Caffyns Regulatory News (CFYN)

27 May 2005 07:30

Caffyns PLC27 May 2005 Preliminary Results of Caffyns plc For the year ended 31 March 2005 Caffyns plc, the leading motor distributor covering fourteen car franchises inthe South-East of England, announces its preliminary results for the year ended31 March 2005. Highlights 2005 2004 • Sales £155.7m £153.1m • Operating profit before exceptional items £2,804,000 £3,889,000 • Profit on ordinary activities before taxation £3,303,000 £3,109,000 • Basic earnings per share 93.0p 88.1p • Adjusted earnings per share 53.2p 95.5p • Proposed final dividend 16.0p 15.0p • Total dividend for the year 24.0p 22.5p For further information:Simon Caffyn, Chief ExecutiveMark Harrison, Finance Director01323 730201 Chairman's Statement 2005 will be remembered for the demise of MG Rover and, considering thecompany's historic relationship with MG Rover, I am very pleased that we havebeen able to minimise the damage this event has had on our trading result andfuture prospects. Over the years we have carefully reduced our exposure to MG Rover from 21 sitesin the mid 1990's to 8 as at April this year. Furthermore, action to minimiseour exposure to stock, coupled with discussions with other manufacturers, haskept our consequent losses to relatively low levels and put us in a position toregenerate business in the majority of our MG Rover dealerships with strong andsuccessful franchises. It is fortunate that the VAT refund has enabled us to cope with these short termlosses and, after a period of reorganisation, we will be very well placed tocapitalise on our new franchise opportunities. Robert Caffyn will be retiring as a director on 1 June 2005, having been adirector since 1961. Robert's contribution to the business, both in his time asfinance director and also, subsequently, as a non-executive director has beenconsiderable and I am very grateful to him for his advice over the years. The profit before tax of £3.3m is up on last year's profit of £3.1m by 6% and,given the market conditions, the underlying performance remains satisfactory.Earnings per share increased to 93.0p from 88.1p last year. All listed companies in the European Union will have to report theirconsolidated results under IFRS for accounting periods commencing on or after 1January 2005. This means that the new standards will first affect the Group'sreporting for the year ending 31 March 2006, commencing with the interim resultsfor the six months ending 30 September 2005 and details of their estimatedimpact are included in note 12 to this statement. The group is well advanced inits implementation of IFRS. An interim dividend of 8.0p per ordinary share (2004 : 7.5p) was paid on 12January 2005. An increased final dividend of 16p (2004 : 15p) is now beingrecommended which, if approved, will be payable on 28 July 2005 to shareholderson the register on 24 June 2005, giving a total of 24.0 p for the year (2004 :22.5p). B A CarteChairman 27 May 2005 Chief Executive's Review Results The profit before tax of £3.3m has been achieved during a year of majorredevelopment, assimilation into the group of three large dealerships and,during the second half, the decline and ultimately the collapse of MG Rover. The settlement of our claim for overpayment of VAT, including interest, from HMCustoms and Excise offsets the losses incurred from the demise of MG Rover. Considering the disruption to our business and the substantial losses generatedfrom our exposure to MG Rover the final result is, in the circumstances, betterthan expected and an increase on £3.1m last year. MG Rover At the time of MG Rover's failure just after the end of the financial year, theCompany traded from eight locations with this franchise. Turnover generated lastyear from these dealerships was £28.75m with an operating loss of £305,000. Thiscompares with the previous year's turnover of £35.2m and profits of £888,000.As market share and the profitability of MG Rover fell rapidly during our secondhalf we successfully took action to reduce our exposure to vehicle stocks buttrading losses became inevitable. However, since the announcement that MG Rover had gone into administration wehave carefully marketed our remaining vehicle stocks and demand for these hasbeen strong. Sadly, we have had to close our dealerships in Seaford and Ramsgate but we havesecured alternative franchises elsewhere. In Tunbridge Wells the branch willcontinue as a Vauxhall dealership, adding Chevrolet. In Brighton we are alsochanging to represent Vauxhall. Eastbourne, Uckfield and Worthing are in theprocess of being refranchised and Lewes will continue as an MG Rover servicepoint and used car operation. Whilst we shall experience some disruption, our action over the last few yearsand our swift response to the current situation has ensured that this will bekept to a minimum. Our move away from MG Rover and our increasing representationof strong and successful franchises, will improve the core business of theCompany in line with our strategic plan. Acquisitions In June 2004 we acquired the Volkswagen dealership covering Brighton and Hoveand, after a long period of reorganisation, we are now beginning to seeencouraging results from this business. In November we purchased the Skoda dealership in Tunbridge Wells giving us twodealerships for this successful franchise. Refurbishment and Relocation The year has seen considerable refurbishment activity which, although disruptivein the short term, is giving us sites that are more appealing to customers andeasier and more efficient to operate. In May this year we completed on schedule our new Audi Centre greenfielddevelopment in Eastbourne and successfully relocated the Audi business fromnearby Hailsham. In Tunbridge Wells the extensive redevelopment work on our Vauxhall dealershipis nearing completion and we are adding the Chevrolet franchise to thisimpressive facility. In Tonbridge we have replaced the MG Rover franchise with Vauxhall and thisbusiness now operates as a satellite of Tunbridge Wells. Property In Hove we have exchanged contracts for the sale of the site for a considerationof £3.15m conditional upon planning consent being granted. Our premises in Hythe have been marketed and we anticipate their sale in thecurrent financial year. In Burgess Hill we have exchanged contracts for the sale of part of the site onan unconditional basis. As mentioned earlier, we have taken the decision to close our MG Roverdealerships in Seaford and Ramsgate. These sites will be marketed for sale andthe proceeds will be used to continue the development of our key franchisebusinesses. The company has had its portfolio of freehold and long leasehold premises valuedas at 31 March 2005, but excluding four sites which were for sale as at thatdate. The valuation was carried out by CB Richard Ellis, chartered surveyors, onthe basis of existing use value. The excess of the valuation over net book valueas at 31 March 2005 was £4.325 million. VAT In September, HM Customs and Excise agreed our initial claim in respect of VAToverpaid on demonstrator vehicles in the period 1973 to 1996. The total amountagreed, including interest, was £3.4m and this money has been used to reduceborrowings and offset the losses generated from the collapse of MG Rover. In common with other motor retailers, an additional claim has been made toCustoms but we still await agreement on this, pending resolution of a point oflaw governing the reclaim of input VAT. Financial Services Authority The Financial Services Authority has issued regulations effecting the sale andadministration of insurance based products from January 2005. We took thenecessary steps to comply with these new regulations and our application hasreceived approval. People and Training As mentioned in the Chairman's Statement, Robert Caffyn will be retiring as adirector in June. We have benefited not only from his management of the financeof the company whilst Financial Director, but also from his wisdom and soundadvice over the last five years as a non-executive director. As announced at the half year, Ian Watt retired from the Board in November 2004,having made an outstanding contribution in his role as Deputy Chairman. I amvery grateful to both Robert and Ian for their support over the years. The year has brought many challenges and I am delighted that we have been ableto respond to these so positively. As always, I am very grateful to all ouremployees for their hard work, dedication and loyalty which has ensured that weend a difficult year in the best possible condition. We now have substantial market areas for Vauxhall, Volkswagen and Audi. In orderto optimise the opportunity with these franchises, we have recently appointedfranchise managers to oversee and co-ordinate the activities in the respectivedealerships. The Future Whilst we have successfully managed the immediate effects of the MG Rovercollapse we now have to manage the process of change to the new franchises. Theestimated losses arising as a result of the collapse have largely been providedfor in the accounts. Having suffered from the uncertain future of an ailingfranchise, we will replace it with new franchises, leaving us in a far strongerposition. The May General Election is now behind us and the economists appear equivocal onthe prospects for the economy. Fears of a declining property market and a slowdown in retail activity are not welcome news and, after a slow period in Januaryand February, March was stronger but the outlook remains challenging. S G M CaffynChief Executive27 May 2005 Caffyns plcPreliminary Announcement Consolidated Profit and Loss Account for the year ended 31 March 2005 Note VAT MG 2005 2004 refund Rover £'000 £'000 (note 2) (note 2) £'000 £'000 £'000 £'000 £'000-------------------------------------------------------------------------------- Turnover Continuing 149,756 - - 149,756 153,104operations Acquisitions 5,928 - - 5,928 --------------------------------------------------------------------------------- 155,684 - - 155,684 153,104 Cost of sales (130,509) 1,489 (2,012) (131,032) (129,309)-------------------------------------------------------------------------------- Gross profit 25,175 1,489 (2,012) 24,652 23,795 Other operatingcharges (22,361) - (113) (22,474) (19,906)-------------------------------------------------------------------------------- Operating profit Continuing 2,962 1,489 (2,125) 2,326 3,889operations Acquisitions (148) - - (148) --------------------------------------------------------------------------------- Total operatingprofit 2,814 1,489 (2,125) 2,178 3,889 Exceptional items 2 226 - - 226 (209)-------------------------------------------------------------------------------- Profit on ordinaryactivities beforeinterest 3,040 1,489 (2,125) 2,404 3,680 Interest(payable)/ (1,015) 1,914 - 899 (571)receivable-------------------------------------------------------------------------------- Profit on ordinaryactivities beforetaxation 2,025 3,403 (2,125) 3,303 3,109 Taxation 3 (284) (642) 401 (525) (471)-------------------------------------------------------------------------------- Profit on ordinaryactivities aftertaxation 1,741 2,761 (1,724) 2,778 2,638 Dividends (equityand 4 (793) - - (793) (750)non-equity)-------------------------------------------------------------------------------- Retained profit 948 2,761 (1,724) 1,985 1,888-------------------------------------------------------------------------------- Basic earnings perordinary share 5 93.0p 88.1p Adjusted earningsper 5 53.2p 95.5pordinary share Note of historicalcost profits andlosses Reported profit onordinaryactivities 3,303 3,109before taxation The differencebetween thehistorical costdepreciation anddepreciated basedon 46 45revalued amounts Realisation ofpropertyrevaluation 109 -surplus-------------------------------------------------------------------------------- Historical costprofit on ordinaryactivities beforetaxation 3,458 3,154-------------------------------------------------------------------------------- Historical costprofit for theyearretained aftertaxation and 2,140 1,933dividends-------------------------------------------------------------------------------- There were no recognised gains or losses other that the profit for the financialyear. Caffyns plcPreliminary Announcement Consolidated Balance Sheet at 31 March 2005 Note 2005 2004 £'000 £'000-------------------------------------------------------------------------------- Fixed assets Intangible assets 451 161 Tangible assets 31,540 29,229 -------------------------------------------------------------------------------- 31,991 29,390-------------------------------------------------------------------------------- Current assets Stocks 24,441 22,011 Debtors 9,269 9,860 Bank balances and cash 46 62-------------------------------------------------------------------------------- 33,756 31,933 Creditors Amounts falling due within one year (30,227) (28,501)-------------------------------------------------------------------------------- Net current assets 3,529 3,432-------------------------------------------------------------------------------- Total assets less current liabilities 35,520 32,822 Creditors Amounts falling due after more than one year (3,106) (3,013) Provisions for liabilities and charges (1,023) (403)-------------------------------------------------------------------------------- 31,391 29,406-------------------------------------------------------------------------------- Capital and reserves Called up share capital 2,676 2,676 Share premium account 272 272 Capital redemption reserve 282 282 Revaluation reserve 4,345 4,500 Profit and loss account 23,816 21,676-------------------------------------------------------------------------------- 31,391 29,406-------------------------------------------------------------------------------- Equity shareholders' funds 30,154 28,169 Non-equity shareholders' funds 1,237 1,237-------------------------------------------------------------------------------- Total shareholders' funds 6 31,391 29,406-------------------------------------------------------------------------------- Caffyns plcPreliminary Announcement Consolidated Cash Flow for the year ended 31 March 2005 Note 2005 2004 £'000 £'000 £'000 £'000-------------------------------------------------------------------------------- Net cash inflow from operating 7 4,848 1,029activities Returns on investment and servicingof finance Interest paid (1,015) (571) Interest receivable 1,914 - Preference dividends paid (102) (102)-------------------------------------------------------------------------------- 797 (673) Taxation UK Corporation tax paid (net) (644) (400) Capital expenditure Purchase of tangible fixed assets (3,496) (3,814) Sale of property in current assets - 951 Sale of tangible fixed assets 801 167-------------------------------------------------------------------------------- Net cash outflow from capital (2,695) (2,696)expenditure Acquisitions and disposals Payments in respect of acquisitions (826) (4,348) Disposals (229) (231)-------------------------------------------------------------------------------- (1,055) (4,579) Equity dividends paid (662) (619)-------------------------------------------------------------------------------- Cash inflow/(outflow) before 589 (7,938)financing Financing Capital element of finance leases (29) (37) Issue of shares - 1 -------------------------------------------------------------------------------- Net cash outflow from financing (29) (36)-------------------------------------------------------------------------------- Increase/(decrease) in cash 8 560 (7,974) -------------------------------------------------------------------------------- Caffyns plc Notes to the Preliminary Announcement for the year ended 31 March 2005 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 2005 on which the auditors issued an unqualified audit opinion on 27 May 2005. These financial statements have not yet been delivered to the Registrar of Companies. The principal accounting policies have remained unchanged from the previous year. 2. Exceptional items 2005 2004 £'000 £'000 Net profit on disposal of tangible fixed assets 455 22 Closure and disposal costs (229) (231) -------- ------- 226 (209) -------- ------- MG RoverFollowing the appointment of administrators to MG Rover Group Limited on 8 April2005, an exceptional charge has been made to cost of sales of £2,012,000representing provisions against the realisation of stocks of MG Rover cars ownedby the company at 31 March 2005 (£1,412,000), and a provision against potentialwarranty claims from customers who purchased MG Rover cars which were registeredafter 1 April 2002 (£600,000). A further provision of £113,000 in otheroperating costs comprises bad debts and an impairment review of MG Rover relatedfixtures and fittings.VATThe VAT refund of £1,489,000 represented a claim in respect of VAT overpaid ondemonstrator vehicles in the period 1973 to 1996. There was also £1,914,000interest received following receipt of the VAT refund. 3. Taxation Analysis of charge for year: 2005 2004 £'000 £'000 Current tax: UK Corporation tax at 30% 645 820 Advance corporation tax recovered (239) (367) Adjustment relating to prior years' corporation tax (24) (53) -------- ------- 382 400 Deferred taxation Origination and reversal of timing differences 143 71 -------- ------- Tax on profit on ordinary activities 525 471 -------- ------- 4. Dividends 2005 2004 £'000 £'000 Non equity Preference: 6.5% Cumulative First Preference 25 25 10% Cumulative Preference 65 65 6.0% Cumulative Second Preference 12 12 --------- ------- 102 102 --------- ------- Equity Ordinary: Interim dividend paid of 8.0p (2004 - 7.5p) 230 216 Final dividend proposed of 16.0p (2004 - 15.0p) 461 432 --------- ------- 691 648 --------- ------- 793 750 --------- ------- 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. Reconciliations of earnings and weighted average number of shares used in the calculations are set out below: Adjusted Basic 2005 2004 2005 2004 £'000 £'000 £'000 £'000 Profit before tax 3,303 3,109 3,303 3,109 Adjustments: Goodwill amortisation 120 34 - - Exceptional items - Property (226) 209 - - profit and closure costs - VAT (3,403) - - MG Rover 2,125 - - - ------- ------- ------- ------- Adjusted profit before tax 1,919 3,352 3,303 3,109 Taxation (284) (501) (525) (471) Preference dividends (102) (102) (102) (102) ------- ------- ------- ------- Earnings 1,533 2,749 2,676 2,536 ------- ------- ------- ------- Adjusted earnings per share 53.2p 95.5p ------- ------- Basic earnings per share 93.0p 88.1p ------- ------- 2005 2004 Number Number Weighted average number of fully paid ordinary shares in issue during the year 2,879,298 2,879,298 6. Reconciliation of movements in shareholders funds 2005 2004 £'000 £'000 £'000 £'000 Profit for the financial year 2,778 2,638 Dividends (793) (750) ------- ------- 1,985 1,888 Equity shares issued in year - 1 ------- ------- Net increase in shareholders' funds 1,985 1,889 Brought forward at beginning of year 29,406 27,517 ------- ------- Carried forward at end of year 31,391 29,406 ------- ------- Shareholders' Funds are attributable as follows: Equity interests 30,154 28,169 Non-equity interests 6.5% Cumulative First Preference shares of 389 389 £1 each 10% Cumulative Preference shares of £1 648 648 each 6% Cumulative Second Preference shares of 200 200 10p each ------- ------- 1,237 1,237 ------- ------- 31,391 29,406 ------- ------- 7. Reconciliation of operating profit to net cash inflow from operating activities 2005 2004 £'000 £'000 Operating profit 2,178 3,889 Depreciation charge 1,167 995 Amortisation of goodwill 120 34 Increase in stocks (2,175) (1,119) Decrease/(increase) in debtors 742 (1,937) Increase/(decrease) in creditors 2,339 (663) Increase/(decrease) in provisions for liabilities and 477 (170) charges ------- ------- Net cash inflow from operating activities 4,848 1,029 ------- ------- 8. Reconciliation of net cash flow to movement in net debt 2005 2004 £'000 £'000 Increase/(decrease) in cash in the year 560 (7,974) Net cash (inflow)/outflow from capital elements of (147) 37 finance leases ------- ------- Movement in net debt in the year 413 (7,937) Net debt at beginning of year (11,382) (3,445) ------- ------- Net debt at end of year (10,969) (11,382) ------- ------- 9. Analysis of net debt At Cashflow Acquisitions Other non- At 31 March cash 1 April 2005 changes 2004 £'000 £'000 £'000 £'000 £'000 Bank overdrafts 7,822 (560) - - 8,382 (net) ------- ------- ------- ------- ------- Debt falling due after more than 1 3,000 - - - 3,000 year Finance leases 147 (29) 55 121 - ------- ------- ------- ------- ------- 3,147 (29) 55 121 3,000 ------- ------- ------- ------- ------- Total 10,969 (589) 55 121 11,382 ------- ------- ------- ------- ------- 10. Annual Report Copies of the Annual Report will be despatched to shareholders by 1 July 2005. 11. Financial Calendar Final dividend to be paid on 28 July 2005 to shareholders on the register as at 24 June 2005. (Ex Dividend date - 22 June 2005). Annual General Meeting at the Hydro Hotel, Eastbourne on Thursday 28 July 2005 at 11.30am. 12. International Financial Reporting Standards ("IFRS") The results for the year ended 31 March 2005 set out in this statement are presented under UK GAAP (UK Generally Accepted Accounting Practice). As a result the changeover to IFRS, there will be changes to the format of the primary financial statements (profit and loss account, balance sheet and cash flow statement) and there will also be additional disclosures. However, the main impact on the results comes from differences in the IFRS accounting treatment and for certain items compared to UK GAAP. Those matters having the most significant impact on the group are in respect of pensions, deferred tax and dividends payable. The table below summarises the estimated effect of the change to IFRS on the results for the year ended 31 March 2005. Profit before Profit after Net tax tax assets £ million £ million £ million Profit/net assets under UK GAAP 3.3 2.8 31.4 Pensions - incorporation of deficitonto balance sheetand elimination of SSAP 24 prepayment (0.4) (0.3) (3.2) Deferred tax - provide forrevaluationsand rollover relief - (0.1) (1.0) Taxation - loss of benefit of ACTpreviously written offunder UK GAAP, utilised in the year - (0.5) - Dividends - dividends accounted forin year inwhich declared or proposed - - 0.5 Preference shares - reclassify as aliability - - (1.2) --------- -------- -------- Profit/net assets under IFRS 2.9 1.9 26.5 --------- -------- -------- This information is provided by RNS The company news service from the London Stock Exchange