Final Results
Caffyns PLC
29 May 2003
Preliminary Results of Caffyns plc
For the year ended 31 March 2003
Caffyns plc, the leading motor distributor covering thirteen car franchises in
the South-East of England, announces record preliminary results for the
year-ended 31 March 2003.
Highlights
2003 2002
• Sales £148.5m £160.2m
• Profit on ordinary activities before £4,743,000 £2,785,000
taxation
• Basic earnings per share 144.0p 66.5p
• Proposed final dividend 14.0p 12.0p
• Total dividend for the year 21.0p 18.0p
Chairman's Statement
It is fitting that in the hundredth year of our involvement in the motor
industry, the result for the year ended 31 March 2003 is a record for the
company and I congratulate all the staff who have made this possible.
Specific mention must be made of the role played by my predecessor who retired
as chairman at the end of April 2003. Alan Caffyn has been involved in the
company since the mid-1950s and as a director for the past 40 years. The current
success of the company is due in a large part to his commitment, strong
management and direction.
I am delighted to be taking on the role of chairman at such an exciting time for
the industry, with the company very well positioned to take advantage of the
opportunities that will result from the implementation of the new Block
Exemption regulations.
The chief executive refers in his report to the 2.2% share buy back and,
together with the 15% share buy back in 2001/2002, it is very satisfying to see
the earnings per share grow by a significant amount.
An interim dividend of 7.0p per ordinary share (2002 - 6.0p) was paid on 15
January. A final dividend of 14.0p is now being recommended which, if approved
will be payable on 23 July 2003 to shareholders on the register on 27 June 2003,
giving a total of 21.0p for the year (2002 - 18.0p).
B A CARTE
Chairman
29 May 2003
Chief Executive's Review
Results
I am very pleased to report a record profit for the group of £4.743 million
before tax. This figure contains an exceptional profit of £1.919 million arising
largely from the sale of our two Mercedes dealerships last June, however it is
extremely satisfying to see that, despite the subsequent reduction in turnover
and profit, the underlying group profit is ahead of last year. After net
exceptional items of £1.589 million, the underlying profit before tax was £3.154
million giving a return of 2.1% on turnover of £148.5 million.
The result is a great credit to everyone in the group and a fitting tribute to
my father, Alan Caffyn, who retired as chairman at the end of April after a long
and distinguished career. We will of course continue to call on his wisdom and
his association continues as honorary president of the company.
Board Appointments
As announced at last year's annual general meeting, Mr Brian Carte has been
appointed chairman with effect from 1 May 2003. He joined the company in June
1996 on his retirement as chief executive of Lombard North Central plc.
Miss Sarah Caffyn was appointed to the main board as a director on 28 April
2003. Her role is Human Resources director and Company Secretary.
Both bring considerable experience and expertise to their respective positions
and we are lucky to enjoy this level of continuity on the board.
Block Exemption and UK Car Prices
As predicted, UK new car prices continue to harmonise with those in Europe.
Demand in the UK has been strong with retail activity driven by lower prices and
reducing interest rates. Demand may be affected by talks of possible interest
rate rises but the purchase of a new car is still attractive to many buyers.
The new Block Exemption regulation becomes law in October this year and we
continue to improve the operating standards of our dealerships to ensure we
capitalise on the new market conditions.
Franchises and Premises
As I mentioned above we sold our Mercedes businesses and received proceeds (net
of costs) of £5.178 million. This money was used to reduce our borrowings after
the recent acquisitions of one Volvo and one Volkswagen dealership. Both are
performing well and generating strong returns. Last year we began the
refurbishment of our Haywards Heath Volkswagen dealership and work starts on the
Eastbourne site soon. Our Worthing Volkswagen business was refurbished four
years ago and is now producing outstanding results.
Our Brighton Audi dealership continues to deliver excellent results and the
franchise remains highly desirable.
Our Vauxhall dealerships have had a very good year and the franchise goes from
strength to strength in this its Centenary Year. Having relocated our Vauxhall
dealership in Ashford in 2000 we have now sold the previous site since the
year-end for a cash consideration of £990,000. The loss arising from the sale of
£391,000 has been charged in the year as exceptional loss.
We have again worked hard and produced good results from our MG Rover businesses
with March being particularly strong. The MG Rover team continue to innovate and
we look forward to the arrival of their new small car in the autumn.
Our two Ford dealerships have again made significant contributions to the group
and our Land Rover business in East Sussex has had a record year.
Technology
Our management systems remain robust and we continue to develop their ability to
provide us with the information to successfully manage our customer database.
With the advent of increased competition following the introduction of the new
Block Exemption Regulation this area of our business remains central to our
success. Chris Fullalove, who is in charge of our IT systems, has been promoted
to our regional board.
Share Buy Back
Following an approach by a shareholder during the year, we bought back and
cancelled a further 65,500 shares representing 2.2% of the ordinary shares in
issue. As before, we have proposed a special resolution at the forthcoming AGM
to authorise the Company to make market purchases up to 15% of the issued
ordinary shares. There are currently no plans to make such purchases.
Caffyns Motor Contracts
In March 2001 we closed our contract hire operation, Caffyns Motor Contracts, to
new business. Used car residual values have fallen since then further than
expected and a further provision of £330,000 has been made. As we are now in the
final stages of the remaining contracts we do not expect any further provisions
to be necessary.
People and Training
Our record year is of course entirely due to the considerable efforts of our
loyal and hard working staff. Many of our dealerships have produced outstanding
performances as a result of strong teamwork and I am most grateful to them.
We continue to invest in training and development and we have begun a series of
management programmes which will work in parallel with the initiatives taken by
the industry's Retail Forum. These are designed to raise the profile of the
motor industry and the standards of qualification available to managers within
it.
The Future
A successful trading year has increased shareholders' funds to £27.5 million.
Group borrowings are low and we are in a strong position both financially and
operationally to build on our relationships with our leading manufacturer
partners.
S G M CAFFYN
Chief Executive
29 May 2003
For further information:
Simon Caffyn, Chief Executive
Mark Harrison, Finance Director
01323 730201
Caffyns plc
Preliminary Announcement
For the year ended 31 March 2003
Consolidated Profit and Loss Account
Note 2003 2002
£'000 £'000
Turnover
Continuing operations 148,483 159,251
Acquisitions - 983
------- ------
148,483 160,234
------- ------
Cost of sales (125,888) (137,478)
Exceptional costs on discontinued 2 (330) -
operation ------- ------
Total cost of sales (126,218) (137,478)
------- ------
Gross profit 22,265 22,756
Other operating charges (18,867) (19,007)
Operating profit
------- ------
Continuing operations before exceptional 3,728 3,749
costs
Exceptional costs on discontinued (330) -
operation ------- ------
Total operating profit 3,398 3,749
Exceptional item 2 1,919 (244)
------- ------
Profit on ordinary activities before 5,317 3,505
interest
Interest payable (574) (720)
------- ------
Profit on ordinary activities before 4,743 2,785
taxation
Taxation 3 (473) (423)
------- ------
Profit on ordinary activities after 4,270 2,362
taxation
Dividends (equity and non-equity) 4 (706) (654)
------- ------
Retained profit 3,564 1,708
------- ------
Earnings per ordinary share 5
Basic 144.0p 66.5p
Diluted 144.0p 66.2p
Note of Historical Cost Profits and Losses
Reported profit on ordinary activities 4,743 2,785
before taxation
Realisation of property revaluation (693) 272
(deficits)/surpluses ------- ------
Historical cost profit on ordinary 4,050 3,057
activities before taxation ------- ------
Historical cost profit for the year retained 2,871 1,980
after taxation and dividends ------- ------
There were no recognised gains or losses other than the profit for the financial
year.
Caffyns plc
Consolidated Balance Sheet at 31 March 2003
2003 2002
Note £'000 £'000
Fixed assets
Intangible assets 10 34
Tangible assets 23,510 26,356
------ ------
23,520 26,390
------ ------
Current assets
Stocks 19,725 23,629
Property 2 951 -
Debtors 7,923 7,800
Bank balances and cash 51 554
------ ------
28,650 31,983
Creditors
Amounts falling due within one year (20,944) (27,302)
------ ------
Net current assets 7,706 4,681
------ ------
Total assets less current liabilities 31,226 31,071
Creditors
Amounts falling due after more than one (3,207) (6,418)
year
Provisions for liabilities and charges (502) (541)
------ ------
27,517 24,112
------ ------
Capital and reserves
Called up share capital 2,676 2,686
Share premium account 271 167
Capital redemption reserve 282 249
Revaluation reserve 4,545 4,036
Profit and loss account 19,743 16,974
------ ------
27,517 24,112
------ ------
Equity shareholders' funds 26,280 22,875
Non-equity shareholders' funds 1,237 1,237
------ ------
Total shareholders' funds 6 27,517 24,112
------ ------
Caffyns plc
Consolidated Cash Flow Statement for the year ended 31 March 2003
Note 2003 £'000 2002
£'000 £'000 £'000
Net cash inflow from 7 3,360 4,086
operating activities
Returns on investment
and servicing of
finance
Interest paid (574) (720)
Preference dividends (102) (102)
paid ----- -----
(676) (822)
Taxation
UK Corporation tax (650) 98
(paid)/refunded
Capital expenditure
Purchase of tangible (931) (1,943)
fixed assets
Sale of tangible fixed 48 626
assets ----- -----
Net cash outflow from (883) (1,317)
capital expenditure
Disposals/(acquisitions) 5,124 (1,620)
Equity dividends paid (549) (526)
----- -----
Cash inflow/(outflow) 5,726 (101)
before financing
Financing
Capital element of (140) (129)
finance leases
Issue of shares 127 3
Purchase of own shares (2,675) -
Loan (repayment)/ (4,000) 4,000
advances ----- -----
Net cash (outflow)/ (6,688) 3,874
inflow from financing ----- -----
(Decrease)/increase in 8 (962) 3,773
cash ===== =====
Caffyns plc
Notes to the Preliminary Announcement for the year ended 31 March 2003
1. Basis of preparation
This preliminary statement, which does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985, has been extracted from the
statutory financial statements of the company for the year ended 31 March 2003
on which the auditors issued an unqualified audit opinion on 29 May 2003. These
financial statements have not yet been delivered to the Registrar of Companies.
The principal accounting policies have remained unchanged form the previous
year.
2. Exceptional items
2003 2002
£'000 £'000
Discontinued operations - Caffyns Motor Contracts (330) -
------- ---------
The contract hire operation of the company, Caffyns Motor Contracts, was closed
to new business in March 2001. Used car residual values have since fallen
further than expected and the further provision above of £330,000 has been made.
2003 2002
£'000 £'000
Profit on disposal of businesses 942 -
Net profit on disposal of tangible fixed assets 1,541 57
Closure and disposal costs (173) (301)
Provision for diminution in value of freehold property (391) -
------- ---------
1,919 (244)
-------- -------
In July 2002, the group disposed of its Mercedes-Benz franchises in Salisbury
and Dorchester. The group received £974,000 for goodwill and, after adjusting
for disposal costs, recorded a profit of £942,000.
The company's freehold properties at Salisbury and Dorchester were sold for
£2,875,000 recording profits on disposal after adjusting for disposal costs, of
£1,541,000. The profit on the historical cost basis was £848,000.
The closure and disposal costs relate to the disposal of the above dealerships,
the costs of closing a branch in Bexhill-on-Sea and the closure of a petrol
forecourt in Hailsham.
After the company's year-end on 31 March 2003, a freehold property in Ashford,
which was formerly occupied by Vauxhall and Skoda dealerships prior to their
relocation, has been sold for £990,000. After disposal costs, a loss of £391,000
has arisen and full provision for that loss has been made.
3. Taxation
2003 2002
£'000 £'000
Analysis of charge for year:
Current tax:
UK Corporation tax at 30% (695) (689)
Advance corporation tax recovered 266 303
Adjustment relating to prior years (12) 8
------ ------
(441) (378)
Deferred taxation
Origination and reversal of timing differences (32) (45)
------ ------
Tax on profit on ordinary activities (473) (423)
------ ------
The group's UK corporation tax charge has been reduced by £52,000 (2002 -
£90,000) as a result of branch closure costs (note 2) and a further £71,000
(2002: £60,000) due to utilisation of tax losses. There is no corporation tax
charge arising on the exceptional profit due to the availability of roll-over
relief and indexation.
4. Dividends
2003 2002
Non equity £'000 £'000
Preference
6.5% Cumulative First Preference 25 25
6.0% Cumulative Second Preference 12 12
10% Cumulative Preference 65 65
----- -----
102 102
----- -----
Equity
Ordinary
Interim dividend paid of 7.0p (2002 - 6.0p) 201 204
Final dividend proposed of 14.0p (2002 - 12.0p) 403 348
----- -----
604 552
----- -----
Total 706 654
----- -----
5. Earnings per ordinary 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. Shares held in employee share schemes 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.
Earnings Number of 2003 Earnings Earnings Number of 2002 Earnings
£'000 shares per share £'000 shares per share
'000 '000 As restated
Profit on 4,168 2,260
ordinary ------ ------
activities after
taxation and
preference
dividends
Weighted average 2,894 3,397
number of shares
Basic earnings 144.0p 66.5p
per share ------- -------
Number of shares - 48
under option
Number of shares - (33)
that would have ------ ------
been issued at
average market
value
Diluted earnings 4,168 2,894 144.0p 2,260 3,412 66.2p
per share ------- ------ ------- ------ ------ -------
6. Reconciliation of movements in shareholders' funds
2003 2002
£'000 £'000 £'000 £'000
Profit for the financial year 4,270 2,362
Dividends (706) (654)
------ -------
3,564 1,708
Purchase of own shares (286) (2,389)
Equity shares issued in year 127 3
------ -------
Net increase/(decrease) in 3,405 (678)
shareholders' funds
Brought forward at 1 April 24,112 24,790
------ -------
Carried forward at 31 March 27,517 24,112
------ -------
Shareholders' funds are attributable as
follows:
Equity interests 26,280 22,875
Non-equity interests
6.5% Cumulative First preference shares 389 389
of £1 each
10% Cumulative Preference shares of £1 648 648
each
6% Cumulative Second Preference shares 200 1,237 200 1,237
of 10p each ------ ------ ----- -------
27,517 24,112
------ -------
7. Reconciliation of operating profit to net cash inflow from operating
activities
2003 2002
£'000 £'000
Operating profit 3,398 3,749
Depreciation charge 975 1,029
Amortisation of goodwill 24 15
Decrease/(increase) in stocks 2,503 (1,228)
Increase in debtors (123) (1,675)
(Decrease)/increase in creditors (3,346) 2,708
Decrease in provisions for liabilities and charges (71) (512)
----- -----
Net cash inflow from operating activities 3,360 4,086
----- -----
8. Reconciliation of net cash flow to movement in net debt
2003 2002
£'000 £'000
(Decrease)/increase in cash in the year (962) 3,773
Movement in loans 4,000 (4,000)
Cash outflow from capital repayments of finance 140 129
leases ----- -----
Movement in net debt in the year 3,178 (98)
Net debt at 1 April (6,623) (6,525)
----- -----
Net debt at 31 March (3,445) (6,623)
----- -----
9. Analysis of net debt
At 31 March 2003 Disposal Cash flow At 1 April 2002
£'000 £'000 £'000 £'000
Overdrafts/(cash 408 (5,177) 6,139 (554)
at bank) ------ ------- ------ -----
Debt falling due - - (1,500) 1,500
within 1 year
Debt falling due 3,000 - (2,500) 5,500
after more than 1
year
Finance leases 37 - (140) 177
------ ------- ------ -----
3,037 - (4,140) 7,177
------ ------- ------ -----
Total 3,445 (5,177) 1,999 6,623
------ ------- ------ -----
10. Annual Report
Copies of the Annual Report will be dispatched to shareholders by 27 June 2003.
11. Financial Calendar
Final dividend to be paid on 23 July 2003 to shareholders on the register as at
27 June 2003. (Ex Dividend date - 25 July 2003).
Annual General Meeting at the Hydro Hotel, Eastbourne on Wednesday 23 July 2003
at 2.30 p.m.
This information is provided by RNS
The company news service from the London Stock Exchange
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