Caffyns Regulatory News (CFYN)

25 May 2007 07:01

Caffyns PLC25 May 2007 Preliminary results of Caffyns plc for the year ended 31 March 2007 25 May 2007 Caffyns plc, the leading motor distributor covering 15 car franchises in thesouth-east of England, announces its preliminary results for the year ended 31March 2007. 2007 2006 £'000 £'000 Sales 176,238 160,076 Operating profit before exceptional items 2,515 1,172 Profit before tax 1,443 1,030 Earnings per share - basic 40.4p 26.3p Proposed final dividend 17.0p 16.0p Dividend per ordinary share 25.0p 24.0p Highlights •Recovery plan post MG Rover collapse on track •Sales up 10% to £176.2m •Operating profit before exceptionals more than doubled to £2.5m •Pre-tax profit improved by 40% to £1.44m •Earnings per share up by 54% to 40.4p •Balance sheet and cash flow significantly improved •Increased dividend Commenting on these results, Chief Executive Simon Caffyn said: "The first stage of our recovery plan, subsequent to the collapse of MG Rover in2005, has now been completed. But there is still more to be done. Our businesshas been re-shaped with some outlets now operating under new and more attractivefranchises while other less profitable sites have been closed. The market fornew car sales remains very competitive but Caffyns is now in a strongerfinancial and commercial position in which to compete more effectively." Enquiries: Tel: 01323 730201 Simon Caffyn Chief Executive Mark Harrison Finance Director Chairman's Statement The early part of the year saw us complete the first stage of our MG Roverrecovery plan and all affected sites are now refranchised, refurbished or sold.Since the half year we have been working steadily to rebuild each business andit is satisfying to see our operating profit increase to £2,515,000 from£1,172,000 and the profit before tax for the year recover to £1,443,000 (2006 :£1,030,00). Earnings per share increased from 26.3p to 40.4p. We expect to complete on two property sales during the current year. As aresult, the strengthened balance sheet will leave us well placed to takeadvantage of any suitable acquisition opportunities that may arise. The new car market remains at a historically high level and we continue to makesteady progress. An interim dividend of 8.0p per ordinary share (2006 - 8.0p) was paid on 10January 2007. An increased final dividend of 17.0p (2006 - 16.0p) is now beingrecommended which, if approved, will be payable on 26 July 2007 to shareholderson the register on 22 June 2007, giving a total dividend of 25.0p for the year(2006 - 24.0p). The events of the past two years have posed significant challenges for thebusiness. I would like to take this opportunity to thank all Caffyns employeesfor their hard work and dedication in making a considerable contribution to thechanges we have made. While markets remain competitive, we are taking steps bothto reposition our business and to train and motivate our team, so that Caffynscan compete effectively in the future. We look forward to the current year withcautious optimism. Brian A Carte Chairman 25 May 2007 Chief Executive's Operating Review Results and key performance indicators The year ended 31 March 2007 has seen the company make steady progress along ourthree year recovery plan, which commenced immediately after the collapse of MGRover in April 2005. I am very encouraged to see the dealerships that were refranchised in the earlystages of the recovery plan begin to make contributions. I can also report thatthe final two dealership refurbishments were successfully finished during theyear, enabling us to complete the first stage of our recovery plan on schedule. Financial and operating performance has improved. Operating profit beforeexceptional items has risen from £1,172,000 to £2,515,000 on turnover up 10%from £160.1m to £176.2m. Most encouragingly, underlying profit from normal trading before exceptionalitems has risen from £58,000 to £1,283,000. Profit before taxation increasedfrom £1,030,000 to £1,443,000 and earnings per share increased from 26.3p to40.4p. With a net cash inflow of £1,180,000 in the year (2006 - outflow of £120,000)reducing bank borrowings from £7.942m to £6.762m, the proportion of total bankborrowings to shareholders funds at 31 March 2007 reduced to 35% (2006 - 44%). Recovery and development As I reported at the half year, the first stage of our recovery plan, thephysical restructuring of our refranchised properties, is now complete. We cannow concentrate on building strong businesses in these dealerships to delivertheir full potential. In September we opened our new Audi Centre in Worthing to complement our othertwo centres in Brighton and Eastbourne. Plans are in place to refurbish theBrighton facility during the current financial year to incorporate the latestAudi specifications. In Tonbridge we have refurbished the site following the introduction of theVauxhall franchise to provide the current specification showroom layout andimproved servicing facilities. In October we took action to consolidate three underperforming operations intomore successful businesses. Our wholesale parts warehouse in Hove was closed andthe business largely transferred to our wholesale operation in Hailsham, addingto the potential of this site. Our East Grinstead Vauxhall satellite was closed and the Vauxhall businessredirected to our neighbouring dealerships in Brighton and Tunbridge Wells withbeneficial effect. The third closure was our bodyshop business in Worthing and all our internalbusiness processed by this site is now directed through our other bodyshops. Acquisition In August we acquired the Volvo dealership in Brighton to complement oursuccessful Volvo operation in neighbouring Eastbourne. This business had beenrunning at a loss and the negative goodwill that we received appears underexceptional items along with the closure costs of East Grinstead, Hove andWorthing. The benefits of running adjoining territories will deliver strongerresults in the future. Property Planning issues have caused further delays to the sale of our property in Hovebut we are progressing towards a sale conditional upon a satisfactory planningapproval. Our empty freehold sites in Worthing and East Grinstead have generatedconsiderable interest and are also progressing to sale. Pensions I am pleased to report that the Board and Trustees have made some changes to ourdefined benefit scheme which, together with favourable market conditions, haveproduced a small surplus compared to last year's deficit. IT Successful negotiations with the supplier of our dealer management system haveresulted in us signing a contract for the supply of improved systems. During theyear we shall be looking to take advantage of this greater functionality andalso to develop further our internet capabilities. People and Training During the last twelve months we have continued to develop our trainingprogrammes and have run a highly successful in-house course on Best Practicesfor staff in dealership management positions. Much time and effort has also been devoted to training for ever more stringentregulatory requirements and other legislative issues. Our dedicated in-houseteams are to be congratulated on implementing their comprehensive programmes tomeet these enhanced standards. During a year of recovery I would like to recognise the contributions made byall our employees throughout the Company who have worked tirelessly to deliverthe encouraging results achieved. VAT In March this year we announced that we had received £2.978m from HM Revenue andCustoms ("HMRC"). In common with other motor dealers, we had made a claim inrespect of VAT overpaid on demonstrator vehicle bonuses in the period 1973-1997.As a result of ongoing legal action by HMRC in relation to another unrelatedcompany, we have not been able to take credit for this amount through our IncomeStatement due to the uncertainty over our retention of the sum involved. We hopethat this matter will be satisfactorily resolved in our financial year 2007-08. The Future The economy, and in particular our market place, remains steady but concernsover rising levels of personal debt may continue to temper optimism. Thepolitical scene is also in a period of change and this may or may not have animpact on economic stability. We are now making good progress along our recovery path as we enter the secondyear of our programme to return to historic profitability. With further proceedsexpected from property sales we shall be in a good position to take advantage ofsuitably attractive business opportunities as and when they arise. We anticipatemaking further progress in the forthcoming year. Simon G M Caffyn Chief Executive 25 May 2007 CONSOLIDATED INCOME STATEMENT for the year ended 31 March 2007 Note 2007 2006 £'000 £'000 Continuing operations Revenue 176,238 160,076 Cost of sales -------- --------- Exceptional MG Rover Group items 2 - 317 Other costs of sales (151,566) (135,658) -------- --------- Total cost of sales (151,566) (135,341) -------- --------- Gross profit 24,672 24,735 Distribution costs (15,098) (16,464) Administrative expenses -------- --------- Exceptional items 2 786 858 Other costs (7,059) (6,782) -------- --------- Total administrative expenses (6,273) (5,924) Restructuring costs (626) (203) -------- --------- Operating profit -------- --------- Arising from exceptional items 2 160 972 On normal trading 2,515 1,172 -------- --------- Total operating profit 2,675 2,144 Finance costs (1,232) (1,114) -------- --------- Profit before tax -------- --------- Arising from exceptional items 2 160 972 On normal trading 1,283 58 -------- --------- Total profit before tax 1,443 1,030 -------- --------- Tax 3 (280) (274) -------- --------- Profit for the year attributable to theshareholders of 1,163 756Caffyns plc -------- --------- Earnings per share Basic and diluted earnings per ordinary share fromcontinuing operationsand for the profit for the year 5 40.4p 26.3p CONSOLIDATED BALANCE SHEET at 31 March 2007 2007 2006 As restated* £'000 £'000 Non-current assets Goodwill 481 481Intangible assets 31 54Property, plant and equipment 31,610 31,203Retirement benefit scheme 344 -Deferred tax asset 1,160 1,923 ------- ------- 33,626 33,661 ------- ------- Current assets Inventories 23,846 22,694Trade and other receivables 9,047 8,897Current tax assets - 186Cash and cash equivalents 35 39Non current assets classified as held for sale 990 - ------- ------- 33,918 31,816 ------- ------- Total assets 67,544 65,477 ======= ======= Current liabilities Bank and overdrafts and loans 6,797 7,981Trade and other payables 21,575 21,057Current tax payable 230 -Obligations under finance leases 29 28Short-term provisions 3,203 341 ------- ------- 31,834 29,407 ------- ------- Net current assets 2,084 2,409 ------- ------- Non current liabilities Bank loans 3,000 3,000Preference shares 1,237 1,237Retirement benefit obligation - 3,190Deferred tax liabilities 3,378 3,186Obligations under finance leases 50 78 ------- ------- 7,665 10,691 ------- ------- Total liabilities 39,499 40,098 ======= ======= Net assets 28,045 25,379 ======= ======= EQUITYShare capital 1,439 1,439Share premium account 272 272Capital redemption reserve 282 282Revaluation reserve 3,915 3,971Retained earnings 22,137 19,415 ------- ------- Total equity attributable to shareholders of Caffyns plc 28,045 25,379 ======= ======= * See note 6 CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2007 Note 2007 2006 £'000 £'000 --- -------- ------- Net cash from operating activities 7 4,202 2,163 --- -------- ------- Investing activities Proceeds on disposal of property, plant andequipment 1,351 1,959 Purchases of property, plant and equipment (3,479) (3,510) --- -------- -------Acquisitions (176) - --- -------- ------- Net cash used in investing activities (2,304) (1,551) --- -------- ------- Financing activities Dividends paid (691) (691) Repayments of obligations under financeleases (27) (41) --- -------- ------- Net cash used in financing activities (718) (732) -------- ------- Net increase/(decrease) in cash and cashequivalents 1,180 (120) Cash and cash equivalents at beginning ofyear (7,942) (7,822) -------- ------- Cash and cash equivalents at end of year (6,762) (7,942) -------- ------- 31 March 31 March 31 March 2007 2006 2005 £'000 £'000 £'000 Cash and cash equivalents 35 39 46 Overdrafts (6,797) (7,981) (7,868) -------- -------- ------- Net cash and cash equivalents (6,762) (7,942) (7,822) -------- -------- ------- CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE for the year ended 31 March 2007 2007 2006 £'000 £'000 -------- ------- Profit for the year 1,163 756 Actuarial gains recognised 3,134 108 Deferred tax on actuarial gains (940) (31) -------- ------- Total recognised income and expense for the year 3,357 833 ======== ======= NOTES TO THE PRELIMINARY RESULTS For the year ended 31 March 2007 1. Basis of Preparation The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The financial information presented does not constitute statutory financial statements for the years ended 31 March 2007 or 2006 as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 31 March 2007 and the comparative information have been extracted from the audited financial statements for the year ended 31 March 2007 prepared under IFRS, which have not yet been approved by shareholders and have not yet been delivered to the Registrar. This preliminary statement was approved by the board of directors on 25 May 2007. 2. Exceptional items 2007 2006 £'000 £'000 In cost of sales Credit associated with the failure of the MG Rover Group Stock write downs - 317 In administrative expenses Net profit on disposal of property, plant and equipment 600 858 Negative goodwill received on purchase of business, net 186 - of costs ------- ------- 786 1,175 Restructuring costs arising from branch closures (626) (203) ------- ------- Total exceptional items before taxation 160 972 Less tax thereon (48) (294) ------- ------- Total after tax 112 678 ======= ======= 3. Tax 2007 2006 £'000 £'000 --- --- Current tax UK corporation tax 85 22 Adjustments recognised in the period for current tax of 180 (26) prior periods ------ ------ Total 265 (4) ------ ------ Deferred tax Current year 136 307 Adjustments recognised in the period for deferred tax of (121) (29) prior periods ------ ------ Total 15 278 ------ ------ Total tax charged in the income statement 280 274 ====== ====== 4. Dividends The directors recommend a final dividend of 17.0p (2006 - 16.0p) per ordinaryshare, to be paid on 26 July 2007 to shareholders on the register at 22 June2007. An interim dividend of 8.0p (2006 - 8.0p) per share was paid during theyear, making a total for the year of 25.0p (2006 - 24.0p). The ex-dividend dateis 20 June 2007. 5. Earnings per ordinary share The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the year. The calculation of diluted earnings per share would be based on the basicearnings per share, adjusted to allow for the issue of shares and the post taxeffect of dividends and/or interest, on the assumed conversion of all dilutiveoptions and other dilutive potential ordinary shares. At both year-ends there weno unissued shares, so the diluted earnings per share are the same as the basicearnings per share. Adjusted earnings (which exclude exceptional items) is adopted to assist thereader in understanding the underlying performance of the group. Reconciliations of earnings and weighted average number of shares used in thecalculations are set out below: Adjusted Basic 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Profit before tax 1,443 1,030 1,443 1,030 Adjustments: Exceptional items: - Property profit and restructuring costs 26 (655) - - - Negative goodwill received on purchase of business (186) - - - - MG Rover - (317) - - ------ ------ ------ ------- Adjusted profit before tax 1,283 58 1,443 1,030 Taxation (232) 20 (280) (274) ------ ------ ------ ------- Earnings 1,051 78 1,163 756 ------ ------ ------ ------- Adjusted earnings per share 36.5p 2.7p ------ ------Basic earnings per share 40.4p 26.3p ====== ======= The weighted average number of fully paid ordinary shares in issue during theyear was 2,879,298 (2006 - 2,879,298) 6. Prior year adjustment £'000 Retained earnings Balance at 31 March 2006 as previously reported 20,477 Prior year adjustment - deferred tax (1,062) ------- Balance at 31 March 2006, as restated 19,415 ------- Deferred tax asset Balance at 31 March 2006, as previously reported 1,939 Prior year adjustment (16) ------- Balance at 31 March 2006, as restated 1,923 ------- Deferred tax liability Balance at 31 March 2006, as previously reported 2,140 Prior year adjustment 1,046 ------- Balance at 31 March 2006, as restated 3,186 ------- The restatement of the opening balances arises following a reassessment of the taxation position relating to the rollover relief claimed in respect of realisations of capital assets in prior years. The current tax charge for the two years ended 31 March 2007 is not materially affected. 7. Notes to the cash flow statement 2007 2006 £'000 £'000 Profit before taxation 1,443 1,030 Adjustment for finance costs 1,232 1,114 ------- ------- Profit from operations 2,675 2,144 Adjustments for: Depreciation of property, plant and equipment 1,427 1,268 Amortisation of intangible assets 23 22 Negative goodwill received (186) - Gain on disposal of property, plant and equipment (600) (858) Increase / (decrease) in provisions 2,862 (268) ------- ------- Operating cash flows before movements in working 6,201 2,308 capital (Increase) / decrease in inventories (871) 1,747 (Increase) / decrease in receivables (150) 68 Increase / (decrease) in payables 496 (800) (Decrease) / increase in pensions (400) 4 ------- ------- Cash generated by operations 5,276 3,327 Income taxes received/(paid) 151 (50) Interest paid (1,225) (1,114) ------- ------- Net cash from operating activities 4,202 2,163 ------- ------- 8. Annual Report Copies of the Annual Report will be despatched to shareholders by 2 July 2007. 9. Financial Calendar Annual General Meeting at the Hydro Hotel, Eastbourne on Thursday 26 July 2007 at 11.30am. This information is provided by RNS The company news service from the London Stock Exchange