Caffyns Regulatory News (CFYN)

2 Jun 2006 07:30

Caffyns PLC02 June 2006 Preliminary results of Caffyns plc for the year ended 31 March 2006 Caffyns plc, the leading motor distributor covering fourteen car franchises inthe south-east of England, announces its preliminary results for the year ended31 March 2006. 2006 2005 £'000 £'000 • Sales 160,076 155,684 • Operating profit before exceptional items 1,172 2,473 • Operating profit after exceptional items 2,144 2,063 • Profit before tax 1,030 2,860 • Earnings per share - basic 26.3p 68.4p • Proposed final dividend 16.0p 16.0p • Dividend per ordinary share 24.0p 24.0p Profits for year affected by business reorganisation caused by failure of MGRover Non-recurring VAT rebate in previous year's result further affected comparativeprofit before tax and earnings per share Full year dividend maintained at 24.0p Physical restructuring of the business near completion Commenting on these results, Chief Executive Simon Caffyn said: "Although the profits for the year ended March 2006 were significantly affectedby our refranchising and redevelopment programme, we have now largely completedthe physical restructuring of the business. After a difficult period adverselyaffecting profits, we have advanced our strategy and grown our representationwith our most successful franchises. Subject to a stable economy, profits willrecover steadily over the next two years." Enquiries: Tel: 01323 730201 Simon Caffyn Chief Executive Mark Harrison Finance Director Chairman's Statement The year to March 2006 has been a challenging one following the demise of MGRover in April 2005. I am pleased to be able to report that despite reducedprofits before tax for the year of £1,030,000, we start our new trading year ingood health with a strong cash flow and a very promising portfolio offranchises. The management team have worked hard to minimise the damage caused by the MGRover closures and they have been successful in securing new franchises. We havenearly completed the redevelopment work and can now concentrate on building thebusinesses to the expected levels of profitability from these refranchisedlocations. After several years of growth, the new car market has been in decline for over ayear now. However, with our stronger franchise portfolio and with increasedefficiencies throughout the Company we should continue to make progress. An interim dividend of 8.0p per ordinary share (2005 - 8.0p) was paid on 11January 2006. An unchanged final dividend of 16.0p (2005 - 16.0p) is now beingrecommended which, if approved, will be payable on 27 July 2006 to shareholderson the register on 23 June 2006, giving a total of 24.0p for the year (2005 -24.0p). B A CarteChairman 2 June 2006 Chief Executive's Operating Review Results The year ended March 2006 has been the most challenging year for the Company inrecent times. Before the year began we had already planned a relocation of amajor business together with the refurbishment of one of our largestdealerships. In April 2005 MG Rover went into administration and we initiated amajor reorganisation and refranchising programme for our eight affecteddealerships. In addition, the new car markets in the private and businesssectors in which we operate fell 14.8% in the year to December 2005 and at March2006 was down a further 5.3%. Against this background we believe the profit before tax of £1,030,000 achievedin the year represents a good result. We have emerged not only with a profit for the year together with a strong cashinflow of £2,163,000 from operating activities but also with a far strongerportfolio of franchised dealerships. Reorganisation and Refranchising Immediately after the failure of MG Rover we quickly traded out of remainingvehicle stocks to minimise exposure. At the same time we began the majorrefranchising programme, referred to above, which involved considerableredevelopment work at a number of dealerships. As a result all but two sites,Seaford and Ramsgate, were awarded new franchises. Ramsgate has been sold and the proceeds have been reinvested in new facilities.We exchanged contracts for the sale of our site at Seaford in March 2006 and theproceeds of £1.478m were received in May. For Vauxhall we have refranchised the dealerships in Tonbridge and Brighton andcompleted a major redevelopment of the facilities in Tunbridge Wells, alsoadding the Chevrolet franchise. In Uckfield we have refranchised to Citroen, inEastbourne to Nissan and in Lewes we have amalgamated the MG Rover business intoour expanding Land Rover operation. In Worthing we are scheduled to complete the refranchising works for an Audicentre in July. The costs of this exercise both in redevelopment and in disruption to profitstream have been substantial but the positive attitudes shown by our staff hasenabled us to lay strong foundations for the future of these businesses. Another major project saw the relocation of our Audi business from Hailsham to agreenfield site in a highly visible location in Eastbourne. The old site has nowbeen sold. These vastly improved facilities will enable us to achieve the fullpotential of our Audi market area which now covers Eastbourne, Brighton andWorthing. IT During the year we have made a radical improvement to our IT andtelecommunications infrastructure substantially improving our capability tocommunicate with customers, our manufacturer partners and internally. Thechanges made, combined with other initiatives, will provide the company with arobust and expandable platform. Property I have already mentioned the sale of our properties in Seaford, Ramsgate andHailsham but planning issues continue to delay the sale of our sites in Hytheand Hove, which have been sold subject to planning permission. It is possiblethat decisions on these will be made during the first half of our currentfinancial year. The premises at Burgess Hill were also sold during the year.Since the year end, the company has purchased the freehold interest of a longleasehold property already owned by the company for a cash consideration of£900,000. Pensions Following a review of our pension provisions, and after extensive consultationswith staff, we have implemented a change for existing members from a finalsalary scheme to a career average for contributions post 1 April 2006. Newentrants can join a defined contributions scheme. These changes havestrengthened the scheme going forward to the benefit of both members and thecompany. People and Training During the year we have run our own highly successful management trainingcourses for departmental managers. In addition, many of our staff benefit fromadditional training courses run by our manufacturers. As well as running operational and management courses we have also developed andrun courses in the essential areas of health and safety, IT and all areas ofpersonal development. This year has been particularly challenging and I would like to thank all ouremployees, our advisors and our suppliers for their hard work and assistancethat has ensured we start the new year in a far stronger position. The Future Although the profits for the year ended March 2006 were significantly affectedby our refranchising and redevelopment programme, we have largely completed thephysical restructuring of the business. We have started on the process ofrebuilding and already some of our new franchises are already contributingpositively to operating performance. To fully deliver the potential of thesedealerships can take up to three years and whilst I am very encouraged by earlysigns, our current potential will not be reached before 2008. Overall, after a difficult period adversely affecting profitability, we haveadvanced our strategy and grown our representation with our most successfulfranchises. Subject to a stable economy, profits should recover steadily overthe next two years. S G M CaffynChief Executive 2 June 2006 CONSOLIDATED INCOME STATEMENT for the year ended 31 March 2006 Note 2006 2005 £'000 £'000 Continuing operations Revenue 160,076 155,684 Cost of sales -------- --------- Exceptional VAT refund - 1,489 Exceptional MG Rover Group items 2 317 (2,012) Other costs of sales (135,658) (130,509) -------- --------- Total cost of sales (135,341) (131,032) -------- --------- Gross profit 24,735 24,652 Distribution costs (16,464) (16,123) Administrative expenses -------- --------- Exceptional items 2 858 342 Other costs (6,782) (6,579) -------- --------- Total administrative expenses (5,924) (6,237) Restructuring costs (203) (229) -------- --------- Operating profit -------- --------- Arising from exceptional items 2 972 (410) On normal trading 1,172 2,473 -------- --------- Total operating profit 2,144 2.063 Interest receivable - 1,914 Finance costs (1,114) (1,117) -------- --------- Profit before tax -------- --------- Arising from exceptional items 2 972 1,504 On normal trading 58 1,356 -------- --------- Total profit before tax 1,030 2,860 Tax 3 (274) (890) -------- --------- Profit for the year attributable to theshareholders of 756 1,970Caffyns plc -------- --------- Earnings per share Basic and diluted earnings per ordinary share fromcontinuing operationsand for the profit for the year 5 26.3p 68.4p CONSOLIDATED BALANCE SHEET at 31 March 2006 2006 2005 £'000 £'000 Non-current assets Goodwill 481 481Intangible assets 54 76Property, plant and equipment 31,203 30,929Deferred tax asset 1,939 1,941 ------- -------- 33,677 33,427 ------- -------- Current assets Inventories 22,694 24,441Trade and other receivables 8,897 7,487Current tax assets 186 132Cash and cash equivalents 39 46 ------- -------- 31,816 32,106 ------- -------- Non current assets classified as held for sale - 611 ------- -------- Total assets 65,493 66,144 ======= ======== Current liabilities Bank and overdrafts and loans 7,981 7,868Trade and other payables 21,057 21,857Obligations under finance leases 28 41Short-term provisions 341 609 ------- -------- 29,407 30,375 ------- -------- Net current assets 2,409 2,342 ------- -------- Non current liabilities Bank loans 3,000 3,000Preference shares 1,237 1,237Retirement benefit obligation 3,190 3,294Deferred tax liabilities 2,140 1,774Obligations under finance leases 78 106 ------- -------- 9,645 9,411 ------- -------- Liabilities directly associated with non-current assetsclassified asheld for sale - 59 ------- -------- Total liabilities 39,052 39,845 ======= ======== Net assets 26,441 26,299 ======= ======== EQUITYShare capital 1,439 1,439Share premium account 272 272Capital redemption reserve 282 282Revaluation reserve 3,971 4,837Retained earnings 20,477 19,469 ------- -------- Total equity attributable to shareholders of Caffyns plc 26,441 26,299 ======= ======== CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2006 Note 2006 2005 £'000 £'000 Net cash from operating activities 6 2,163 4,772 ------- -------- Investing activities Proceeds on disposal of property, plantand equipment 1,959 801 Purchases of property, plant and equipment (3,510) (3,496) Acquisitions - (826) ------- -------- Net cash used in investing activities (1,551) (3,521) ------- -------- Financing activities Dividends paid (691) (662) Repayments of obligations under financeleases (41) (29) ------- -------- Net cash used in financing activities (732) (691) ------- -------- Net (decrease)/ increase in cash and cashequivalents (120) 560 Cash and cash equivalents at beginning ofyear (7,822) (8,382) ------- -------- Cash and cash equivalents at end of year (7,942) (7,822) ------- -------- 31 March 31 March 31 March 2006 2005 2004 £'000 £'000 £'000 Cash and cash equivalents 39 46 62 Overdrafts (7,981) (7,868) (8,444) -------- ------- -------- Net cash and cash equivalents (7,942) (7,822) (8,382) -------- ------- -------- CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE for the year ended 31 March 2006 2006 2005 £'000 £'000 Profit for the year 756 1,970 Actuarial gains/(losses) recognised 108 (355) Deferred tax on actuarial gains or losses (31) 106 ------- -------- Total recognised income and expense for the year 833 1,721 ======= ======== Notes to the Preliminary results For the year ended 31 March 2006 1. Basis of Preparation The financial information in this statement contains extracts from the 2006 Annual Report, which will be issued in June 2006 and prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use by the European Union for accounting periods commencing on or after 1 January 2005. Prior to 2005 the group has reported its results under UK Generally Accepted Accounting Practice ("UK GAAP"). The results in this preliminary results statement have been prepared in accordance with IFRS for the first time. There is a requirement to include at least one year of comparative information in the financial statements for the year ended 31 March 2006 and therefore the transition date to IFRS for the group is 31 March 2004. The results for the year ended 31 March 2005 in this preliminary results statement have been restated in accordance with IFRS. On 25 November 2005 the group published its Interim Results for the half year to 30 September 2006 which explained the impact of IFRS. This report detailed the key differences between UK GAAP and IFRS that impact the group. The report also included reconciliations of the balance sheet as at 31 March 2004, 30 September 2004 and the year ended 31 March 2005. The Interim Results referred to above sets out the group's principal accounting policies as they have been modified to comply with IFRS. The principal differences which impact the group are summarised below: i Goodwill - amortisation of goodwill is no longer permitted, it is instead tested at least annually for impairment. Goodwill previously written off to reserves is no longer required to be adjusted through the income statement on disposal of a business. ii Pensions - the deficit in the pension scheme is incorporated in the balance sheet, operating and financing costs are charged to the income statement and actuarial gains and losses are taken directly to equity. iii Deferred tax - deferred tax is recognised on revaluations of property, on gains on assets rolled over and on recoverable advance corporation tax. iv Dividends - the recognition of dividends is on a declared rather than a proposed basis. The application of IFRS also changes the terminology and presentation of thefinancial statements as reflected in this preliminary results statement. This preliminary results statement has been prepared on the basis of theaccounting policies which the group has adopted in its financial statements forthe year ended 31 March 2006. IFRS comprise a significant amount of accounting and financial reportingregulation, much of which has been originated or revised very recently.Interpretation of this regulation is expected to be refined throughout thefinancial community, both in the UK and the rest of the European Union, as IFRSare implemented for the first time by many listed companies. 2. Exceptional items 2006 2005 £'000 £'000 In cost of sales Refund of VAT overpaid on demonstrator vehicles in - 1,489 the period 1973 to 1996 Credit/(cost) associated with the failure of the MG Rover Group Stock write downs 317 (1,412) Warranty provision - (600) ------- ------ 317 (523) ------- ------ In administrative expenses Net profit on disposal of property, plant and 858 455 equipment Bad debt and impairment review associated with the - (113) failure of the MG Rover Group ------- ------ 858 342 ------- ------ Restructuring costs arising from branch closures (203) (229) ------- ------ Total exceptional items before interest 972 (410) Interest received on VAT refund - 1,914 ------- ------ Total before tax 972 1,504 Less tax thereon (294) (451) ------- ------ 678 1,053 ======= ====== MG Rover Following the appointment of administrators to MG Rover Group Limited on 8 April 2005, an exceptional charge was made in the financial statements for the year ended 31 March 2005. This comprised a charge to cost of sales of £1,412,000 and represented provisions against the realisation of stocks of MG Rover cars owned by the company at the year end and a provision of £600,000 against potential warranty claims from customers who purchased MG Rover cars which were registered after 1 April 2002, as the company has no recourse to the manufacturer in respect of warranty claims by customers. In 2006 part of the provision was recovered. Also, £113,000 was charged to other operating charges in respect of irrecoverable debts due from MG Rover and an impairment review of MG Rover related fixtures and fittings. 3. Tax 2006 2005 £'000 £'000 Current tax UK corporation tax 22 645 Advance corporation tax recovered - (239) Adjustment relating to prior years' corporation tax (26) (24) ------ ------ Total (4) 382 ------ ------ Deferred tax Current year 307 369 Prior year adjustment (29) 139 ------ ------ Total 278 508 ------ ------ Total tax charged in the income statement 274 890 ====== ====== 4. Dividends The directors recommend a final dividend of 16.0p (2005 - 16.0p) per ordinary share, to be paid on 27 July 2006 to shareholders on the register at 23 June 2006. An interim dividend of 8.0p (2005 - 8.0p) per share was paid during the year, making a total for the year of 24.0p (2005 - 24.0p). The ex-dividend date is 21 June 2005. 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. The calculation of diluted earnings per share would be based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. At both year ends there we no unissued shares, so the diluted earnings per share are the same as the basic earnings. Reconciliations of earnings and weighted average number of shares used in the calculations are set out below: Adjusted Basic 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Profit before tax 1,030 2,860 1,030 2,860 Adjustments: Exceptional items: - - - Property profit and closure costs (655) (226) - VAT - (3,403) - - - MG Rover (317) 2,125 - - ------- ------ ------- ------ Adjusted profit before tax 58 1,356 1,030 2,860 Taxation 20 (439) (274) (890) ------- ------ ------- ------ Earnings 78 917 756 1,970 ------- ------ ------- ------ Adjusted earnings per share 2.7p 31.8p ------- ------Basic earnings per share 26.3p 68.4p ======= ====== The weighted average number of fully paid ordinary shares in issue during theyear was 2,879,298 (2005 - 2,879,298) 6. Notes to the cash flow statement 2006 2005 £'000 £'000 Profit from operations 2,144 2,063 Adjustments for: Depreciation of property, plant and equipment 1,268 1,167 Amortisation of intangible assets 22 14 Gain on disposal of property, plant and equipment (858) (434) (Decrease) / increase in provisions (268) 477 ------- ------- Operating cash flows before movements in working 2,308 3,287 capital Decrease / (increase) in inventories 1,747 (2,175) Decrease in receivables 68 1,099 (Decrease) / increase in payables (800) 2,337 Increase in pensions 4 71 ------- ------- Cash generated by operations 3,327 4,619 Income taxes paid (50) (644) Interest paid (1,114) (1,117) Interest received - 1,914 ------- ------- Net cash from operating activities 2,163 4,772 ------- ------- 7. The financial information in this statement is not audited and does not constitute statutory accounts within the meaning of s.240 of the Companies act 1985 (as amended). This preliminary statement was approved by the board of directors on 2 June 2006. The above results for the year ended 31 March 2006 have been abridged from the full group accounts for that year, which received an unqualified auditors' report. 8. Annual Report Copies of the Annual Report will be despatched to shareholders by 1 July 2006. 9. Financial Calendar Annual General Meeting at the Hydro Hotel, Eastbourne on Thursday 27 July 2006 at 11.30am. This information is provided by RNS The company news service from the London Stock Exchange