Interim Results
Caffyns PLC
26 November 2004
Interim Results
________________________________________________________________________________
for the half-year ended 30 September 2004
Summary
2004 2003
£'000 £'000
Operating profit before exceptional items 1,983 1,716
Exceptional credit - VAT refund and interest 3,389 -
Profit on ordinary activities before taxation 5,216 1,478
p p
Basic earnings per share 150.6 41.9
Interim dividend 8.0 7.5
Enquiries:
Simon Caffyn
Chief Executive
Mark Harrison
Finance Director
Telephone: 01323 730201
Chairman's Statement
________________________________________________________________________________
In the six months to 30 September 2004, turnover has increased from £76 million
to £80 million. The operating profit before exceptional items is up at
£1,983,000 against £1,716,000 last year, an improvement of 15%.
The six month period has seen much activity with the amalgamation into the Group
of our business acquisitions coupled with the ongoing refurbishment programme
affecting many sites.
The Vauxhall dealership in Tunbridge Wells, acquired in February this year, is
undergoing major refurbishment. We will later this year open a satellite
Vauxhall site in Tonbridge, enabling us to cover this market area more
effectively and to provide MG Rover vehicles from a shared facility in Tunbridge
Wells.
In June we acquired the Volkswagen dealership covering Brighton and Hove and,
although it has not made a contribution to profits due to the major
reorganisation required, the opportunity for the long term development of the
business is substantial.
In November we acquired the Skoda dealership in Tunbridge Wells, giving us an
even stronger representation in the town as well as complementing our successful
Skoda operation in Ashford.
In the same period we have closed our loss-making business in Burgess Hill. The
Burgess Hill property will be sold and the proceeds from this and the sale of
the two sites closed last year will be used to continue the development of our
key franchise businesses.
In Eastbourne work is progressing well on a new Audi Centre development which is
on schedule to be completed in the spring of next year.
In September HM Customs & Excise agreed our initial claim in respect of VAT
overpaid on demonstrator vehicles in the period 1973 to 1996. The amount agreed
was £1.489 million and interest of £1.9 million and these monies will be used to
reduce borrowings. In common with other motor retailers, an additional claim has
been made to Customs but agreement is withheld pending resolution of a point of
law governing the reclaim of input VAT.
The Financial Services Authority has issued regulations which will affect the
sale and administration of insurance based products from January 2005. We are
taking the necessary steps to comply with the new regulations and the FSA have
indicated that they are minded to approve our application.
The post exceptional pre-tax profit of £5,216,000 will give rise to a tax charge
which may, by the year end, utilise all our surplus ACT therefore in future
years we would not have this tax benefit.
I would like to pay tribute to Ian Watt who retires from the Board at the end of
this month. Since joining the Company in January 1993 Ian has made an
outstanding contribution and I am very grateful to him for his advice over the
years.
Considering the potential disruption of all of the above activities, it is very
pleasing to report an increase in profit before tax and exceptional VAT refunds
to £1.827 million ahead of £1.478 million in 2003. The economy has slowed in the
last quarter but we remain well placed to continue to build on our success.
Your Directors have agreed to an increased interim dividend of 8.00p per
ordinary share amounting to £230,000. This will be paid on 12 January 2005 to
shareholders on the register at 5.00pm on 10 December 2004.
Brian A Carte
Chairman
26 November 2004
Consolidated Profit and Loss Account
___________________________________________________________________________________________________________
for the half-year ended 30 September 2004
Note Before VAT Half-year to Half-year to Year to
exceptional exceptional 30 September 30 September 31 March
VAT 2004 2003 2004
£'000 £'000 £'000
___________________________________________________________________________________________________________
Turnover
Continuing operations 77,962 - 77,962 76,004 146,017
Acquisitions 2,155 - 2,155 - 7,087
___________________________________________________________________________________________________________
80,117 - 80,117 76,004 153,104
___________________________________________________________________________________________________________
Operating profit
Continuing operations 2,057 1,489 3,546 1,670 3,697
Acquisitions (74) - (74) 46 192
___________________________________________________________________________________________________________
Total operating profit 1,983 1,489 3,472 1,716 3,889
Exceptional items 2 322 - 322 - (209)
___________________________________________________________________________________________________________
2,305 1,489 3,794 1,716 3680
Net interest (478) 1,900 1,422 (238) (571)
___________________________________________________________________________________________________________
Profit on ordinary activities
before taxation 1,827 3,389 5,216 1,478 3,109
Taxation 3 (291) (538) (829) (222) (471)
___________________________________________________________________________________________________________
Profit on ordinary activities
after taxation 1,536 2,851 4,387 1,256 2,638
Dividends (equity and non-equity) 4 (281) - (281) (267) (750)
___________________________________________________________________________________________________________
Retained profit 1,255 2,851 4,106 989 1,888
___________________________________________________________________________________________________________
Earnings per ordinary share 5 P p p
Basic 150.6 41.9 88.1
Adjusted 42.1 42.7 95.5
___________________________________________________________________________________________________________
Dividend per ordinary share 8.0 7.5 22.5
___________________________________________________________________________________________________________
Note of historical cost profits
and losses £'000 £'000 £'000
Reported profit on ordinary
activities before taxation 5,216 1,478 3,109
The difference between the
historical cost depreciation
and depreciation based on
revalued amounts 22 - 45
___________________________________________________________________________________________________________
Historical cost profit on
ordinary activities
before taxation 5,238 1,478 3,154
___________________________________________________________________________________________________________
Historical cost profit for
the period retained after
taxation and dividends 4,128 989 1,933
___________________________________________________________________________________________________________
Consolidated Balance Sheet
________________________________________________________________________________
at 30 September 2004
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
________________________________________________________________________________
Fixed assets
Intangible assets 363 103 161
Tangible assets 29,528 25,628 29,229
________________________________________________________________________________
29,891 25,731 29,390
________________________________________________________________________________
Current assets
Stocks 16,696 15,297 16,192
Consignment stocks 8,720 5,451 5,819
Debtors 13,159 8,155 9,860
Bank balances and cash 54 63 62
________________________________________________________________________________
38,629 28,966 31,933
________________________________________________________________________________
Creditors : amounts falling due within one year
Short term borrowings 8,252 2,341 8,444
Obligations relating to
consignment stock 8,720 5,451 5,819
Other 14,333 14,942 14,238
________________________________________________________________________________
31,305 22,734 28,501
________________________________________________________________________________
Net current assets 7,324 6,232 3,432
________________________________________________________________________________
Total assets less current liabilities 37,215 31,963 32,822
________________________________________________________________________________
Creditors : amounts falling due after one year
Long term borrowings (3,000) (3,000) (3,000)
Other (115) (54) (13)
________________________________________________________________________________
(3,115) (3,054) (3,013)
________________________________________________________________________________
Provisions for liabilities and charges (588) (401) (403)
________________________________________________________________________________
Net assets 33,512 28,508 29,406
________________________________________________________________________________
Capital and reserves
Called up share capital 2,676 2,676 2,676
Share premium account 272 272 272
Capital redemption reserve 282 282 282
Revaluation reserve 4,239 4,545 4,500
Profit and loss account 26,043 20,733 21,676
________________________________________________________________________________
Total shareholder's funds 33,512 28,508 29,406
________________________________________________________________________________
Consolidated Cash Flow Statement
________________________________________________________________________________
for the half-year ended 30 September 2004
Half-year to Half-year to Year to
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
________________________________________________________________________________
Cash inflow from operating actitivies
Operating profit 3,472 1,716 3,889
Depreciation 518 535 995
Amortisation of goodwill 49 17 34
Exceptional VAT (1,489) - -
Increase in stocks (3,219) (542) (1,119)
Decrease/(increase) in debtors 90 (197) (1,937)
Increase/(decrease) in creditors 2,685 (43) (663)
Decrease in provisions (82) (101) (170)
________________________________________________________________________________
Net cash inflow from operating activities 2,024 1,385 1,029
________________________________________________________________________________
Returns on investments and servicing of finance
Interest paid (478) (238) (571)
Preference dividends paid (51) (51) (102)
________________________________________________________________________________
(529) (289) (673)
________________________________________________________________________________
Taxation
Corporation tax paid (net) (96) (200) (400)
________________________________________________________________________________
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,000) (2,026) (3,814)
Sale of property in current assets - - 951
Sale of tangible fixed assets 807 1,059 167
________________________________________________________________________________
(193) (967) (2696)
________________________________________________________________________________
(Acquisitions)/disposals (703) (1,361) (4,579)
________________________________________________________________________________
Equity dividends paid (432) (403) (619)
________________________________________________________________________________
Cash inflow/(outflow) before financing 71 (1,835) (7,938)
________________________________________________________________________________
Financing
Issue of ordinary shares - 2 1
Capital element of finance lease 113 (37) (37)
________________________________________________________________________________
Net cash inflow/(outflow) from financing 113 (35) (36)
________________________________________________________________________________
Increase/(decrease) in cash (see note 6) 184 (1,870) (7,974)
________________________________________________________________________________
Notes to the Interim Results
________________________________________________________________________________
for the half-year ended 30 September 2004
1. Basis of preparation
The directors approved this interim statement on 26 November 2004.
The interim accounts for the half-year ended 30 September 2004 and the
comparative figures for the half-year ended 30 September 2003 are
unaudited, and have been prepared on the same basis as the accounts for the
year ended 31 March 2004.
The financial information for the year ended 31 March 2004 has been
abridged from the statutory accounts which have been filed with the
Registrar of Companies and on which the auditors have given an unqualified
audit opinion.
The interim financial statements have been reviewed by the company's
auditors. A copy of the auditor's review report is set out at the end of
this statement.
2. Exceptional items
Half-year to Half-year to Year to
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
Net profit on disposal of
tangible fixed assets 499 - 22
Closure and disposal costs (177) - (231)
_______________________________________________
322 - (209)
_______________________________________________
3. Taxation
Half-year to Half-year to Year to
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
Current UK corporation tax at 30%
Charge for the period 1,363 321 820
Advance corporation tax recovered (801) (114) (367)
Over-provision in respect
of prior years - - (53)
_______________________________________________
Total corporation tax 562 207 400
Deferred tax at 30%
Origination and reversal
of timing differences 267 15 71
_______________________________________________
829 222 471
_______________________________________________
4. Dividends
Ordinary shares of 50p each
The interim dividend proposed at the rate of 8.0p per share (2003 : 7.5p)
is payable on 12 January 2005 to shareholders on the register at the close
of business on 10 December 2004. The shares will be marked ex-dividend on 8
December 2004.
Preference shares
Preference dividends have been paid in October 2004. The next preference
dividends are payable in April 2005.
5. Earnings per share
Basic Half-year to Half-year to Year to
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
Profit before tax 5,216 1,478 3,109
Taxation (829) (222) (471)
Preference dividends (51) (51) (102)
_______________________________________________
Earnings 4,336 1,205 2,536
_______________________________________________
Basic earnings per share 150.6p 41.9p 88.1p
_______________________________________________
Adjusted
Profit before tax 5,216 1,478 3,109
Adjustments:
Goodwill amortisation 49 23 34
Exceptional items (note 2) (322) - 209
Exceptional item - VAT (3,389) - -
_______________________________________________
Adjusted profit before tax 1,554 1,501 3,352
Taxation (291) (222) (501)
Preference dividends (51) (51) (102)
_______________________________________________
Earnings 1,212 1,228 2,749
_______________________________________________
Adjusted earnings per share 42.1p 42.7p 95.5p
_______________________________________________
The weighted average number of ordinary shares in issue during each period
was 2,879,298.
6. Reconciliation of net cash flow to movement in net debt
Half-year to Half-year to Year to
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
Increase/(decrease) in
cash in the period 184 (1,870) (7,974)
Net cash (inflow)/outflow
from finance leases (113) 37 37
_______________________________________________
Movement in net debt in
the period 71 (1,833) (7,937)
Net debt at beginning of
period (11,382) (3,445) (3,445)
_______________________________________________
Net debt at end of period (11,311) (5,278) (11,382)
_______________________________________________
Independent Review Report
________________________________________________________________________________
to Caffyns plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 September 2004 which comprise the consolidated profit
and loss account, the note of historical cost profits and losses, the
consolidated balance sheet, the consolidated cash flow statement and notes 1 to
6. We have read the other information contained in the interim report which
comprises only the Chairman's Statement and considered whether it contains any
apparent misstatements or material inconsistencies with the financial
information. Our responsibilities do not extend to any other information.
This report is made solely to the company, in accordance with guidance contained
in APB Bulletin 1999/4 'Review of Interim Financial Information'. Our review
work has been undertaken so that we might state to the company those matters we
are required to state to it in a review report and for no other purposes. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company, for our review work, for this report, or for the
conclusion we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Service Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of management and applying analytical
procedures to the financial information and underlying financial data and, based
thereon, assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2004.
Grant Thornton UK LLP
Chartered Accountants
London
26 November 2004
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