Final Results

RNS Number : 4761Z

Caffyns PLC

27 May 2016

 

Caffyns plc

Preliminary Results for the year ended 31 March 2016

Summary

	2016	2015
	£'000	£'000
Revenue	232,492	210,314
Underlying* profit before tax	2,857	2,472
Underlying* EBITDA	5,140	4,797
Net non-underlying (charge)/credit before tax	(222)	8,966
Profit before tax	2,635	11,438
	p	p
Underlying* earnings per share	96.4	78.1
Earnings per share	90.1	335.5
Proposed final dividend per share	14.50	13.50
Dividend per share for the year	21.75	20.25
*   Underlying results exclude items that have non-trading attributes due to their size, nature or incidence.

Highlights

·     Like for like new car unit sales up 6.2% against 3.3% in our market sector

·     Like for like used car unit sales up 9.3%

·     Revenue up by 10.6% to £232m

·     Underlying profit before tax up 15.6% to £2,857,000 (2015: £2,472,000)

·     Underlying earnings per share up 23.4% to 96.4p (2015: 78.1p)

·     Recommended dividend per ordinary share for year increased by 7.4% to 21.75p 

·     Property portfolio revalued at 31 March 2016: £9.5m surplus (not included in accounts)

·     Disposal of Land Rover business in Lewes, retaining the freehold premises, for cash consideration of £7.5m post year-end.

Commenting on the results, Simon Caffyn, Chief Executive said:

"I am delighted to announce that the underlying profit before tax for last year increased by 15.6% and we now have significant financial flexibility to take advantage of opportunities to expand."

Enquiries:

Caffyns plc	Simon Caffyn, Chief Executive	Tel:	01323 730201
	Mark Harrison, Finance Director
HeadLand	Howard Lee	Tel:	020 3805 4822

Operational and Business Review

Summary of results

I am pleased to report further profit improvement during the year under review and an underlying profit before tax for the year of £2.86m up 15.6% from £2.47m last year.

Profit before tax was £2.64m compared to £11.44m last year. The results for the year to 31 March 2016 include a cost for the redemption of 425,000 preference shares whilst the year to March 2015  included an £8.86m gain on the past service cost of the defined benefit pension liabilities. 

Revenue for the year was up 10.6% to £232.5m (2015: £210.3m).

Underlying earnings per share for the year were up 23.4% to 96.4p (2015: 78.1p).

New and used cars

Our new unit sales were up by 6.2% on a like for like basis in the twelve month period, while total UK new car registrations rose by 5.9%. Within this, the private and small business sector in which we operate rose by 3.3% so we again outperformed our specific sector. We experienced some pressure on new car margins, particularly in the first three months of 2016 but, despite this, new car gross profits were up on last year.

Used car unit sales were up 9.3% on a like for like basis building further on this key area of the business. Used car margins remained steady and gross profits improved.

Aftersales

Our strong new and used sales in recent years have helped to grow our potential aftersales market and we have placed great emphasis on our customer retention programmes. As a result we have seen our like for like service sales increase 6.5%. Overall aftersales were up 6.7% with parts sales growing at 6.9% like for like.

Operations and redevelopment

The improved profits were delivered despite ongoing disruption from redevelopment work at our Eastbourne Volkswagen site which was finally completed in April 2016. Our new 12 car showroom with increased used car display, together with the greater workshop capacity built in 2014, establishes this dealership as a major presence in the area. The work was completed on schedule and budget at a total cost of £2.7m.

After a very strong first half to the year, we began the second half just as the news broke of the Volkswagen emission test results in the United States. While this affected enquiry rates and sales, the recent announcements and customer loyalty support programmes from Volkswagen have helped confidence.

After the year-end, in April 2016, we sold our Land Rover business in Lewes to Harwoods for a cash consideration of £7.5m which included a payment for goodwill of £5.5m.  We have also retained the freehold premises and let them to Harwoods at market value.  The sale was fully outlined in a circular sent to shareholders on 17 March 2016 and approved by ordinary shareholders at a General Meeting on 21 April 2016.

The new car market continues to be driven by manufacturer offers which are having a positive impact on our retail sales. Personal contract plans are helping consumers to change into new vehicles at very competitive monthly payment rates, often combined with similarly competitive service plans helping consumers budget their vehicle costs more effectively. As a result, growth in new car sales has continued in the current year to date.  Recent investment has also placed further emphasis on increasing our levels of used car sales and customer retention for aftersales business.

Groupwide projects

We remain focused on generating further improvements in the three key areas of used car sales, used car finance and aftersales. All of these contributed towards the increase in profits in the year under review, with strong growth in used car sales and labour sales. In addition, we continue to make very good progress utilising technology to enhance the customer-buying experiences from their first point of contact right through the showroom buying process, as well as improving aftersales retention.

Property

We operate primarily from freehold properties and our property portfolio provides additional stability to our business model. During the year, we incurred capital expenditure of £3.83m (2015: £3.03m). This included a significant upgrade to our Volkswagen dealership in Eastbourne (£2.56m spent in the year) and expenditure on a vacant freehold property in Goring-by-Sea of £0.4m.

We sold two freehold sites which were surplus to requirements. In July 2015, we completed on the sale of our vacant freehold site in Upperton Road, Eastbourne for £1.58m. In January 2016, we sold part of our vacant freehold site in Goring-by-Sea for £0.36m. The building on the rest of this site has been let to Sainsbury's at a rent of £80,000 p.a. with effect from 25 April 2016.

In April 2015, we received the £0.95m cash proceeds on the sale of an investment property in Uckfield, which had been sold and reported in the previous financial year.

As announced on 27 April 2016, we exercised options to acquire three parcels of land, approximately 3.7 acres in aggregate, in Angmering, West Sussex for a total consideration of £2.3m. Consideration of £1.5m is payable on 27 October 2016 and consideration of £0.8m is due between 27 July 2016 and 27 October 2016 at the option of the vendor. The Company has plans to develop the site and relocate an existing business.

The Company's portfolio of freehold premises was revalued as at 31 March 2016 by chartered surveyors CBRE Limited on the basis of existing use value. The excess of the valuation over net book value of freehold properties was £9.5m. In accordance with the Group's accounting policies (which reflect those generally utilised throughout the industry), this surplus has not been incorporated into the Company's accounts.

Bank facilities

The Company's banking facilities with HSBC Bank comprise a four year revolving credit facility of £7.5m entered into in September 2014 and overdraft facilities of £3.5m.  In addition, we have an overdraft facility of £7.0m provided by Volkswagen Bank together with a 10 year Term Loan of £5.0m expiring in November 2023.  Bank borrowings, net of cash balances, at 31 March 2016 were £11.16m (2015: £10.13m) and as a proportion of shareholders' funds at 31 March 2016 were 42% (2015: 41%).

Pension Scheme

The Company's defined benefit scheme was closed to future accrual in 2010. In common with many companies, the directors have little control over the key assumptions required by the accounting standards in the valuation calculations. The deficit as at 31 March 2016 reduced to £5.0m (31 March 2015: £5.4m). The deficit, net of deferred tax, at 31 March 2016 was £4.1m (31 March 2015: £4.3m).

The pension cost under IAS 19 continues to be charged as a non-underlying cost and in 2016 amounted to £215,000 (2015: £502,000).

In line with the Recovery Plan agreed with the trustees following the actuarial valuation as at 31 March 2014,  a cash payment of £300,000 was made in the in the year to 31 March 2016 (2014-15: £358,000) and will increase by 2.25% per annum.

The Board continues to review options, together with the independent pension fund trustees, to reduce the cost of operating the scheme. Any additional actions that could further reduce the deficit over the medium and longer term will be considered.

People

During the second half of the year we responded to enquiries from Volkswagen customers regarding the emissions results and I am grateful to all our employees who have acted with professionalism and consideration to allay concerns. The rebuilding of our Eastbourne Volkswagen dealership caused significant disruption through the wet winter months but, despite this disruption, everyone on site continued to provide customers with excellent levels of service. I am delighted that we have been able to take this in our stride and continue to deliver improved results. As in previous years I am proud of and grateful for the loyalty, hard work and positive approach shown by all employees throughout the Company which of course is responsible for our ongoing success.

Mark Harrison, our Finance Director, will be retiring after the AGM on 21 July 2016. Mark has played a hugely significant role in the Company since joining in April 2000 and the Board and I would like to thank him for his outstanding contribution throughout this period and wish him well for the future.

We announced in February 2016 the appointment of Mike Warren to the Board from 31 May 2016 and he will assume the role of Finance Director upon the retirement of Mark Harrison at the AGM. Mike brings a wealth of experience having been Finance Director of HR Owen plc.

Apprenticeships

We have continued to increase the numbers on our apprenticeship programme and we have seen the benefits flow through the business as more complete their training and become fully qualified. The recruitment programme continues and we will be taking on another full complement this year to aid our growth.

Dividend

The Board has decided to recommend a final dividend of 14.50p per Ordinary Share (2015: 13.5p).  If approved at the Annual General Meeting, this will be paid on 28 July 2016 to ordinary shareholders on the register at close of business on 1 July 2016. 

Together with the interim dividend of 7.25p per Ordinary Share (2015: 6.75p) paid during the year, the total dividend for the year will be 21.75p per Ordinary Share (2015: 20.25p).

Strategy

Our strategy to focus on representing premium and premium-volume franchises is proving successful. The significant proceeds from the sale of our Land Rover business provides us with the further flexibility to expand upon this success and to evaluate and invest in the growth of the Company. We are assessing a number of opportunities.

Investment in additional land has enabled us to grow our existing businesses. Relocation of our Worthing Audi dealership to a larger site will allow it to expand its trading performance. We are concentrating on larger business opportunities in stronger markets to deliver higher returns on capital from fewer but bigger sites. We are also more effective in being able to deliver performance improvement, although we remain dependent on the key months of September and March.

The focus on improving operational processes has resulted in an encouraging increase in used car sales and in aftersales. Our success in increasing our new and used sales coupled with our improved aftersales retention programmes will enable us to further enhance profitability.

Our website is being significantly upgraded and will enable customers to continue the online search process leading to an easier car buying experience. We also continue to invest in new technology and systems to provide a more straightforward interaction for our aftersales customers.

Outlook

Economic growth in the UK has slowed but manufacturers continue to support our market with strong finance led offers, particularly on new car personal contract plans as well as, increasingly, on used car plans.   We are well placed for organic growth having recently opened our refurbished Volkswagen dealership in Eastbourne and completed the upgrading of other key dealerships.  The proceeds from the Land Rover sale further strengthens our balance sheet and provides the Company with significant financial flexibility to take advantage of opportunities to expand.

S G M Caffyn

Chief Executive

27 May 2016

Consolidated Income Statement

for the year ended 31 March 2016

	Note	Underlying	Non-underlying (note 5)	2016	Underlying	Non-underlying (note 5)	2015
		£'000	£'000	£'000	£'000	£'000	£'000
Revenue		232,492	-	232,492	210,314	-	210,314
Cost of sales		(205,228)	-	(205,228)	(185,207)	-	(185,207)
Gross profit		27,264	-	27,264	25,107	-	25,107
Operating expenses
Distribution costs		(15,338)	-	(15,338)	(14,271)	-	(14,271)
Administration expenses		(7,934)	(366)	(8,300)	(7,139)	8,735	1,596
Operating profit before other income		3,992	(366)	3,626	3,697	8,735	12,432
Other income (net)		-	317	317	-	794	794
Operating profit after other income		3,992	(49)	3,943	3,697	9,529	13,226
Finance expense	6	(1,135)	-	(1,135)	(1,225)	(82)	(1,307)
Finance expense on pension scheme		-	(173)	(173)	-	(481)	(481)
Net finance expense		(1,135)	(173)	(1,308)	(1,225)	(563)	(1,788)
Profit before taxation		2,857	(222)	2,635	2,472	8,966	11,438
Income tax expense	7	(197)	49	(148)	(318)	(1,865)	(2,183)
Profit for the year from continuing operations attributable to shareholders of the Company		2,660	(173)	2,487	2,154	7,101	9,255
Earnings per share
Basic	8			90.1p			335.5p
Diluted	8			88.7p			330.7p
Non GAAP measure
Basic	8			96.4p			78.1p
Diluted	8			94.8p			77.0p

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2016

				2016		2015
				£'000		£'000
Profit for the year				2,487		9,255
Other comprehensive income
Items that will never be reclassified to profit and loss:
Remeasurement of net defined benefit liability				296		(2,766)
Deferred tax on remeasurement				(59)		553
Total other comprehensive income, net of taxation				237		(2,213)
Total comprehensive income for the year				2,724		7,042

Consolidated Statement of Financial Position

at 31 March 2016

						2016 £'000		2015 £'000
Non-current assets
Property, plant and equipment							38,218		37,984
Investment property							1,167		-
Goodwill							286		286
							39,671		38,270
Current assets
Inventories							32,925		31,896
Trade and other receivables							8,449		8,164
Cash and cash equivalents							219		1,746
							41,593		41,806
Total assets							81,264		80,076
Current liabilities
Interest bearing loans and borrowings							500		500
Trade and other payables							36,368		35,931
Current tax payable							416		446
							37,284		36,877
Net current assets							4,309		4,929
Non-current liabilities
Interest bearing loans and borrowings							10,875		11,375
Preference shares							812		1,237
Deferred tax liability							617		705
Retirement benefit obligations							4,980		5,388
							17,284		18,705
Total liabilities							54,568		55,582
Net assets							26,696		24,494
Capital and reserves
Share capital							1,439		1,439
Share premium account							272		272
Capital redemption reserve							707		282
Non-distributable reserve							1,724		1,724
Other reserve							132		81
Retained earnings							22,422		20,696
Total equity attributable to shareholders of Caffyns plc							26,696		24,494

Consolidated Statement of Changes in Equity

for the year ended 31 March 2016

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Non-distributable reserve £'000	Other reserve £'000	Retained earnings £'000	Total £'000
At 1 April 2015	1,439	272	282	1,724	81	20,696	24,494
Total comprehensive income
Profit for the year	-	-	-	-	-	2,487	2,487
Other comprehensive income	-	-	-	-	-	237	237
Total comprehensive income for the year	-	-	-	-	-	2,724	2,724
Transactions with owners:
Dividends	-	-	-	-	-	(573)	(573)
Preference shares bought back	-	-	425	-	-	(425)	-
Share-based payment	-	-	-	-	51	-	51
At 31 March 2016	1,439	272	707	1,724	132	22,422	26,696

for the year ended 31 March 2015

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Non-distributable reserve £'000	Other reserve £'000	Retained earnings £'000	Total £'000
At 1 April 2014	1,439	272	282	2,390	30	13,500	17,913
Total comprehensive income
Profit for the year	-	-	-	-	-	9,255	9,255
Other comprehensive income	-	-	-	-	-	(2,213)	(2,213)
Total comprehensive income for the year	-	-	-	-	-	7,042	7,042
Transactions with owners:
Dividends	-	-	-	-	-	(517)	(517)
Purchase of own shares	-	-	-	-	-	5	5
Issue of shares - SAYE scheme	-	-	-	(78)	-	78	-
Transfer - SAYE scheme (2010)	-	-	-	(588)	-	588	-
Share-based payment	-	-	-	-	51	-	51
At 31 March 2015	1,439	272	282	1,724	81	20,696	24,494

Consolidated Cash Flow Statement

for the year ended 31 March 2016

	Note		2016		2015
			£'000		£'000
Net cash inflow from operating activities	10		1,352		3,041
Investing activities
Proceeds on disposal of property, plant and equipment			2,736		2,295
Purchases of property, plant and equipment and investment property			(3,825)		(3,027)
Net cash outflow from investing activities			(1,089)		(732)
Financing activities
Secured loans repaid			(500)		(500)
Purchase of own shares			(717)		-
Issue of shares - SAYE scheme			-		5
Dividends paid			(573)		(517)
Net cash outflow from financing activities			(1,790)		(1,012)
Net (decrease)/increase in cash and cash equivalents			(1,527)		1,297
Cash and cash equivalents at beginning of year			1,746		449
Cash and cash equivalents at end of year			219		1,746
			31 March		31 March
			2016		2015
			£'000		£'000
Cash and cash equivalents			219		1,746

Notes

for the year ended 31 March 2016

1.             GENERAL INFORMATION

Caffyns plc is a Company domiciled in the United Kingdom. The address of the registered office is Saffrons Rooms, Meads Road, Eastbourne BN20 7DR. The registered number of the Company is 105664.

These consolidated financial statements were approved by the Directors on 27 May 2016.

2.             ACCOUNTING POLICIES

The financial information has been prepared under International Financial Reporting Standards (IFRSs) issued by the IASB and as adopted by the European Commission (EC). This financial information has been prepared on the same basis as in 2015.             

       
Whilst the financial information included in this announcement has been computed in accordance with IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs.

This set of financial statements has been prepared in accordance with the accounting policies set out in the Annual Report for the year ended 31 March 2016.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2016 or 2015, but is derived from those accounts. Statutory accounts for the year ended 31 March 2015 have been delivered to the Registrar of Companies and those for the year to 31 March 2016 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section 498(2) or (3) Companies Act 2006 or equivalent preceding legislation.

A copy of the annual report for the year ended 31 March 2016 will be available at www.caffynsplc.co.uk and will be posted to shareholders by 28 June 2016.

Segmental reporting

Based upon the management information reported to the Group's chief operating decision maker, the Chief Executive, in the opinion of the directors, the Group only has one reportable segment. There are no major customers amounting to 10% or more of the Group's revenue. All revenue and non-current assets derive from, or are based in, the United Kingdom.

3.             GOING CONCERN

The financial statements have been prepared on a going concern basis which the directors consider appropriate for the reasons set out below.

The Company and the Group meet their day to day working capital requirements through short-term stocking loans and bank overdraft and medium-term revolving credit facilities. At the year-end the medium-term banking facilities included a revolving credit facility of up to £7.5m, renewable in September 2018, and short-term overdraft facilities of £10.5m of which £7.0m is renewed annually in July and is currently being renegotiated in the normal course of business. The directors have every expectation that it will be renewed based on the current discussions with the bank. The other overdraft facility of £3.5m is renewable in August 2016. The Group also has a 10 year Term Loan with a balance outstanding at 31 March 2016 of £3.875m. In the opinion of the directors, there is a reasonable expectation that all facilities will be renewed. The overdraft and revolving credit facilities include certain covenant tests. The failure of a covenant test would render these facilities repayable on demand at the option of the lenders.

The directors have undertaken a detailed review of trading and cash flow forecasts for a period in excess of one year from the date of this Annual Report which projects that the expected facility limits are not exceeded over the duration of the forecasts. These forecasts have made assumptions in respect of future trading conditions, particularly volumes and margins of new and used car sales, aftersales and operational improvements together with the timing of capital expenditure. The forecasts take into account these factors to an extent which the directors consider to be reasonable, based on the information that is available to them at the time of approval of these financial statements. These forecasts indicate that the Group will be able to operate within the financing facilities that are expected to be available to it and meet the covenant tests with sufficient margin for reasonable adverse movements in expected trading conditions.

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For those reasons, they continue to adopt the going concern basis in preparing the financial statements.

4.             CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

In preparing the consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2015, with the addition of the following:

Disposal of Land Rover

The directors have considered IFRS 5 in relation to the classification of the trading performance and subsequent disposal of the Group's Land Rover business which completed on 29 April 2016. The sale of the business was conditional upon shareholder approval on 21 April 2016 and as such, at the balance sheet date, the directors did not know the outcome of this vote. The directors were unable to determine that it was highly probable that the vote would approve the disposal of 31 March 2016 and accordingly continued to classify the dealership's results as continuing operations within their financial results. The financial impact of the disposal is summarised in note 11.

5.             NON-UNDERLYING ITEMS

				2016		2015
				£'000		£'000
	Impairment of property, plant and equipment			-		(20)
	Net profit on disposal of investment property			-		431
	Net profit on disposal of property, plant and equipment			317		383
	Other income (net)			317		794
	Within operating expenses:
	Preference share premium paid on redemption			(156)		-
	Preference share redemption costs			(136)		-
	Gain on change of service cost of defined benefit pension			-		8,861
	Service cost on pension scheme			(42)		(21)
	Losses incurred on closed businesses			-		(66)
		Redundancy costs		(32)		(39)
				(366)		8,735
	Net finance expense on pension scheme			(173)		(481)
	Interest on overdue taxation relating to prior years			-		(82)
				(173)		(563)
	Total non-underlying items before taxation			(222)		8,966
	Income tax expense - tax charge on non-underlying items			49		(1,865)
	Total after tax			(173)		7,101

The following amounts have been presented as non-underlying items in these financial statements:

There were branch specific redundancy costs of £28,000 (2015: £39,000).

The Group sold most of its freehold property in Upperton Road, Eastbourne for £1,581,000 and land in Goring Road, Worthing for £360,000 generating net gains of £281,000 and £71,000 respectively. Other losses on disposal totalled £35,000.

On 8 February 2016, the Company purchased 218,268 First Preference Shares for 108 pence each and 206,664 New Preference Shares for 167 pence each pursuant to a Redemption Option offered to shareholders. Given the nature of the transaction, the associated legal and professional costs of this purchase have been treated as non-underlying together with the premium paid on redemption.

In 2015, the net financing return and service cost on pension obligations in respect of the defined benefit scheme closed to future accrual was presented as a non-underlying item due to the volatility of the amount. Agreement had been reached with the trustees of the Group's defined benefit pension scheme that the inflation measure used in payment increases for pensions in excess of GMP would change from RPI to CPI for members (or dependants of members) who were in service on or after 1 April 1991. Having considered the requirements of IAS 19 'Employee benefits', this change had been recorded as a plan amendment through the Income Statement. The change from RPI to CPI resulted in a gain in the Income Statement of £8,861,000 in the year ended 31 March 2015.

The interest on overdue taxation relates to the corporation tax due on a VAT repayment made to the Group in the year ended 31 March 2015. While the tax due had been the subject of dispute with HM Revenue and Customs, it had been provided for in the accounts, subsequently being paid in April 2015 with the associated interest paid in March 2016.

6.             FINANCE EXPENSE

		2016		2015
		£'000		£'000
	Interest payable on bank borrowings	292		489
	Vehicle stocking plan interest	652		509
	Financing costs amortised	104		125
	Interest on overdue taxation (see note 5)	-		82
	Preference dividends (see note 9)	87		102
	Finance expense	1,135		1,307
	Interest payable on bank borrowings is after capitalising interest on additions to freehold properties of £22,000 at a rate of 3.5% (2015: £8,000, rate: 3.8%).

7.             TAXATION

				2016 £'000		2015 £'000
	Current tax
			UK corporation tax	(294)		(249)
	Deferred tax
			Origination and reversal of temporary differences	(87)		(1,969)
			Adjustments recognised in the period due to change in rate of corporation tax	184		-
			Adjustments recognised in the period for deferred tax of prior periods	49		35
				146		(1,934)
		Total tax charged in the Income Statement		(148)		(2,183)
		The tax charge arises as follows:
		On normal trading		(197)		(318)
		Non-underlying (see note 5)		49		(1,865)
				(148)		(2,183)
				2016		2015
				£'000		£'000
	The charge for the year can be reconciled to the profit per the Income Statement as follows:
	Profit before tax			2,635		11,438
	Tax at the UK corporation tax rate of 20% (2015: 21%)			(527)		(2,402)
	Tax effect of expenses that are not deductible in determining taxable profit			(23)		(23)
	Accounting depreciation/impairment for which no tax relief is due			(107)		(109)
	Difference between accounts profits and taxable profits on capital asset disposals			108		126
	Movement in rolled over and held over gains			47		190
	Re-measurement of deferred tax due to change in rate of corporation tax			184		-
	Adjustments to tax charge in respect of prior years			170		35
	Tax charge for the year			(148)		(2,183)

8.             EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.  Treasury shares are treated as cancelled for the purposes of this calculation.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post-tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. 

Reconciliations of earnings and weighted average number of shares used in the calculations are set out below:

			Adjusted				Basic
			2016 £'000		2015 £'000		2016 £'000		2015 £'000
	Profit before tax		2,635		11,438		2,635		11,438
	Adjustments:
	Non-underlying items (note 5)		222		(8,966)		-		-
	Adjusted profit before tax		2,857		2,472		2,635		11,438
	Taxation		(197)		(318)		(148)		(2,183)
	Earnings		2,660		2,154		2,487		9,255
	Earnings per share		96.4p		78.1p		90.1p		335.5p
	Diluted earnings per share		94.8p		77.0p		88.7p		330.7p

The number of fully paid ordinary shares in circulation at the year-end was 2,879,298 (2015: 2,758,733). The weighted average shares in issue for the purposes of the earnings per share calculation were 2,759,371 (2015: 2,757,527). The shares granted under the Company's SAYE scheme are dilutive. The weighted average number of dilutive shares under option at fair value was 45,703 (2015: 41,169) giving a total diluted weighted average number of shares of 2,805,074 (2015: 2,798,696).

9.             DIVIDENDS

		2016		2015
	Paid	£'000		£'000
	Preference
	7.0% Cumulative First Preference*	18		25
	11.0% Cumulative Preference*	57		65
	6.0% Cumulative Second Preference	12		12
	Included in finance expense (see note 6)	87		102
	Ordinary
	Interim dividend paid in respect of the current year of 7.25p (2015: 6.75p)	200		186
	Final dividend paid in respect of the March 2015 year end of 13.5p (2014: 12.0p)	373		331
		573		517
	Proposed
	In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2016 of 14.5p per share which will absorb £401,000 of shareholders' funds (2015: 13.5p per share absorbing £372,000).  The shares will go ex-dividend on 30 June 2016. The proposed final dividend is subject to approval by shareholders at the forthcoming Annual General Meeting and has not been included as a liability in these financial statements.
	*Redemption of preference shares and change to coupon rate
	On 8 February 2016, the Company bought back 218,268 6.5% Cumulative First Preference shares and 206,664 10% Cumulative Preference shares. The voting rights attributable to both Preference shares have been removed and at the same time the coupon rates have been raised from 6.5% to 7% and from 10% to 11% respectively.

10.           NOTES TO THE CASH FLOW STATEMENT

	2016 £'000		2015 £'000
Profit before taxation	2,635		11,438
Adjustment for share redemption premium and costs	292		-
Adjustment for net finance expense	1,350		1,788
	4,277		13,226
Adjustments for:
Depreciation of property, plant and equipment and investment properties	1,148		1,080
Impairment of property, plant and equipment	-		20
Change in retirement benefit obligations	(324)		(9,222)
Gain on disposal of property, plant and equipment	(317)		(814)
Share-based payments	51		51
Operating cash flows before movements in working capital	4,835		4,341
Increase in inventories	(1,029)		(5,043)
Increase in receivables	(1,235)		(1,051)
Increase in payables	241		6,030
Cash generated by operations	2,812		4,277
Income taxes	(325)		(11)
Interest paid	(1,135)		(1,225)
Net cash derived from operating activities	1,352		3,041

11.           POST BALANCE SHEET EVENTS

Dividend

A final dividend of 14.5p per ordinary share (2015: 13.5p) has been recommended by the Directors.

Disposal of the Land Rover business

The Company announced on 16 March 2016 that it had entered into an agreement, conditional upon the approval of holders of the Company's Ordinary Shares, to sell the business and assets (excluding the freehold property) of its Land Rover Business to Harwoods Limited.

The Company had been informed that its current five year contract with Jaguar Land Rover as an authorised dealer of new Land Rovers would not be renewed when it expires on 31 May 2016. The details of the transaction and effect on the Company were set out in a circular to shareholders dated 17 March 2016 and ordinary shareholders voted on a resolution put to a General Meeting of the Company on 21 April 2016 to approve the sale of the business on the terms agreed. The contract, accordingly, became unconditional once the ordinary resolution was passed.

Cash consideration of £7.5m comprised £5.5m for goodwill together with £0.2m for tangible fixed assets and £1.9m for stocks less £0.1m in respect of liabilities transferred. The total consideration was received at completion on 29 April 2016. 
 
Ownership of the freehold property in Lewes from which the Land Rover Business operates remains with the Company, and is being leased to the Buyer for a period of up to three years from Completion subject to a two year tenant only break clause.

The following disposal group identifies those assets and associated liabilities that were transferred to Harwoods on completion.

	29 April 2016 £'000
Property, plant and equipment	207
Inventories	1,920
Assets directly associated with the disposal group	2,127
Trade and other payables	(115)
Liabilities directly associated with the disposal group	(115)
Disposal group	2,012

Acquisition of Freehold property

The Company announced on 27 April 2016 that it had exercised options to acquire the freehold of three parcels of land, approximately 3.7 acres in aggregate, in Angmering, West Sussex. The total consideration payable is £2.3 million in cash of which £1.5m is payable on 27 October 2016 and £0.8m on 27 October 2016 (or earlier at the option of the vendors but not before 27 July 2016). 
 
The Company intends to relocate its existing Audi dealership in Worthing to the site acquired. Planning permission for the proposed relocation was initially refused by Arun District Council on 31 March 2016. However, following Counsel's advice in relation to the grounds for a planning appeal, the Company intends appealing against this decision.

 

END

 

 

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