2012

1,439

272

282

2,390

108

11,698

16,189









 

 

 

for the half year ended 30 September 2011

 


 

Share

capital

£'000

 

Share

premium

£'000

Capital

redemption

reserve

£'000

Non-distributable

reserve

£'000

Other reserve

£'000

 

Retained earnings

£'000

 

 

Total

£'000









At 1 April 2011

1,439

272

282

2,419

72

15,786

20,270

















Total comprehensive income
















Profit for the period

-

-

-

-

-

178

178









Other comprehensive income






(1,214)

(1,214)

















Total comprehensive income for the period

-

-

-

 

-

-

(1,036)

(1,036)









Transactions with owners:
















    Dividends

-

-

-

-

-

(195)

(195)









    Purchase of own shares

-

-

-

-

-

(37)

(37)









    Share based payment

-

-

-

-

12

-

12

















At 30 September 2011

1,439

272

282

2,419

84

14,518

19,014









 

 

 

Consolidated Statement of Changes in Equity

 

for the year ended 31 March 2012

 

 


 

Share

capital

£'000

 

Share

premium

£'000

Capital

redemption

reserve

£'000

Non-distributable

reserve

£'000

Other reserve

£'000

 

Retained earnings

£'000

 

 

Total

£'000









At 1 April 2011

1,439

272

282

2,419

72

15,786

20,270

















Total comprehensive income
















Profit for the period

-

-

-

-

-

1,416

1,416









Other comprehensive income

-

-

-

-

-

(909)

(909)









Realised surpluses on disposal of land and buildings

-

-

-

 

(29)

-

29

-

















Total comprehensive income for the year

-

-

-

(29)

-

536

507









Transactions with owners:
















    Dividends

-

-

-

-

-

(335)

(335)









    Purchase of own shares

-

-

-

-

-

(104)

(104)









    Issue of shares - SAYE scheme

-

-

-

-

-

8

8









    Share-based payment

-

-

-

-

24

-

24

















At 31 March 2012

1,439

272

282

2,390

96

15,891

20,370









 

 

Condensed Consolidated Cash Flow Statement

 

for the half year ended 30 September 2012

 


Half year to

Half year to

Year to


30 September 2012

30 September 2011

31 March 2012


£'000

£'000

£'000









Cash flows from operating activities








Profit before taxation

512

241

1,456





Adjustments for:








Net finance expense

453

417

856





Depreciation and amortisation

476

493

990





Change in retirement benefit obligations

(163)

(87)

(180)





Impairment of property, plant and equipment

-

-

174





Gain on disposal of property, plant and equipment

(800)

(444)

(2,198)





Share-based payments

12

12

24





Decrease in inventories

4,598

3,128

547





Decrease/(increase) in trade and other receivables

511

459

(940)





Decrease in payables

(6,131)

(5,586)

(1,678)









Cash absorbed by operations

(532)

(1,367)

(949)





Income taxes

-

-

(4)





Interest paid

(494)

(534)

(1,093)









Net cash used in operating activities

(1,026)

(1,901)

(2,046)









Investing activities








Proceeds on disposal of property, plant and equipment (net of sale costs)

 

1,164

 

1,812

 

4,557





Purchases of property, plant and equipment

(565)

(1,320)

(2,703)









Net cash used in investing activities

599

492

1,854









Financing activities








Secured loans repaid

-

-

(3,000)





Secured loans received

-

-

2,500





Purchase of own shares

-

(37)

(104)





Issue of shares - SAYE scheme

-

-

8





Dividends paid to shareholders

(193)

(195)

(335)









Net cash used in financing activities

(193)

(232)

(931)









Net decrease in cash and cash equivalents

(620)

(1,641)

(1,123)





Cash and cash equivalents at beginning of period

(1,197)

(74)

(74)









Cash and cash equivalents at end of period

(1,817)

(1,715)

(1,197)





 

 

Notes to the Set of Financial Information

 

for the half year ended 30 September 2012

 

1.             GENERAL INFORMATION

 

 

 

 

 

 

2.             ACCOUNTING POLICIES

 

 

Segmental reporting

 

Basis of preparation: 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 Group meets its day to day working capital requirements through short-term stocking loans and bank overdraft and medium-term revolving credit facilities. The overdraft and revolving credit facilities include certain covenant tests. 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 Interim Management 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 this financial information. These forecasts indicate that the group 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 group 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 this Interim Management Report.

3.             NON-UNDERLYING ITEMS


Half year to

Half year to

Year to


30 September

30 September

31 March


2012

2011

2012



(as restated)

(as restated)


£'000

£'000

£'000





Impairment of property, plant and equipment

-

-

(174)





Net profit on disposal of property, plant and equipment

800

444

2,198





Losses incurred on closed businesses

(600)

(347)

(1,315)





Redundancy costs

(156)

(226)

(32)





Net finance income and service cost on pension scheme

29

102

215










73

(27)

892





 

Losses incurred in the closure of businesses amounted to £600,000 (2011: £347,000). These costs include wind down expenses, recognised from the date of the announcement to close or terminate the dealer agreement with the manufacturer, and also branch specific redundancy costs. Dealerships affected included the sale of the Volvo/Ford dealership in Hove, Sussex and the closure of the Ford dealership in Alton, Hampshire together with the trading at Ashford and Tunbridge Wells following the termination notice with Vauxhall Motors in July 2011.

 

The Group undertook a programme of redundancies in its core business consequent to the current economic situation, resulting in non-underlying payments of £156,000 (2011: £226,000).

 

 

 

4.             FINANCE EXPENSE

 


Half year to

Half year to

Year to


30 September

30 September

31 March


2012

2011

2012


£'000

£'000

£'000





Interest payable on bank borrowings

189

194

436





Vehicle stocking plan interest

191

217

413





Financing costs amortised

63

72

142





Preference dividends

51

51

102









Total finance costs

494

534

1,093









 

 

5.             TAXATION

 


Half year to

Half year to

Year to

 


30 September

30 September

31 March

 


2012

2011

2012

 



(as restated)

(as restated)

 


£'000

£'000

£'000

 





 

Current UK corporation tax




 





 

Charge for the period

-

-

-

 





 





 

Deferred tax




 





 

Origination and reversal of timing differences

127

110

227

 





 

Adjustment for change in rate of corporation tax

(42)

(47)

(86)

 





 

Adjustments recognised in the period for deferred tax of prior periods

 

-

 

-

 

(101)

 




(

 





 

Total

85

63

40

 





 





 

Total tax charged in the Income Statement

85

63

40

 





 





The tax charge/(credit) arises as follows:




 





 

On normal trading

67

48

(192)

 





 

Non-underlying

18

15

232

 





 





 

Total

85

63

40

 





 





 

6.             EARNINGS PER SHARE

 

 


Half year to

Half year to

Year to


30 September

30 September

31 March

Basic

2012

2011

2012


£'000

£'000

£'000





Profit before tax

512

241

1,456





Taxation

(85)

(63)

(40)





Earnings

427

178

1,416









Basic earnings per share

15.4p

6.4p

51.0p









Diluted earnings per share

14.9p

6.2p

49.1p









Adjusted


(as restated)

(as restated)





Profit before tax

512

241

1,456





Adjustment: Non-underlying items (note 3)

(73)

27

(892)









Adjusted profit before tax

439

268

564





Taxation

(67)

(48)

192









Adjusted earnings

372

220

756









Adjusted earnings per share

13.4p

7.9p

27.2p









Diluted earnings per share

13.0p

7.6p

26.2p





 

 

7.             DIVIDENDS

Ordinary shares of 50p each

 

Preference shares

 

8.             PENSIONS

 

9.             RELATED PARTY TRANSACTIONS

 

There have been no new related party transactions that have taken place in the first six months of the current financial year that have materially affected the financial position or performance of the Group during that period and there have been no material changes in the related party transactions described in the last annual report that could do so.

10.           POST BALANCE SHEET EVENT

 

 

 

11.           RISKS AND UNCERTAINTIES

 

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Board believes these risks and uncertainties to be consistent with those disclosed in our latest annual report, including general economic factors, their impact on the Group's defined benefit pension scheme, liquidity and financing, manufacturers' dependency and stability, used car prices and regulatory compliance.

 

 

12.           RESPONSIBILITY STATEMENT

 

We confirm to the best of our knowledge:

 

a)             the Interim financial statements have been prepared in accordance with IAS34 'Interim Financial Reporting';

b)             the Interim financial statements include a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules (indication of important events during the first six months and their impact on the set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year); and

c)             the Interim financial statements include a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules (disclosure of related parties' transactions and changes therein).

 

 

By order of the Board

 

S G M Caffyn

Chief Executive

 

M S Harrison

Finance Director

 

30 November 2012

 

 

INDEPENDENT REVIEW REPORT

 

to Caffyns plc

 

Introduction

Directors' responsibilities

Our responsibility

Scope of review

Conclusion

Grant Thornton UK LLP

Registered Auditor and

Chartered Accountants

London

30 November 2012

 


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