Caffyns Regulatory News (CFYN)

25 Nov 2005 07:30

Caffyns PLC25 November 2005 Interim Results for the half year ended 30 September 2005 Summary 2005 2004 £'000 £'000----------------------------- -------------- ---------Turnover 81,503 80,117 Operating profit before exceptional items 1,188 1,795 Profit before tax and exceptional items 637 1,266 Arising from exceptional items 285 3,711 Profit before tax 922 4,977 p p Basic earnings per share 22.3 123.9 Interim dividend 8.0 8.0 * Profits in the first half affected by business reorganisation caused by failure of MG Rover * Much lower exceptional items compared to the same period last year with corresponding effect on comparative profits before tax and EPS * Interim dividend held at 8.0p * Good progress made in refranchising branches and in refurbishment programme "The failure of MG Rover clearly had an effect on our trading performance in thefirst half. We are now well down the path of reorganising our dealership networkand we can concentrate on building businesses with their new franchises:"commented Brian Carte, Chairman of Caffyns. Enquiries: Simon Caffyn Chief Executive Mark Harrison Finance Director Tel: 01323 730201 Chairman's Statement In the six months to 30 September 2005, the affect on our business of thefailure of MG Rover became apparent. We have nearly completed the process ofmanaging the business away from MG Rover, a process that commenced prior to itsfall into administration. Inevitably, the reorganisation has led to somedisruption, with an influence on sales at the branches concerned. Trading atthese branches should gradually improve once this reorganisation has beenfinally concluded. Turnover increased from £80.1 million to £81.5 million but operating profitbefore exceptional items has reduced from £1,795,000 to £1,188,000. The accountshave been presented in accordance with International Financial ReportingStandards for the first time. Prior years' figures have been restated to reflectthe changes to our accounting policies. It is worth noting that the exceptionalbenefit we enjoyed last year from the substantial VAT rebate, has significantlyaffected like for like comparisons between profit before tax and earnings pershare in the period under review. Management actions over the period included the successful trading out of our MGRover vehicle stocks, and the full refurbishment and refranchising of thedealerships in Tunbridge Wells, Brighton and Eastbourne. The dealerships inTonbridge, Worthing and Uckfield have also been refranchised and are scheduledto be refurbished over the coming months. This has been a major task. The Lewesdealership has been amalgamated with our neighbouring Land Rover business andthe sites in Seaford and Ramsgate have been sold, subject to contract. The costsof the refranchising of these dealerships impacted on the results in the firsthalf of the year whilst the benefits will be seen in future financial periods. I am pleased that we have managed this difficult event so well and, although westill have three sites to develop, the remaining dealerships can concentrate onbuilding businesses with their new franchises. This will take a period of timebut our core business is now stronger and our franchise representation is inline with our strategic plan. Elsewhere in the Company we have successfully launched our new greenfielddevelopment Audi Centre in Eastbourne and the opportunity here is veryencouraging. Our Volkswagen dealership covering Brighton and Hove, acquired inJune 2004, is now making a strong contribution to profits. Planning considerations continue to delay the sale of various freehold sites butwe are making progress and are working to complete sales on property in Hove,Hythe, Hailsham, Seaford and Ramsgate by the end of our financial year or soonthereafter. The proceeds of these sales will be used to reduce borrowings and toreinvest in the business. As noted above, our results are now presented in accordance with InternationalFinancial Reporting Standards. While the affect on the profit before tax in ourIncome Statement for this half year has not been material, a full tax charge nowarises following changes to deferred taxation. The balance sheet nowincorporates the impact of the deficit on our defined benefit pension scheme,reducing net assets. Whilst it is disappointing to report a fall in operating profit before tax andexceptionals, it is encouraging to see that we have made substantial progress onour refranchising and refurbishment programme. The retail economy is tough, asreported by many others in the market, and the outlook remains challenging. Wehave restructured the business and, when the final redevelopment work iscomplete, we believe we shall be in a considerably stronger position. With this in mind, your Directors have agreed to an unchanged interim dividendof 8.0p per ordinary share amounting to £230,000. This will be paid on 11January 2006 to shareholders on the register at 5.00pm on 7 December 2005. Brian A Carte Chairman 25 November 2005 Consolidated Income Statementfor the half year ended 30 September 2005 Note Half year to Half year to Year to 30 September 30 September 31 March 2005 2004 2005 as restated as restated £'000 £'000 £'000 £'000 £'000 £'000 ----------------- ------ ------ ------ ------ ------- ------ -------Revenue 81,503 80,117 155,684----------------- ------ ------ ------ ------ ------- ------ -------Operating profit /(loss) Before exceptional 1,188 1,795 2,473items Exceptional items 2 285 1,811 (410)----------------- ------ ------ ------ ------ ------- ------ -------Total operating 1,473 3,606 2,063profit Interest receivable 2 - 1,900 1,914on exceptional items Finance costs (551) (529) (1,117)----------------- ------ ------ ------ ------ ------- ------ -------Profit before tax From normal trading 637 1,266 1,356operations Arising from 2 285 3,711 1,504exceptional items----------------- ------ ------ ------ ------ ------- ------ -------Total 922 4,977 2,860----------------- ------ ------ ------ ------ ------- ------ -------Tax On normal trading (194) (297) (439)operations On exceptional items (85) (1,113) (451)----------------- ------ ------ ------ ------ ------- ------ -------Total 3 (279) (1,410) (890)----------------- ------ ------ ------ ------ ------- ------ -------Profit for the 643 3,567 1,970period----------------- ------ ------ ------ ------ ------- ------ -------Earnings per share 4 Basic and diluted 22.3p 123.9p 68.4pearnings per ordinary share from continuingoperations----------------- ------ ------ ------ ------ ------- ------ -------Dividend per 5 8.0p 8.0p 24.0pordinary share----------------- ------ ------ ------ ------ ------- ------ ------- Consolidated Statement of Recognised Income and Expense for the half year ended 30 September 2005 Half year to Half year to Year to 30 September 30 September 31 March 2005 2004 2005 as restated as restated £'000 £'000 £'000------------------------- --------- ---------- ----------Profit for the period 643 3,567 1,970 Actuarial (losses)/gains recognisedin defined benefit pension scheme (1,058) 242 (355) Deferred tax on actuarial(losses)/gains 317 (73) 106------------------------- --------- ---------- ----------Total recognised income and expensefor the period (98) 3,736 1,721------------------------- --------- ---------- ---------- Consolidated Balance Sheet at 30 September 2005 30 September 30 September 31 March 2005 2004 2005 as restated as restated Note £'000 £'000 £'000---------------- ------ ----------- ---------- ----------Non-current assets Goodwill 481 361 481Intangible assets 65 47 76Property, plant and equipment 32,243 29,528 30,929Deferred tax asset 2,222 1,153 1,941---------------- ------ ----------- ---------- ---------- 35,011 31,089 33,427---------------- ------ ----------- ---------- ----------Current assets Inventories 22,880 25,416 24,441Trade and other receivables 8,311 11,687 7,487Current tax assets - - 132Cash and cash equivalents 45 54 46---------------- ------ ----------- ---------- ---------- 31,236 37,157 32,106---------------- ------ ----------- ---------- ----------Non current assets - - 611classified asheld for sale ---------------- ------ ----------- ---------- ----------Total assets 66,247 68,246 66,144---------------- ------ ----------- ---------- ---------- Current liabilities Bank overdrafts and loans 10,582 8,252 7,868Trade and other payables 18,814 22,194 21,857Tax liabilities 85 596 -Obligations under finance leases 34 33 41Short-term provisions 423 50 609---------------- ------ ----------- ---------- ---------- 29,938 31,125 30,375---------------- ------ ----------- ---------- ----------Net current assets 1,298 6,032 1,731---------------- ------ ----------- ---------- ---------- Non-current liabilities Bank loans 3,000 3,000 3,000Preference shares 1,237 1,237 1,237Retirement benefit obligation 4,381 2,661 3,294Deferred tax liabilities 1,858 1,564 1,774Obligations under finance leases 93 115 106---------------- ------ ----------- ---------- ---------- 10,569 8,577 9,411---------------- ------ ----------- ---------- ---------- Liabilities directly associatedwith non-current assets - - 59Classified as held for sale---------------- ------ ----------- ---------- ----------Total liabilities 40,507 39,702 39,845---------------- ------ ----------- ---------- ----------Net assets 25,740 28,544 26,299---------------- ------ ----------- ---------- ---------- EQUITY Share capital 1,439 1,439 1,439Share premium account 272 272 272Capital redemption reserve 282 282 282Revaluation reserve 4,698 4,845 4,837Retained earnings 6 19,049 21,706 19,469---------------- ------ ----------- ---------- ---------- Total equity attributable toshareholders of Caffyns plc 25,740 28,544 26,299---------------- ------ ----------- ---------- ---------- Consolidated Cash Flow Statement for the half year ended 30 September 2005 Half year ended Half year ended Year ended 30 September 30 September 31 March 2005 2004 2005 as restated as restated £'000 £'000 £'000--------------------- ----------- ---------- ---------Cash flows from operatingactivies Profit from operations 1,473 3,606 2,063 Non cash adjustments 280 (46) 1,224--------------------- ----------- ---------- ---------Operating cash flows beforemovements in working capital 1,753 3,560 3,287 Movements in working capital (2,252) (3,607) 1,332--------------------- ----------- ---------- --------- Cash (absorbed)/generated byoperations (499) (47) 4,619 Net interest (551) 1,371 797 Income taxes paid - (96) (644)--------------------- ----------- ---------- --------- Net cash (used in)/ fromoperating activities (1,050) 1,228 4,772--------------------- ----------- ---------- --------- Investing activities Proceeds on disposal ofproperty, plant and equipment 783 801 801 Purchases of property, plantand equipment (1,967) (879) (3,496) Acquisitions - (526) (826)--------------------- ----------- ---------- --------- Net cash used in investingactivities (1,184) (604) (3,521)--------------------- ----------- ---------- --------- Financing activities Dividends paid (461) (432) (662) Repayments of obligationsunder finance leases (20) (8) (29)--------------------- ----------- ---------- --------- Net cash used in financingactivities (481) (440) (691)--------------------- ----------- ---------- --------- Net (decrease)/increase incash and cash equivalents (2,715) 184 560--------------------- ----------- ---------- --------- Cash and cash equivalents atbeginning of period (7,822) (8,382) (8,382)--------------------- ----------- ---------- --------- Cash and cash equivalents atend of period (10,537) (8,198) (7,822)--------------------- ----------- ---------- --------- Principal Accounting Policies for the half year ended 30 September 2005 Basis of Accounting The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. There is, however, a possibilitythat the directors may determine that some changes to those policies arenecessary when preparing the full annual financial statements for the first timein accordance with those International Financial Reporting Standards (IFRS)adopted for use by the European Union (EU). This is because the directors haveanticipated that the revised IAS 19 Employee Benefits, which has yet to beformally adopted for use in the EU, will be so adopted in time to be applicableto the next annual financial statements. This interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRS in issue that either areendorsed by the EU and effective (or available for early adoption) at 31 March2006 or are expected to be endorsed and effective (or available for earlyadoption) at 31 March 2006, the Group's first annual reporting date at which itis required to use adopted IFRS. Based on these adopted and unadopted IFRS, thedirectors have made assumptions about the accounting policies expected to beapplied when the first annual IFRS financial statements are prepared for theyear ending 31 March 2006. Basis of Consolidation The consolidated financial statements incorporate the financial statements ofthe company and its subsidiaries made up to 31 March each year. All subsidiariesare currently dormant so the income, expenses and cash flows are the same forthe group and the company. Acquisitions The results of businesses acquired or disposed of during the period are includedin the consolidated income statement from the effective date of acquisition orup to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the businesses to bring the accountingpolicies used into line with those used by the group. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. On acquisition, the assets and liabilities and contingent liabilities of abusiness are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable netassets acquired is recognised as goodwill. Any deficiency of the cost ofacquisition below the fair values of the identifiable net assets acquired (i.e.discount on acquisition) is credited to profit and loss in the period ofacquisition. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair valueof the net identifiable assets acquired, and is tested annually for impairment.Gains and losses on subsequent disposal of the assets acquired include anyrelated goodwill. Intangible assets Intangible assets comprise benefits arising from the contractual rights acquiredwith businesses upon acquisition. Amortisation is provided on a straight line basis over the expected usefullives. This is normally 4 years being the minimum period that the companyexpects to benefit from those rights. Revenue Recognition Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for goods and services provided inthe normal course of business, net of discounts, VAT and other sales relatedtaxes. Sales of motor vehicles, parts and accessories are recognised when goods aredelivered to the customer and title has passed. Servicing and bodyshop sales arerecognised on completion of the agreed work. Leasing Leases are classified as finance leases whenever the terms of the lease transfersubstantially all the risks and rewards of ownership to the lessee. All otherleases are classified as operating leases. Assets held under finance leases are recognised as assets at their fair valueor, if lower, at the present value of the minimum lease payments, eachdetermined at the inception of the lease. The corresponding liability to thelessor is included in the balance sheet as a finance lease obligation. Leasepayments are apportioned between finance charges and reduction of the leaseobligation so as to achieve a constant rate of interest on the remaining balanceof the liability. Finance charges are charged directly against income. Rentals payable under operating leases are charged to income on a straight-linebasis over the terms of the relevant lease. Borrowing Costs All borrowing costs are recognised in profit or loss in the period in which theyare incurred. Profit from Operations Profit from operations is stated after charging restructuring costs but beforefinance costs. Retirement Benefit Costs The company operates a defined benefit pension scheme for its employees fundedjointly by contributions from the company and employees. The cost of providing benefits is determined using the Projected Unit CreditMethod, with actuarial valuations being carried out at each balance sheet date.Actuarial gains and losses are recognised in full in the period in which theyoccur. They are recognised outside profit or loss and presented in the statementof recognised income and expense. Past service cost is recognised immediately to the extent that the benefits arealready vested, and otherwise is amortised on a straight-line basis over theaverage period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents thepresent value of the defined benefit obligation as adjusted for unrecognisedpast service cost, and as reduced by the fair value of scheme assets. Any assetresulting from this calculation is limited to past service cost, plus thepresent value of available refunds and reductions in future contributions to theplan. Actuarial gains and losses have been recognised in full in the Statement ofRecognised Income and Expense. Taxation The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable for deductible in otheryears and it further excludes items that are never taxable or deductible. Theliability for current tax is calculated using tax rates that have been enactedor substantively enacted by the balance sheet date. Taxation (continued) Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or from the initial recognition (other than in abusiness combination) of other assets and liabilities in a transaction thataffects neither the tax profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. The tax base of an item takes into account its intendedmethod of recovery by either sale or use. Property, Plant and Equipment Land and buildings used in the business are stated in the balance sheet at cost,or deemed cost, being the open market value at 31 March 1995, for thoseproperties acquired before that date. Depreciation on revalued buildings is charged to income. On the subsequent saleof a revalued property, the attributable revaluation surplus remaining in therevaluation reserve is transferred directly to accumulated profits. Properties in the course of construction are carried at cost, less anyrecognised impairment loss. Cost includes professional fees but excludesborrowing costs. Depreciation of these assets, on the same basis as otherproperty assets, commences when the assets are ready for their intended use. Other assets are stated at cost less accumulated depreciation and any recognisedimpairment loss. Depreciation is charged so as to write off the cost or valuation of assets,other than land and properties under construction, over their estimated usefullives, using the straight-line method, on the following basis: Freehold buildings - 50 yearsLeasehold buildings - Period of leasePlant and machinery, fixtures and fittings - 3 to 10 years The leasehold land is accounted for as an operating lease. Assets held under finance leases are depreciated over their expected usefullives on the same basis as owned assets or, where shorter, over the term of therelevant lease. The gain or loss arising on the disposal of an asset is determined as thedifference between the sales proceeds and the carrying amount of the asset andis recognised in income. Non-current assets held for sale Non-current assets classified as held for sale are measured at the lower ofcarrying amount and fair value costs to sell. Non-current assets are classified as held for sale if their carrying amount willbe recovered through a sale transaction rather than through continuing use. Thiscondition is regarded as met only when the sale is highly probable and the assetis available for immediate sale in its present condition. Management must becommitted to the sale which should be expected to qualify for recognition as acompleted sale within one year from the date of classification. No furtherdepreciation is provided once assets are classified as held for sale. Impairment a) Impairment of goodwill Goodwill is tested annually for impairment. If an impairment provision is made,it cannot subsequently be reversed. b) Impairment of property, plant and equipment At each balance sheet date the company reviews the carrying amounts of itsintangible assets and property, plant and equipment to determine whether thereis any indication that those assets have suffered an impairment loss. If anysuch indication exists, the recoverable amount of the asset is estimated inorder to determine the extent of the impairment loss (if any). Where the assetdoes not generate cash flows that are independent from other assets, the companyestimates the recoverable amount of the cash-generating unit to which the assetbelongs. An intangible asset with an indefinite useful life is tested forimpairment annually and whenever there is an indication that the asset may beimpaired. Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to theasset for which the estimates of future cash flows have been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised as an expense immediately, unless the relevant asset is carried ata revalued amount, in which case the impairment loss is treated as a revaluationdecrease. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairmentloss is recognised as income immediately, unless the relevant asset is carriedat a revalued amount, in which case the reversal of the impairment loss istreated as a revaluation increase. Inventories Inventories are stated at the lower of cost and net realisable value. Vehicle stock includes service vehicles. Vehicles on consignment frommanufacturers that are the subject of interest charges or where the groupcarries commercially significant rights relating to the vehicles are included atcost. Vehicles that are the subject of repurchase agreements are included at theagreed repurchase price less provisions made. In both cases the associatedliabilities are recorded in creditors. Costs of parts is calculated using thereplacement cost method, which approximates to a FIFO basis. Net realisable value represents the estimated selling price less all estimatedcosts of completion and costs to be incurred in marketing and selling. Financial instruments Financial assets and financial liabilities are recognised on the balance sheetwhen the company becomes a party to the contractual provisions of theinstrument. Trade receivables Trade receivables do not carry any interest and are stated at their nominalvalue as reduced by appropriate allowances for estimated irrecoverable amounts. Financial liabilities and equity Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of the companyafter deducting all of its liabilities. Bank borrowings Interest-bearing bank loans and overdrafts are recorded at their fair value(normally the proceeds received less transaction costs that are directlyattributable to the financial liability). Finance charges, including premiumspayable on settlement or redemption and direct issue costs, are accounted for onan accrual basis to the profit and loss account using effective interest methodand are added to the carrying amount of the instrument to the extent that theyare not settled in the period in which they arise. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Equity instruments Equity instruments issued by the company are recorded at the proceeds received,net of direct issue costs. Preference shares All the preference shares are accounted for as non-current liabilities, as theyhave more of the attributes of debt than equity. Preference dividends areaccounted for as finance charges within interest payable. Derivative financial instruments and hedge accounting The company's activities expose it primarily to the financial risks of changesin interest rates. The company does not use derivative financial instruments tohedge its exposure to interest rate movements. Derivatives embedded in other financial instruments or other host contracts aretreated as separate derivatives when their risks and characteristics are notclosely related to those of host contracts and the host contracts are notcarried at fair value with unrealised gains or losses reported in the incomestatement. Provisions Warranty costs on new and used vehicles are normally paid for by the motormanufacturers. Warranties have been issued by the company to honour theunexpired term of the MG Rover warranties, after that group went intoadministration. Provisions for restructuring costs are recognised when the company has adetailed formal plan for the restructuring that has been communicated toaffected parties. Notes to the Interim Resultsfor the half-year ended 30 September 2005 1. Basis of preparation The directors approved this interim statement on 25 November 2005. The interim accounts comprise the results for the half year ended 30 September2005, the half year ended 30 September 2004 and the year ended 31 March 2005.All of these results have been prepared in accordance with InternationalFinancial Reporting Standards and are unaudited. The statutory accounts for the year ended 31 March 2005 prepared under UK GAAP,and on which the auditors have given an unqualified audit opinion, have beenfiled with the Registrar of Companies. The interim accounts have been reviewed by the company's auditors. A copy of theauditor's review report is set out at the end of this statement. 2. Exceptional items Half-year to Half-year to Year to 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000 Net profit on disposal of property,plant and equipment 155 499 455 VAT refund - 1,489 1,489 (Credit)/cost associated withfailure of MG Rover Group 319 - (2,125) Other restructuring costs (189) (177) (229) --------- --------- -------- Impact on operating profit 285 1,811 (410) Interest received on VAT refund - 1,900 1,914 --------- --------- -------- Total before tax 285 3,711 1,504 Less: tax thereon (85) (1,113) (451) --------- --------- -------- Total 200 2,598 1,053 --------- --------- -------- 3. Taxation Half year to Half year to Year to 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000 Current UK corporation tax at 30% Charge for the period 245 1,363 645 Advance corporation tax recovered (31) (801) (239) Over-provision in respect of prioryears (5) - (24) --------- --------- -------- Total corporation tax 209 562 382 Deferred tax at 30% Origination and reversal of timingdifferences 70 848 508 --------- --------- -------- 279 1,410 890 --------- --------- -------- Taxation for each half year has been provided at the effective rate of taxationexpected to apply to the whole year on ordinary trading. Tax on exceptionalitems is provided at the actual rate applicable. 4. Earnings per share Basic Half year to Half year to Year to 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000 Profit before tax 922 4,977 2,860 Taxation (279) (1,410) (890) --------- --------- -------- Earnings 643 3,567 1,970 --------- --------- -------- Basic earnings per share 22.3p 123.9p 68.4p --------- --------- -------- Adjusted Profit before tax 922 4,977 2,860 Adjustments: Exceptional items (note 2) (285) (3,711) (1,504) ---------- --------- -------- Adjusted profit before tax 637 1,266 1,356 Taxation (194) (297) (439) ---------- --------- -------- Earnings 443 969 917 ---------- --------- -------- Adjusted earnings per share 15.4p 33.7p 31.8p ---------- --------- -------- The weighted average number of ordinary shares in issue during each period was2,879,298. 5. Dividends Ordinary shares of 50p each The interim dividend proposed at the rate of 8.0p per share (2004 : 8.0p) ispayable on 11 January 2006 to shareholders on the register at the close ofbusiness on 7 December 2005. The shares will be marked ex-dividend on 9 December2005. Preference shares Preference dividends have been paid in October 2005. The next preferencedividends are payable in April 2006. The cost of the preference dividends hasbeen included within finance costs. 6. Retained Earnings Half year to Half year to Year to 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000--------------------- --------- --------- -------- At the beginning of period 19,469 18,166 18,166 Total recognised income and expensefor the period (98) 3,736 1,721 Transfer from revaluation reserve 139 236 244 Dividends paid (461) (432) (662)--------------------- --------- --------- -------- At end of period 19,049 21,706 19,469--------------------- --------- --------- -------- Appendices 1. Restatement of the Income Statement for the half year ended 30 September 2004 UK Dividends Deferred tax Pension Goodwill Reclassification IFRS GAAP (note 1) (note 2) (note 3) (note 7) (note 8) 2004 2004 £'000 £'000 £'000 £'000 £'000 £'000 £'000----------- ------ ------- ------- ------ ------ -------- ------- Revenue 80,117 - - - - - 80,117 OperatingCosts (76,645) - - (233) 45 - (76,833) Surplus onpropertydisposal 499 - - - - - 499 Restructuringcosts (177) - - - - - (177)----------- ------ ------- ------- ------ ------ -------- ------- Operatingprofit 3,794 - - (233) 45 - 3,606 Finance 1,422 (51) - - - - 1,371costs----------- ------ ------- ------- ------ ------ -------- ------- Profit beforetax 5,216 (51) - (233) 45 - 4,977 Tax (829) - (639) 71 (13) - (1,410)----------- ------ ------- ------- ------ ------ -------- ------- Net profit 4,387 (51) (639) (162) 32 - 3,567 Actuarialgains chargedto Statementof RecognisedIncome andExpense - - - 242 - - 242 Deferred taxon actuarialgains - - - (73) - - (73)----------- ------ ------- ------- ------ ------ -------- ------- Totalrecognisedincome andexpense forthe period 4,387 (51) (639) 7 32 - 3,736 Dividends (281) (151) - - - - (432)----------- ------ ------- ------- ------ ------ -------- ------- Net additionstoshareholders'funds for theperiod 4,106 (202) (639) 7 32 - 3,304 Shareholders'funds at 1April 2004 29,406 432 (461) (2,900) - (1,237) 25,240----------- ------ ------- ------- ------ ------ -------- ------- Shareholders'funds at 30September 33,512 230 (1,100) (2,893) 32 (1,237) 28,5442004----------- ------ ------- ------- ------ ------ -------- ------- 2. Restatement of the Income Statement for the year ended 31 March 2005 UK GAAP Dividends Deferred Pension Goodwill Reclassification IFRS 2005 tax 2005 (note 1) (note 2) (note 3) (note 7) (note 8) £'000 £'000 £'000 £'000 £'000 £'000 £'000----------- ------- ------- ------- ------ ------ -------- ------- Revenue 155,684 - - - - - 155,684 Operatingcosts (153,506) - - (447) 106 - (153,847) Surplus onpropertydisposal 455 - - - - - 455 Restructuringcosts (229) - - - - - (229)----------- ------- ------- ------- ------ ------ -------- ------- Operatingprofit 2,404 - - (447) 106 - 2,063 Finance 899 (102) - - - - 797costs----------- ------- ------- ------- ------ ------ -------- ------- Profit beforetax 3,303 (102) - (447) 106 - 2,860 Tax (525) - (468) 135 (32) - (890)----------- ------- ------- ------- ------ ------ -------- ------- Net profit 2,778 (102) (468) (312) 74 - 1,970 Actuariallosseschargedto Statementof RecognisedIncome and - - - (355) - - (355)Expense Deferred taxon actuariallosses - - - 106 - - 106----------- ------- ------- ------- ------ ------ -------- ------- Totalrecognisedincome andexpenses forthe year 2,778 (102) (468) (561) 74 - 1,721 Dividends (793) 131 - - - - (662)----------- ------- ------- ------- ------ ------ -------- ------- Net additionstoshareholders'funds for theyear 1,985 29 (468) (561) 74 - 1,059 Shareholders'funds at 1April 2004 29,406 432 (461) (2,900) - (1,237) 25,240----------- ------- ------- ------- ------ ------ -------- ------- Shareholders'funds at 31March 2005 31,391 461 (929) (3,461) 74 (1,237) 26,299----------- ------- ------- ------- ------ ------ -------- ------- 3. Reconciliation of Equity at 1 April 2004 (date of transition to IFRS) UK GAAP Dividends Pension Deferred Reclassification IFRS 1/4/04 tax 1/4/04 (note 4) (note 5) (note 6) (note 8) £'000 £'000 £'000 £'000 £'000 £'000----------- ------- ------- ------- ------- --------- ------- Goodwill 161 - - - - 161 Property,plant andequipment 29,229 - - - - 29,229 Deferred taxasset - - - 1,960 - 1,960----------- ------- ------- ------- ------- --------- ------- Totalnon-currentassets 29,390 - - 1,960 - 31,350----------- ------- ------- ------- ------- --------- ------- Inventories 22,011 - - - - 22,011 Trade andotherreceivables 9,860 - (1,274) - - 8,586 Cash and cashequivalents 62 - - - - 62----------- ------- ------- ------- ------- --------- ------- Total currentassets 31,933 - (1,274) - - 30,659----------- ------- ------- ------- ------- --------- ------- Total 61,323 - (1,274) 1,960 - 62,009assets----------- ------- ------- ------- ------- --------- ------- Bankoverdraftsand 8,444 - - - - 8,444loans Trade andother 19,444 51 - - - 19,495payables Taxliabilities 130 - - - - 130 Proposeddividends 483 (483) - - - - Provisions - - - - 132 132----------- ------- ------- ------- ------- --------- ------- Currentliabilities 28,501 (432) - - 132 28,201----------- ------- ------- ------- ------- --------- ------- Net currentassets 3,432 432 (1,274) - (132) 2,458----------- ------- ------- ------- ------- --------- ------- Non-currentliabilities Bank loans 3,000 - - - - 3,000 Preferenceshares - - - - 1,237 1,237 Retirementbenefitobligation - - 2,868 - - 2,868 Deferred taxliabilities 271 - - 1,179 - 1,450 Trade andother 13 - - - - 13payables Long termprovisions 132 - - - (132) ------------ ------- ------- ------- ------- --------- ------- 3,416 - 2,868 1,179 1,105 8,568----------- ------- ------- ------- ------- --------- ------- Totalliabilities 31,917 (432) 2,868 1,179 1,237 36,769----------- ------- ------- ------- ------- --------- ------- Net assets 29,406 432 (4,142) 781 (1,237) 25,240----------- ------- ------- ------- ------- --------- ------- Share 2,676 - - - (1,237) 1,439capital Share premiumaccount 272 - - - - 272 Capitalredemptionreserve 282 - - - - 282 Revaluationreserve 4,500 - - (423) 1,004 5,081 Retainedearnings 21,676 432 (4,142) 1,204 (1,004) 18,166----------- ------- ------- ------- ------- --------- ------- Total 29,406 432 (4,142) 781 (1,237) 25,240equity----------- ------- ------- ------- ------- --------- ------- 4. Reconciliation of Equity at 30 September 2004 UK GAAP Dividends Pension Deferred Goodwill Reclassification IFRS 30/9/04 tax 30/9/04 (note 4) (note 5) (note 6) (note 7) (note 8) £'000 £'000 £'000 £'000 £'000 £'000 £'000----------- ------ ------- ------ ------- ------ -------- ------- Goodwill 363 - - - (2) - 361 Intangibleassets - - - - 47 - 47 Property,plant andequipment 29,528 - - - - - 29,528 Deferred taxasset - - - 1,153 - - 1,153----------- ------ ------- ------ ------- ------ -------- ------- Totalnon-currentassets 29,891 - - 1,153 45 - 31,089----------- ------ ------- ------ ------- ------ -------- ------- Inventories 25,416 - - - - - 25,416 Trade andotherreceivables 13,159 - (1,472) - - - 11,687 Cash and cashequivalents 54 - - - - - 54----------- ------ ------- ------ ------- ------ -------- ------- Total currentassets 38,629 - (1,472) - - - 37,157----------- ------ ------- ------ ------- ------ -------- ------- Total 68,520 - (1,472) 1,153 45 - 68,246assets----------- ------ ------- ------ ------- ------ -------- ------- Bankoverdraftsand 8,252 - - - - - 8,252loans Trade andother 22,772 51 - - - - 22,823payables Proposeddividends 281 (281) - - - - - Short termprovisions - - - - - 50 50----------- ------ ------- ------ ------- ------ -------- ------- Currentliabilities 31,305 (230) - - - 50 31,125----------- ------ ------- ------ ------- ------ -------- ------- Net currentassets 7,324 230 (1,472) - - (50) 6,032----------- ------ ------- ------ ------- ------ -------- ------- Non-current -liabilities Bank loans 3,000 - - - - - 3,000 Preferenceshares - - - - - 1,237 1,237 Retirementbenefitobligation - - 2,661 - - - 2,661 Deferred taxliabilities 538 - - 1,026 - - 1,564 Obligationsunder financeleases 115 - - - - - 115 Long termprovisions 50 - - - - (50) ------------ ------ ------- ------ ------- ------ -------- ------- 3,703 - 2,661 1,026 - 1,187 8,577----------- ------ ------- ------ ------- ------ -------- ------- Totalliabilities 35,008 (230) 2,661 1,026 - 1,237 39,702----------- ------ ------- ------ ------- ------ -------- ------- Net assets 33,512 230 (4,133) 127 45 (1,237) 28,544----------- ------ ------- ------ ------- ------ -------- ------- Share 2,676 - - - (1,237) 1,439capital Share premiumaccount 272 - - - - 272 Capitalredemptionreserve 282 - - - - 282 Revaluationreserve 4,239 - - (398) 1,004 4,845 Retainedearnings 26,043 230 (4,133) 525 45 (1,004) 21,706----------- ------ ------- ------ ------- ------ -------- ------- Total 33,512 230 (4,133) 127 45 (1,237) 28,544equity----------- ------ ------- ------ ------- ------ -------- ------- 5. Reconciliation of Equity at 31 March 2005 (date of last UK GAAP financialstatements) UK Dividends Pensions Deferred Goodwill Reclassification Assets IFRS GAAP tax held 31/3/05 31/3/05 for sale (note 4) (note 5) (note 6) (note 7) (note 8) (note 8) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ------ ------- ------ ------ ------ -------- ------ ------ Goodwill 451 - - - 30 - - 481 Intangibleassets - - - - 76 - - 76 Property,plant andequipment 31,540 - - - - - (611) 30,929 Deferred taxasset - - - 1,941 - - - 1,941---------- ------ ------- ------ ------ ------ -------- ------ ------ Totalnon-currentassets 31,991 - - 1,941 106 - (611) 33,427---------- ------ ------- ------ ------ ------ -------- ------ ------ Inventories 24,441 - - - - - - 24,441 Trade andotherreceivables 9,137 - (1,650) - - - - 7,487 Current taxassets 132 - - - - - - 132 Cash and cashequivalents 46 - - - - - - 46---------- ------ ------- ------ ------ ------ -------- ------ ------ Total currentassets 33,756 - (1,650) - - - - 32,106---------- ------ ------- ------ ------ ------ -------- ------ ------ Non currentassetsclassified asheld for sale - - - - - - 611 611---------- ------ ------- ------ ------ ------ -------- ------ ------ Total 65,747 - (1,650) 1,941 106 - - 66,144assets---------- ------ ------- ------ ------ ------ -------- ------ ------ Bankoverdraftsand 7,868 - - - - - - 7,868loans Trade andother 21,806 51 - - - - - 21,857payables Obligationsunder financeleases 41 - - - - - - 41 Proposeddividends 512 (512) - - - - - - Short termprovisions - - - - - 609 - 609---------- ------ ------- ------ ------ ------ -------- ------ ------ Currentliabilities 30,227 (461) - - - 609 - 30,375---------- ------ ------- ------ ------ ------ -------- ------ ------ Net currentassets 3,529 461 (1,650) - - (609) - 1,731---------- ------ ------- ------ ------ ------ -------- ------ ------ Non-current -liabilities Bank loans 3,000 - - - - - - 3,000 Preferenceshares - - - - - 1,237 - 1.237 Retirementbenefitobligation - - 3,294 - - - - 3,294 Deferred taxliabilities 414 - - 1,419 - - (59) 1,774 Obligationsunder financeleases 106 - - - - - - 106 Long termprovisions 609 - - - - (609) - ----------- ------ ------- ------ ------ ------ -------- ------ ------ 4,129 - 3,294 1,419 - 628 (59) 9,411---------- ------ ------- ------ ------ ------ -------- ------ ------ Liabilitiesassociatedwith assetsheld for sale - - - - - - 59 59---------- ------ ------- ------ ------ ------ -------- ------ ------ Totalliabilities 34,356 (461) 3,294 1,419 - 1,237 - 39,845---------- ------ ------- ------ ------ ------ -------- ------ ------ Net assets 31,391 461 (4,944) 522 106 (1,237) - 26,299---------- ------ ------- ------ ------ ------ -------- ------ ------ Share 2,676 - - - - (1,237) - 1,439capital Share premiumaccount 272 - - - - - - 272 Capitalredemptionreserve 282 - - - - - - 282 Revaluationreserve 4,345 - - (423) - 915 - 4,837 Retainedearnings 23,816 461 (4,944) 945 106 (915) - 19,469---------- ------ ------- ------ ------ ------ -------- ------ ------ Total 31,391 461 (4,944) 522 106 (1,237) - 26,299equity---------- ------ ------- ------ ------ ------ -------- ------ ------ 6. Explanatory Notes 1. IAS32 Financial Instruments disclosure and presentation requires preferenceshares to be reclassified as liabilities, and it follows that the preferencedividends are reclassified as finance costs. Also under IAS10 events after thebalance sheet date, only dividends paid or declared are reflected in theaccounts, so the proposed ordinary dividends have been reversed. 2. IAS12 Income Taxes requires deferred tax to be provided on all temporarydifferences and this adjustment reflects the impact of including deferred taxnot previously provided. The detailed changes on deferred tax are explained inmore detail in note 6 below. 3. Under IAS19 Employee Benefits, the SSAP24 debtor is no longer recognised andprovision is made for the deficit on the defined benefit pension scheme, withthe actuarial gains and losses being charged to the Statement of RecognisedIncome and Expense. Deferred tax relief at 30% has been recognised on theseadjustments. 4. Under IAS10, Events after the Balance Sheet Date, proposed dividends are notrecognised as a liability, so the ordinary dividends have been reversed (1 April2004 : £432,000; 30 September 2004 : £230,000; 31 March 2005 : £461,000). Alsothe declared preference dividends of £51,000 have been reclassified within tradeand other payables at each balance sheet date. 5. IAS19 Employee Benefits requires the elimination of the SSAP24 debtor (1April 2004 : £1,274,000; 30 September 2004 : £1,472,000, 31 March 2005 :£1,650,000) and full provision for the net deficit on the defined benefitpension scheme (1 April 2004 : £2,868,000; 30 September 2004 : £2,661,000; 31March 2005 : £3,294,000) with deferred tax at 30% being provided on each amount(see note 3 above). 6. Under IAS12 Income Taxes, deferred tax adjustments are required in respectof: a) Provide in full on unrealised capital gains (with the charge to revaluationreserve) and on gains rolled over (charged to profit and loss account). b) All the recoverable advance corporation tax, as the directors expect thereto be adequate future profits for the purpose in future. c) The elimination of the SSAP24 debtor and inclusion of the net deficit onthe defined benefit pension scheme creates a deferred tax asset. 1 Apr 2004 30 Sep 2004 31 Mar 2005 £'000 £'000 £'000 a) Provide for unrealised capitalgains and gains rolled over Charged to revaluation (423) (423) (373) reserve Charged to retained profits (597) (677) (659) --------- -------- ----------- (1,020) (1,100) (1,032) b) Additional recoverable ACT nowrecognised 559 - 103 --------- -------- ----------- Balances arising from note 2 (461) (1,100) (929) c) On pensions adjustments 1,242 1,240 1,483 c) On goodwill (note 7) - (13) (32) --------- -------- ----------- 781 127 522 --------- -------- -----------Included in: Deferred tax assets 1,960 1,153 1,941 Deferred tax liabilities (1,179) (1,026) (1,419) --------- -------- ----------- Net as above 781 127 522 --------- -------- ----------- 7. IFRS 1 First time adoption of IFRS, the carrying value of goodwill at thetransaction date has not been subject to subsequent amortisation as noimpairment has been identified. Subsequent additions arising from business combinations have been split betweengoodwill and intangible assets as appropriate. This split of additions is: Period ended Year ended 30 September 31 March 2004 2005 £'000 £'000 Goodwill 200 320 Intangible assets 51 90 ----------- --------- Total 251 410 ----------- --------- Amortisation provided on intangible assets 4 14 Reduction in previously provided amortisation 45 106 Net book value of intangible assets 47 76 ----------- --------- Deferred tax at 30% has been provided on the adjustments to the income statement(30 September 2004 period : £13,000; 31 March 2005 year : £32,000) ascorporation tax relief has been available on the amortisation provided under UKGAAP. 8. The reclassifications required under IFRS are: a) Provisions are now disclosed within current liabilities (1 April 2004 :£132,000; 30 September 2004 : £50,000; 31 March 2005 : £609,000). b) The £1,237,000 of preference shares fulfil the definitions within IAS32Financial Instruments - disclosure and presentation to be reclassified as aliability. c) IAS16 Property, plant and equipment required revaluation deficits to belowcost to be charged to profit and loss account, whereas previously the netsurplus was taken to revaluation reserve. The adjustment grosses up to eliminatethe deficits from revaluation reserve and charges them to retained earnings(1 April 2004 and 30 September 2004 : £1,004,000; 31 March 2005 : £915,000). 9. IAS16 Property, plant and equipment, a property awaiting disposal fulfilledthe requirements to be classified as available for sale at 31 March 2005 and sohas been reclassified together with its associated tax liability. Independent Review Report to Caffyns plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 September 2005 which comprises the consolidated interimbalance sheet at 30 September 2005, the consolidated profit and loss account,consolidated cash flow statement and, the statement of recognised income andexpense for the six months then ended and the related notes 1 to 6 andappendices 1 to 6. We have read the other information contained in the interimreport which comprises only the chairman's statement and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company's members, as a body, in accordancewith guidance contained in APB Bulletin 1999/4 "Review of Interim FinancialInformation". Our review work has been undertaken so that we might state to thecompany's members those matters we are required to state to them in a reviewreport and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the company and thecompany's members as a body, for our review work, for this report, or for theconclusion we have formed. Directors' responsibilities The interim report including the financial information contained therein is theresponsibility of, and has been approved by, the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. As disclosed in the accounting policies the next annual financial statements ofthe group will be prepared in accordance with those International FinancialReporting Standards adopted for use by the European Union. This interim reporthas been prepared on the basis of the recognition and measurement requirementsof International Financial Reporting Standards as explained in the basis ofaccounting on page 7. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. There is, however, a possibilitythat the directors may determine that some changes to these policies arenecessary when preparing the full annual financial statements for the first timein accordance with those IFRS adopted for use by the European Union. This isbecause, as disclosed in the basis of accounting on page 7 the directors haveanticipated that revised IAS 19, which has yet to be formally adopted for use inthe European Union will be so adopted in time to be applicable to the nextannual financial statements. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof management and applying analytical procedures to the financial informationand underlying financial data and, based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom auditing standards and therefore provides a lower level of assurancethan an audit. Accordingly, we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2005. Grant Thornton UK LLP Chartered Accountants London 25 November 2005 This information is provided by RNS The company news service from the London Stock Exchange