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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Caffyns Plc | LSE:CFYN | London | Ordinary Share | GB0001615219 | ORD 50P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 525.00 | 500.00 | 550.00 | 525.00 | 525.00 | 525.00 | 500 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Motor Veh Dealers (new,used) | 251.43M | 2.52M | 0.8766 | 5.99 | 15.12M |
From Apr 2019 to Apr 2024
TIDMCFYN
RNS Number : 4010X
Caffyns PLC
24 November 2017
HALF YEAR REPORT
for the half year ended 30 September 2017
Summary
Hot Features
Premium
6 months 6 months
to to
30 September 30 September
2017 2016
GBP'000 GBP'000
Revenue 106,504 105,188
Underlying EBITDA 1,817 2,068
Underlying profit
before tax 743 1,012
Discontinued operations
profit from business
disposal before deferred
tax expense - 4,684
Profit before tax
(including discontinued
businesses) 682 5,492
Pence Pence
Underlying basic earnings
per share 20.8 30.2
Basic earnings per
share (including discontinued
businesses) 19.1 164.3
Interim dividend per
ordinary share 7.50 7.50
Note: Underlying results exclude items that have non-trading attributes due to their size, nature or incidence. Following a business disposal that occurred in April 2016, the 2016 results have been presented between continuing and discontinued operations. Underlying EBITDA of GBP1,817,000 (2016: GBP2,068,000) represents Operating profit before non-underlying items of GBP1,203,000 (2016: GBP1,479,000) and Depreciation and amortisation of GBP614,000 (2016: GBP589,000).
Financial and operational review
-- Underlying profit before tax of GBP0.74 million (2016: GBP1.01 million)
-- Profit before tax of GBP0.68 million compared to the prior year profit of GBP5.49 million which included a GBP4.68 million gain from a business disposal
-- Like-for-like new car unit sales down by 7.4% compared to an 11.7% fall in national retail and small business market segment registrations
-- Like-for-like used car unit sales up by 4.6% -- Adjusted basic earnings per share of 20.8 pence (2016: 30.2 pence) -- Basic earnings per share of 19.1 pence (2016: 164.3 pence) -- Net bank borrowings higher at GBP10.3 million (2016: GBP5.39 million) -- Interim dividend declared unchanged at 7.50 pence (2016: 7.50 pence)
Simon Caffyn, Chief Executive, commented:
"In a challenging trading environment, we have generated an underlying profit before tax of GBP0.74 million and finished the period with a stronger than anticipated September performance. It is encouraging for the second half that our manufacturer new car sales targets have been adjusted to take into account the reduced national new car market, providing an increased bonus potential."
Enquiries:
Simon Caffyn, Chief
Caffyns plc Executive Tel: 01323 730201
Mike Warren, Finance
Director
Headland Francesca Tuckett Tel: 020 3805 4822
INTERIM MANAGEMENT REPORT
Summary
Revenue from continuing operations increased by 1.3% to GBP106.5 million (2016: GBP105.2 million). Turnover from new cars was unchanged from the previous year with a reduction in volume being fully mitigated by an increase in average transaction values. Turnover from used cars and aftersales increased by 2.7% and 3.3% respectively.
The Company operated in a challenging environment in the six months to 30 September 2017:
-- Increases in rates of vehicle excise duty were amended from 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. Looking across a period of the first nine months of the calendar year, turnover and underlying profit before tax increased by 6.2% and 9.8% respectively against the comparative nine-month period in 2016;
-- The Government's re-rating of commercial properties was implemented in April 2017 which resulted in an annualised increase in the cost of business property rates to the Company of some GBP0.25 million; and
-- The national backdrop of a declining new car market which showed a year-on-year increase of 6.3% in the first quarter of the calendar year but then fell to a 9.6% decrease over the following two quarters.
Despite these significant challenges we have generated an underlying profit before tax of GBP0.74 million (2016: GBP1.01 million) and finished the period with a strong September performance. A key element of our profitability is the bonuses we receive from manufacturers for achieving new car sales targets and it is encouraging for our second half that these targets have been adjusted to take account of the expected reduced national new car market.
Underlying basic earnings per share were 20.8 pence (2016: 30.2 pence).
Profit before tax for the period was GBP0.68 million with basic earnings per share of 19.1 pence (2016: 164.3 pence). The profit for the previous financial period of GBP5.49 million included a profit on disposal, net of costs and before tax, of GBP4.68 million arising from the sale of our Land Rover business in Lewes in April 2016.
The Company continues to operate at low levels of gearing and remains well placed to exploit future business opportunities including the continued expansion of our used car business.
Operating review
New and used cars
New car unit sales were down by 7.4% on a like-for-like basis in the half-year period, which outperformed the 11.7% fall in registrations in the national retail and small business market segment in which we principally operate. Used cars like-for-like unit sales were up 4.6% on the comparative period as our investment in this area of the business continues to yield useful returns. This is an encouraging result in the light of recently released national used car sales figures showing a 1.4% fall. Over a three-year period, the Company has now recorded 30% like-for-like growth in the number of used cars sold and we continue to see this part of the business as providing an opportunity for future growth. We have enhanced our website further to improve our customers' online searching abilities which, in turn, makes for an easier, more enjoyable car-buying experience.
Our performance in the bi-annual registration plate change month of September was pleasing, producing a stronger than anticipated trading performance and a 7% year-on-year growth in the number of new cars sold, despite a 9% weakening in national national registrations in that month.
Aftersales
The number of one to three-year old cars in circulation continues to increase. Historically strong sales of both new and used cars has meant our three-year car parc has also grown. It was encouraging to see like-for-like service revenues grow by 4.7% as we continued to realise improvements to our customer retention processes. Our parts business also reported sales growth, up by 1.7% on a like-for-like basis from the comparative period.
Operations
Our Audi businesses have continued to perform well. The planned relocation of our dealership in Worthing to a new, and significantly larger, site in the summer of 2018 will ensure that this business can better fulfil its potential.
The performance of our Volkswagen division in the period has been disappointing with new and used car sales declining by 7% and 3% respectively from last year's levels. However, we are encouraged for our second half that our manufacturer new car sales targets have been reduced and tactical bonus opportunities improved. We remain confident that the strength of the brand, the excellent model range and exciting new products will lead to improvements in its future trading performance.
Our Volvo business in Eastbourne is in a period of transition as we look to further develop our site and the manufacturer continues to launch new models. These have been positively received by customers and we are confident this will be reflected in the profitability of the business.
Our SEAT business in Tunbridge Wells, together with the adjacent Skoda business, has delivered healthy levels of profitability.
Our used car business in Ashford continues to expand with significant increases in like-for-like sales volumes being achieved in the first six months of this financial year. The concept has been very well received by our customers who particularly value the link to the Caffyns brand. The business has traded profitably since its inception in October 2014 and we have now started a further significant expansion of this operation. During the period, the Company utilised cash balances of GBP2.0 million, primarily as a result of the purchase of a freehold property and from short-term movements in working capital balances at the period end.
Property
Capital expenditure in the half year was GBP1.04 million (2016: GBP1.43 million) of which GBP0.87 million was incurred on the purchase in August 2017 of a freehold industrial unit in Eastbourne to facilitate the expansion of Volvo Eastbourne.
In September 2017, we commenced construction of a new Audi site in Angmering which will allow for the relocation of Audi Worthing. We anticipate that this development will be completed by June 2018.
In Ashford, we have submitted a planning application to fully utilise the additional land acquired adjacent to our existing Skoda and Vauxhall operations. This investment will almost double our local footprint and will enable us to further grow the exciting used car concept as well as our franchised operations at the site.
The Government implemented its rating revaluation for all commercial property on 1 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. As a result, our annualised cost of business property rates has risen by almost GBP0.25 million to GBP1.06 million.
Pensions
The unprecedented low yields of gilts and bonds continues to have a significant impact on the net funding position of the Company's defined-benefit pension, in line with most similar schemes, although it was pleasing to note an increase in the discount rate in the period. The scheme's investments performed well and the combination of these two factors helped the deficit at the period-end narrow to GBP5.03 million net of tax (GBP6.06 million gross of tax). This compared with a deficit of GBP7.10 million net of tax at 31 March 2017 (GBP8.55 million gross of tax) and a deficit of GBP11.58 million net of tax at 30 September 2016 (GBP13.95 million gross of tax).
The scheme's recovery plan, which was agreed with the trustees following the actuarial valuation in March 2014, resulted in a total cash payment of GBP0.16 million being made in the first six months of this financial year. Under the terms of the recovery plan, it has been agreed that this payment will increase in future financial years by 2.25% per annum.
People
I am very grateful for the dedication and professionalism shown by our employees. The marketplace in which we have operated in the first half of the financial year has been very challenging and their hard work and professional application has been instrumental in achieving growth in both our used car sales and aftersales businesses and, whilst our new car sales are reduced, in again outperforming our target sales market.
Dividend
Despite the reduction in profitability experienced in this six-month period, the Board remains confident in the longer-term prospects of the Company and has therefore declared an unchanged interim dividend of 7.50 pence per ordinary share. This will be paid on 8 January 2018 to shareholders on the register at close of business on 18 December 2017. The ordinary shares will be marked ex-dividend on 17 December 2017.
Strategy
The Company's continued low gearing levels provides us with the flexibility to expand upon our recent successes in used car sales, opportunities to invest in additional freehold premises and assess further opportunities for organic growth.
Current trading and outlook
Our performance in the bi-annual registration plate change month of September was stronger than anticipated. The importance to the Company's full year result of a continued recovery in the financial performance of the Volkswagen division, as well as a successful next bi-annual registration plate change month in March 2018 means that the Board remains cautious for the second half of the year. Other factors prompting caution include the consensus for an overall smaller new car market in 2017, the wider challenge to the economy from the weakness in sterling, likely further increases in interest base rates and the uncertainty surrounding the Brexit process. However, it is encouraging for our second half that our manufacturer new car sales targets have been adjusted to take into account the reduced national new car market, providing an increased bonus potential.
Simon G M Caffyn
Chief Executive
23 November 2017
Condensed Consolidated Statement of Financial Performance
for the half year ended 30 September 2017
Unaudited Unaudited Audited
Half year Half year Year ended
N to 30 to 30 31 March
o September September 2017
t 2017 2016 Total
e Total Total
GBP'000 GBP'000 GBP'000
Continuing operations:
Revenue 106,504 105,188 212,581
Cost of sales (94,157) (93,099) (187,971)
-------------------------------------- ---- ----------- ----------- ------------
Gross profit 12,347 12,089 24,610
Operating expenses (11,396) (10,918) (22,400)
-------------------------------------- ---- ----------- ----------- ------------
Operating profit before
other income 951 1,171 2,210
Other income (net) 293 246 541
-------------------------------------- ---- ----------- ----------- ------------
Operating profit 1,244 1,417 2,751
Operating profit before
non-underlying items 1,203 1,479 2,981
Non-underlying items within
operating profit 3 41 (62) (230)
-------------------------------------- ---- ----------- ----------- ------------
Operating profit 1,244 1,417 2,751
Finance expense 4 (460) (467) (930)
Non-underlying net finance
expense on pension scheme 3 (102) (81) (162)
-------------------------------------- ---- ----------- ----------- ------------
Net finance expense (562) (548) (1,092)
-------------------------------------- ---- ----------- ----------- ------------
Profit before taxation 682 869 1,659
Profit before tax and non-underlying
items 743 1,012 2,051
Non-underlying items within
operating profit 3 41 (62) (230)
Non-underlying net finance
expense on pension scheme 3 (102) (81) (162)
-------------------------------------- ---- ----------- ----------- ------------
Profit before taxation 682 869 1,659
Taxation 5 (167) (148) (375)
-------------------------------------- ---- ----------- ----------- ------------
Profit for the period from
continuing operations 515 721 1,284
-------------------------------------- ---- ----------- ----------- ------------
Discontinued operations:
Profit on disposal of discontinued
operations net of deferred
tax 9 - 3,888 3,888
Loss after tax attributed
to discontinued operations 9 - (51) (49)
-------------------------------------- ---- ----------- ----------- ------------
Profit for the period from
discontinued operations - 3,837 3,839
-------------------------------------- ---- ----------- ----------- ------------
Profit for the period 515 4,558 5,123
-------------------------------------- ---- ----------- ----------- ------------
Earnings per share
Basic 6 19.1p 164.3p 186.3p
Diluted 6 19.0p 164.2p 186.3p
Non GAAP measure
Underlying basic earnings
per share 6 20.8p 30.2p 58.0p
Underlying diluted earnings
per share 6 20.7p 30.2p 58.0p
Condensed Consolidated Statement of Comprehensive Income
for the half year ended 30 September 2017
Unaudited Unaudited Audited
Half year to Half year Year to
30 to 30 31
September 2017 September March
2016 2017
GBP'000 GBP'000 GBP'000
Profit for the period 515 4,558 5,123
--------------------------------------- --------------- ----------- ---------
Items that will never
be reclassified to profit
and loss:
Remeasurement of net pension
scheme obligation 2,436 (9,055) (3,725)
Deferred tax on remeasurement
of pension scheme obligation (414) 1,539 633
--------------------------------------- --------------- ----------- ---------
Other comprehensive income/(expense),
net of tax 2,022 (7,516) (3,092)
--------------------------------------- --------------- ----------- ---------
Total comprehensive income/(expense)
for the period 2,537 (2,958) 2,031
--------------------------------------- --------------- ----------- ---------
Condensed Consolidated Statement of Financial Position
at 30 September 2017
Note Unaudited Unaudited Audited
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and
equipment 36,090 32,974 35,623
Investment property 6,939 7,032 6,986
Goodwill 286 286 286
Deferred tax asset - 41 -
----------------------------- ----- -------------- -------------- ----------
Total non-current
assets 43,315 40,333 42,895
----------------------------- ----- -------------- -------------- ----------
Current assets
Inventories 28,981 27,425 29,904
Trade and other receivables 8,456 8,048 7,838
Cash and cash equivalents 305 6,231 2,321
----------------------------- ----- -------------- -------------- ----------
Total current assets 37,742 41,704 40,063
----------------------------- ----- -------------- -------------- ----------
Total assets 81,057 82,037 82,958
Current liabilities
Bank overdraft - 500 -
Interest-bearing
loans and borrowings 500 500 500
Trade and other payables 32,522 31,931 34,179
Tax liabilities 113 469 197
----------------------------- ----- -------------- -------------- ----------
Total current liabilities 33,135 33,400 34,876
----------------------------- ----- -------------- -------------- ----------
Net current assets 4,607 8,304 5,187
Non-current liabilities
Interest-bearing
loans and borrowings 10,125 10,625 10,375
Preference shares 812 812 812
Deferred tax liability 1,248 - 805
Pension scheme obligation 8 6,063 13,953 8,554
----------------------------- ----- -------------- -------------- ----------
Total non-current
liabilities 18,248 25,390 20,546
----------------------------- ----- -------------- -------------- ----------
Total liabilities 51,383 58,790 55,422
----------------------------- ----- -------------- -------------- ----------
Net assets 29,674 23,247 27,536
----------------------------- ----- -------------- -------------- ----------
Shareholders' equity
Ordinary share capital 1,439 1,439 1,439
Share premium 272 272 272
Capital redemption
reserve 707 707 707
Non-distributable
reserve 1,724 1,724 1,724
Other reserve 5 - -
Retained earnings 25,527 19,105 23,394
----------------------------- ----- -------------- -------------- ----------
Total equity 29,674 23,247 27,536
----------------------------- ----- -------------- -------------- ----------
Consolidated Statement of Changes in Equity
for the half year ended 30 September 2017
Capital
Share Share redemption Non-distributable Retained Total
capital premium reserve reserve earnings equity
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 period - - - - 515 515
Other comprehensive
expense - - - - 2,022 2,022
------------------------ ---------- ---------- ------------ ------------------ ----------- ----------
Total comprehensive
expense for
the period - - - - 2,537 2,537
Transactions with
owners:
Dividends - - - - (404) (404)
Share-based payment - - - - 5 5
At 30 September
2017 (unaudited) 1,439 272 707 1,724 25,532 29,674
------------------------ ---------- ---------- ------------ ------------------ ----------- ----------
for the half year ended 30 September 2016
Capital
Share Share redemption Non-distributable Other Retained Total
capital premium reserve reserve reserve earnings equity
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
period - - - - - 4,558 4,558
Other comprehensive
expense - - - - - (7,516) (7,516)
---------------------- ---------- ---------- ------------ ------------------ --------- ----------- ----------
Total comprehensive
income for
the period - - - - - (2,958) (2,958)
Dividends - - - - - (401) (401)
Purchase of own
shares for treasury - - - - - (383) (383)
Issue of shares
- SAYE scheme - - - - - 272 272
Share-based payment - - - - 21 - 21
Transfer - SAYE
scheme (2013) - - - - (153) 153 -
At 30 September
2016 (unaudited) 1,439 272 707 1,724 - 19,105 23,247
---------------------- ---------- ---------- ------------ ------------------ --------- ----------- ----------
for the year ended 31 March 2017
Capital
Share Share redemption Non-distributable Other Retained Total
capital premium reserve reserve reserve earnings equity
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
income - - - - - (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
(audited) 1,439 272 707 1,724 - 23,394 27,536
---------------------- ---------- ---------- ------------ ------------------ --------- ----------- ----------
Condensed Consolidated Cash Flow Statement
for the half year ended 30 September 2017
Unaudited Unaudited Audited
Half year Half year Year to
to to 31 March
30 September 30 September 2017
2017 2016 GBP'000
GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation from continuing
operations 682 869 1,659
Adjustments for:
Net finance expense and pension
scheme service cost 578 570 1,092
Depreciation and amortisation 614 589 1,196
Contribution to pension scheme
obligation (172) (182) (350)
Loss on disposal of property,
plant and equipment 4 - 1
Share-based payments 5 21 21
Loss generated from discontinued
operations before tax - (61) (61)
Decrease in inventories 923 3,579 1,100
(Increase)/decrease in trade
and other receivables (618) 401 611
Decrease in payables (1,657) (4,321) (2,034)
---------------------------------------- --------------- --------------- -----------
Cash generated from operations 359 1,465 3,235
Income taxes (222) - (557)
Interest paid (460) (470) (935)
---------------------------------------- --------------- --------------- -----------
Net cash (used in)/generated
from operating activities (323) 995 1,743
---------------------------------------- --------------- --------------- -----------
Investing activities
Proceeds generated on sale of
Land Rover business, net of costs - 6,707 6,707
Purchases of property, plant
and equipment (1,039) (1,428) (4,636)
---------------------------------------- --------------- --------------- -----------
Net cash (used in)/generated
from investing activities (1,039) 5,279 2,071
---------------------------------------- --------------- --------------- -----------
Financing activities
Secured loans repaid (250) (250) (500)
Purchase of own shares for treasury - (383) (919)
Issue of shares - SAYE scheme - 272 310
Dividends paid to shareholders (404) (401) (603)
---------------------------------------- --------------- --------------- -----------
Net cash used in financing activities (654) (762) (1,712)
---------------------------------------- --------------- --------------- -----------
Net (decrease)/increase in cash
and cash equivalents (2,016) 5,512 2,102
Cash and cash equivalents at
beginning of period 2,321 219 219
---------------------------------------- --------------- --------------- -----------
Cash and cash equivalents at
end of period 305 5,731 2,321
---------------------------------------- --------------- --------------- -----------
Cash and cash equivalents 305 6,231 2,321
Bank overdraft - (500) -
---------------------------------------- --------------- --------------- -----------
Net cash and cash equivalents 305 5,731 2,321
---------------------------------------- --------------- --------------- -----------
Notes to the Set of Financial Information
for the half year ended 30 September 2017
1. GENERAL INFORMATION
Caffyns plc is a company domiciled in the United Kingdom. The address of the registered office is Meads Road, Eastbourne, East Sussex, BN20 7DR.
These unaudited condensed consolidated interim financial statements for the half year to 30 September 2017 and similarly for the half year to 30 September 2016 are unaudited. They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2017.
The figures for the year ended 31 March 2017 have been extracted from the statutory accounts, filed with the Registrar of Companies on which the auditor gave an unqualified opinion and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
These statements have been reviewed by the Company's auditor and a copy of their review report is set out at the end of these statements.
These consolidated interim financial statements were approved by the directors on 23 November 2017.
2. ACCOUNTING POLICIES
The annual financial statements of Caffyns plc are prepared in accordance with IFRSs as adopted by the European Union. The set of financial statements included in this half yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union. This interim financial report has been prepared under the historical cost convention as modified by the fair value accounting of defined benefit schemes and share-based payment transactions. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, this set of financial statements has been prepared in accordance with the accounting policies set out in the Annual Report for the year ended 31 March 2017.
Segmental reporting
Based upon the management information reported to the Group's chief operating decision maker, the Chief Executive, in the opinion of the directors, the Group only has one reportable segment. There are no major customers amounting to 10% or more of the Group's revenue. All revenue and non-current assets derive from, or are based in, the United Kingdom.
Basis of preparation: Going concern
The condensed 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 Half Year 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 Half Year Report.
Discontinued operations
A discontinued operation represents an individually significant component of the Group that is either held for sale or has been disposed of. The Statement of Financial Performance discloses the results of a discontinued operation separately with comparative information being restated where applicable. The assets and liabilities are presented separately on the Statement of Financial Position, although comparative information is not restated.
Non-underlying items
Non-underlying items are those items that are unusual because of their size, nature or incidence. Management considers that these items should be disclosed separately to enable a full understanding of the operating results. Profits and losses on disposal of property, plant and equipment are also disclosed as non-underlying, as are certain redundancy costs and costs attributable to vacant properties held pending their disposal.
The net financing return and service cost on pension obligations in respect of the defined benefit pension scheme is presented as a non-underlying item due to the volatility of this amount. The defined benefit pension scheme is closed to future accrual.
All other activities are treated as underlying.
3. NON-UNDERLYING ITEMS
Half year Half year Year to
to to 31 March
30 September 30 September 2017
2017 2016
GBP'000 GBP'000 GBP'000
Other income:
Net loss on disposal of
property, plant and equipment (4) - (1)
------------------------------------ -------------- -------------- ----------
Within operating expenses:
Service cost on pension
scheme (15) (19) (37)
Redundancy costs - (43) (43)
Dilapidation provision
release/(charge) 60 - (149)
----------------------------------- -------------- -------------- ----------
45 (62) (229)
------------------------------------ -------------- -------------- ----------
Non-underlying items within
operating profit 41 (62) (230)
------------------------------------ -------------- -------------- ----------
Net finance expense on pension
scheme (102) (81) (162)
------------------------------------ -------------- -------------- ----------
Total non-underlying items
within profit before taxation (61) (143) (392)
------------------------------------ -------------- -------------- ----------
The following amounts have been presented as non-underlying items in these financial statements:
There were no branch specific redundancy costs (2016: GBP43,000).
The Company exercised a break clause of its lease for a site in Tonbridge in June 2017. The Company negotiated a total cost for the remedial work on this property of GBP80,000 with a further GBP9,000 incurred in associated professional fees in the period. The remaining provision held was credited to operating expenses as a non-underlying item.
4. FINANCE EXPENSE
Half year Half year Year to
to to 31 March
30 September 30 September 2017
2017 2016 GBP'000
GBP'000 GBP'000
Interest payable on bank
borrowings 95 119 190
Vehicle stocking plan interest 291 269 569
Financing costs amortised 38 43 99
Preference dividends 36 36 72
-------------------------------- -------------- -------------- ----------
Total finance costs 460 467 930
-------------------------------- -------------- -------------- ----------
5. TAXATION
Half year Half year Year to
to to 31 March
30 September 30 September 2017
2017 2016 GBP'000
GBP'000 GBP'000
Current UK corporation tax
Charge for the period (138) (53) (338)
Total current tax charge (138) (53) (338)
------------------------------------- -------------- -------------- ----------
Deferred tax
Origination and reversal
of timing differences (29) (979) (919)
Adjustments recognised in
the period due to change
in rate of corporation tax - 98 98
------------------------------------- -------------- -------------- ----------
Total deferred tax charge (29) (881) (821)
------------------------------------- -------------- -------------- ----------
Total tax charged in the
Statement of Financial Performance (167) (934) (1,159)
------------------------------------- -------------- -------------- ----------
The tax charge arises as
follows:
On normal trading (182) (173) (455)
Non-underlying items 15 25 80
------------------------------------- -------------- -------------- ----------
Continuing operations (167) (148) (375)
Discontinued operations - (786) (784)
------------------------------------- -------------- -------------- ----------
Total tax charge (167) (934) (1,159)
------------------------------------- -------------- -------------- ----------
Taxation of trading items for the half year has been provided at the current rate of taxation of 19% (2016: 20%) expected to apply to the full year. Tax on the disposal gain from discontinued operations items in the prior year was provided at the substantially enacted rate of 17%.
6. 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 period. 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 the earnings and the weighted average number of shares used in the calculations are set out below.
Half year Half year Year to
to to
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Basic
Profit for the period 515 4,558 5,123
----------------------------- ------------- ------------- ---------
Basic earnings per share 19.1p 164.3p 186.3p
----------------------------- ------------- ------------- ---------
Diluted earnings per share 19.0p 164.2p 186.3p
----------------------------- ------------- ------------- ---------
Adjusted
Profit before tax 682 5,492 6,282
Profit before tax relating
to discontinued operations - (4,623) (4,623)
Adjustment: Non-underlying
items (note 3) 61 143 392
----------------------------- ------------- ------------- ---------
Underlying profit for the
period 743 1,012 2,051
Taxation on normal trading
(note 5) (182) (173) (455)
----------------------------- ------------- ------------- ---------
Underlying earnings 561 839 1,596
----------------------------- ------------- ------------- ---------
Underlying basic earnings
per share 20.8p 30.2p 58.0p
----------------------------- ------------- ------------- ---------
Diluted earnings per share 20.7p 30.2p 58.0p
----------------------------- ------------- ------------- ---------
The number of fully paid ordinary shares in issue at the period end was 2,879,298 (2016: 2,879,298). Excluding the shares held for treasury, the weighted average shares in issue for the purposes of the earnings per share calculation were 2,694,790 (2016: 2,773,616). The shares granted under the Company's SAYE scheme are dilutive. The number of dilutive shares under option at fair value was 12,374 (2016: 2,011) giving a total diluted weighted average number of shares of 2,707,164 (2016: 2,775,627).
The Directors consider that underlying earnings per share figures provide a better measure of comparative performance.
7. DIVIDS
Ordinary shares of 50p each
The interim dividend proposed at the rate of 7.50 pence per share (2016: 7.50 pence) is payable on 8 January 2018 to shareholders on the register at the close of business on 8 December 2017. The shares will be marked ex-dividend on 7 December 2017.
Preference shares
Preference dividends were paid in October 2017. The next preference dividends are payable in April 2018. The cost of the preference dividends has been included within finance costs.
8. PENSIONS
The pension scheme deficit reflects a defined benefit obligation that has been updated to reflect its valuation as at 30 September 2017. This has been calculated by a qualified actuary using a consistent valuation method to that which was adopted in the audited financial statements for the year ended 31 March 2017 and in the period to 30 September 2016, and which complies with the accounting requirements of IAS 19 (revised).
The net liability for defined benefit obligations has decreased from GBP8,554,000 at 31 March 2017 to GBP6,063,000 at 30 September 2017. The decrease of GBP2,491,000 comprises the net charge to the Statement of Financial Performance of GBP117,000 and a net remeasurement gain credited to the Statement of Comprehensive Income of GBP2,436,000 and contributions of GBP172,000. Although assets have decreased, the liabilities have decreased by a greater amount as a result of an increase in the discount rate from 2.40% at 31 March 2017 to 2.55% at 30 September 2017.
9. DISCONTINUED OPERATIONS
In the prior financial year, in April 2016, the Group 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 Group, and is being leased to Harwoods for a four year period to 29 April 2020.
As a result of this transaction, the operating activities attributed to that business have been disclosed as a discontinued operation.
Half year Half year Year to
to to 31 March
30 September 30 September 2017
2017 2016 GBP'000
GBP'000 GBP'000
Revenue - 5,828 5,828
Cost of sales - (5,516) (5,516)
--------------------------------- --------------- -------------- ----------
Gross profit - 312 312
Operating expenses - (370) (370)
--------------------------------- --------------- -------------- ----------
Operating loss - (58) (58)
--------------------------------- --------------- -------------- ----------
Finance expense - (3) (3)
--------------------------------- --------------- -------------- ----------
Loss before taxation - (61) (61)
Income tax credit - 10 12
--------------------------------- --------------- -------------- ----------
Loss attributed to discontinued
operations - (51) (49)
Profit on sale of business
net of deferred tax - 3,888 3,888
--------------------------------- --------------- -------------- ----------
Profit for the period from
discontinued operations - 3,837 3,839
--------------------------------- --------------- -------------- ----------
The results of the business shown above represent its trading from the start of the financial year until disposal on 29 April 2016.
Half year Half year Year to
to to 31 March
30 September 30 September 2017
2017 2016 GBP'000
GBP'000 GBP'000
Proceeds generated on sale
of business - 7,512 7,512
Sale of property, plant
and equipment - (218) (218)
Transfer of inventories - (1,921) (1,921)
Transfer of liabilities - 116 116
----------------------------------- --------------- -------------- ----------
- 5,489 5,489
Associated transaction costs:
Professional fees - (470) (470)
Adjustments arising on completion - (230) (230)
Provision for onerous costs - (105) (105)
----------------------------------- --------------- -------------- ----------
Net transaction costs - (805) (805)
----------------------------------- --------------- -------------- ----------
Net gain on sale of business - 4,684 4,684
----------------------------------- --------------- -------------- ----------
Deferred tax expense - (796) (796)
----------------------------------- --------------- -------------- ----------
Profit on sale of business
net of deferred tax - 3,888 3,888
----------------------------------- --------------- -------------- ----------
10. 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, the Group's dependency on its manufacturers' and their stability, used car prices and regulatory compliance. Following the UK's decision to leave the EU, a degree of uncertainty in the UK economy has been created and we believe that the main risks to arise from this relate to consumer confidence and the potential impact that Sterling/Euro exchange rates may have on vehicle prices.
11. 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 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 all 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 810,000 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 or ownership 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 threatened legal action against 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 of the sixteen claimants 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. On 28 October 2016, one of the claimant firms served its application for a GLO. During a hearing in the High Court on 30 January 2017, the Senior Master adjourned by consent the hearing of the application for a GLO to 12 and 13 October 2017. The hearing was further adjourned by consent to a date to be agreed at a directions hearing scheduled for 27 November 2017. As at 23 November 2017 no other claim form has been served on Caffyns in relation to the NOx issue.
At present, litigation with the potential to coalesce into a group civil claim in respect of the NOx issue 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.
12. RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a) the Half Year Report has been prepared in accordance with IAS34 'Interim Financial Reporting';
b) the Half Year Report includes 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 Half Year Report includes 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 Warren
Finance Director
23 November 2017
INDEPENDENT REVIEW REPORT
to Caffyns plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report of Caffyns plc for the six months ended 30 September 2017 which comprises the Condensed Consolidated Statement of Financial Performance, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Condensed Consolidated Cash Flow Statement and the related notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. 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 half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the company are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Crawley
23 November 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DMMZMVFNGNZM
(END) Dow Jones Newswires
November 24, 2017 02:00 ET (07:00 GMT)
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