Final Results

Caffyns PLC 29 May 2003 Preliminary Results of Caffyns plc For the year ended 31 March 2003 Caffyns plc, the leading motor distributor covering thirteen car franchises in the South-East of England, announces record preliminary results for the year-ended 31 March 2003. Highlights 2003 2002 â€¢ Sales Â£148.5m Â£160.2m â€¢ Profit on ordinary activities before Â£4,743,000 Â£2,785,000 taxation â€¢ Basic earnings per share 144.0p 66.5p â€¢ Proposed final dividend 14.0p 12.0p â€¢ Total dividend for the year 21.0p 18.0p Chairman's Statement It is fitting that in the hundredth year of our involvement in the motor industry, the result for the year ended 31 March 2003 is a record for the company and I congratulate all the staff who have made this possible. Specific mention must be made of the role played by my predecessor who retired as chairman at the end of April 2003. Alan Caffyn has been involved in the company since the mid-1950s and as a director for the past 40 years. The current success of the company is due in a large part to his commitment, strong management and direction. I am delighted to be taking on the role of chairman at such an exciting time for the industry, with the company very well positioned to take advantage of the opportunities that will result from the implementation of the new Block Exemption regulations. The chief executive refers in his report to the 2.2% share buy back and, together with the 15% share buy back in 2001/2002, it is very satisfying to see the earnings per share grow by a significant amount. An interim dividend of 7.0p per ordinary share (2002 - 6.0p) was paid on 15 January. A final dividend of 14.0p is now being recommended which, if approved will be payable on 23 July 2003 to shareholders on the register on 27 June 2003, giving a total of 21.0p for the year (2002 - 18.0p). B A CARTE Chairman 29 May 2003 Chief Executive's Review Results I am very pleased to report a record profit for the group of Â£4.743 million before tax. This figure contains an exceptional profit of Â£1.919 million arising largely from the sale of our two Mercedes dealerships last June, however it is extremely satisfying to see that, despite the subsequent reduction in turnover and profit, the underlying group profit is ahead of last year. After net exceptional items of Â£1.589 million, the underlying profit before tax was Â£3.154 million giving a return of 2.1% on turnover of Â£148.5 million. The result is a great credit to everyone in the group and a fitting tribute to my father, Alan Caffyn, who retired as chairman at the end of April after a long and distinguished career. We will of course continue to call on his wisdom and his association continues as honorary president of the company. Board Appointments As announced at last year's annual general meeting, Mr Brian Carte has been appointed chairman with effect from 1 May 2003. He joined the company in June 1996 on his retirement as chief executive of Lombard North Central plc. Miss Sarah Caffyn was appointed to the main board as a director on 28 April 2003. Her role is Human Resources director and Company Secretary. Both bring considerable experience and expertise to their respective positions and we are lucky to enjoy this level of continuity on the board. Block Exemption and UK Car Prices As predicted, UK new car prices continue to harmonise with those in Europe. Demand in the UK has been strong with retail activity driven by lower prices and reducing interest rates. Demand may be affected by talks of possible interest rate rises but the purchase of a new car is still attractive to many buyers. The new Block Exemption regulation becomes law in October this year and we continue to improve the operating standards of our dealerships to ensure we capitalise on the new market conditions. Franchises and Premises As I mentioned above we sold our Mercedes businesses and received proceeds (net of costs) of Â£5.178 million. This money was used to reduce our borrowings after the recent acquisitions of one Volvo and one Volkswagen dealership. Both are performing well and generating strong returns. Last year we began the refurbishment of our Haywards Heath Volkswagen dealership and work starts on the Eastbourne site soon. Our Worthing Volkswagen business was refurbished four years ago and is now producing outstanding results. Our Brighton Audi dealership continues to deliver excellent results and the franchise remains highly desirable. Our Vauxhall dealerships have had a very good year and the franchise goes from strength to strength in this its Centenary Year. Having relocated our Vauxhall dealership in Ashford in 2000 we have now sold the previous site since the year-end for a cash consideration of Â£990,000. The loss arising from the sale of Â£391,000 has been charged in the year as exceptional loss. We have again worked hard and produced good results from our MG Rover businesses with March being particularly strong. The MG Rover team continue to innovate and we look forward to the arrival of their new small car in the autumn. Our two Ford dealerships have again made significant contributions to the group and our Land Rover business in East Sussex has had a record year. Technology Our management systems remain robust and we continue to develop their ability to provide us with the information to successfully manage our customer database. With the advent of increased competition following the introduction of the new Block Exemption Regulation this area of our business remains central to our success. Chris Fullalove, who is in charge of our IT systems, has been promoted to our regional board. Share Buy Back Following an approach by a shareholder during the year, we bought back and cancelled a further 65,500 shares representing 2.2% of the ordinary shares in issue. As before, we have proposed a special resolution at the forthcoming AGM to authorise the Company to make market purchases up to 15% of the issued ordinary shares. There are currently no plans to make such purchases. Caffyns Motor Contracts In March 2001 we closed our contract hire operation, Caffyns Motor Contracts, to new business. Used car residual values have fallen since then further than expected and a further provision of Â£330,000 has been made. As we are now in the final stages of the remaining contracts we do not expect any further provisions to be necessary. People and Training Our record year is of course entirely due to the considerable efforts of our loyal and hard working staff. Many of our dealerships have produced outstanding performances as a result of strong teamwork and I am most grateful to them. We continue to invest in training and development and we have begun a series of management programmes which will work in parallel with the initiatives taken by the industry's Retail Forum. These are designed to raise the profile of the motor industry and the standards of qualification available to managers within it. The Future A successful trading year has increased shareholders' funds to Â£27.5 million. Group borrowings are low and we are in a strong position both financially and operationally to build on our relationships with our leading manufacturer partners. S G M CAFFYN Chief Executive 29 May 2003 For further information: Simon Caffyn, Chief Executive Mark Harrison, Finance Director 01323 730201 Caffyns plc Preliminary Announcement For the year ended 31 March 2003 Consolidated Profit and Loss Account Note 2003 2002 Â£'000 Â£'000 Turnover Continuing operations 148,483 159,251 Acquisitions - 983 ------- ------ 148,483 160,234 ------- ------ Cost of sales (125,888) (137,478) Exceptional costs on discontinued 2 (330) - operation ------- ------ Total cost of sales (126,218) (137,478) ------- ------ Gross profit 22,265 22,756 Other operating charges (18,867) (19,007) Operating profit ------- ------ Continuing operations before exceptional 3,728 3,749 costs Exceptional costs on discontinued (330) - operation ------- ------ Total operating profit 3,398 3,749 Exceptional item 2 1,919 (244) ------- ------ Profit on ordinary activities before 5,317 3,505 interest Interest payable (574) (720) ------- ------ Profit on ordinary activities before 4,743 2,785 taxation Taxation 3 (473) (423) ------- ------ Profit on ordinary activities after 4,270 2,362 taxation Dividends (equity and non-equity) 4 (706) (654) ------- ------ Retained profit 3,564 1,708 ------- ------ Earnings per ordinary share 5 Basic 144.0p 66.5p Diluted 144.0p 66.2p Note of Historical Cost Profits and Losses Reported profit on ordinary activities 4,743 2,785 before taxation Realisation of property revaluation (693) 272 (deficits)/surpluses ------- ------ Historical cost profit on ordinary 4,050 3,057 activities before taxation ------- ------ Historical cost profit for the year retained 2,871 1,980 after taxation and dividends ------- ------ There were no recognised gains or losses other than the profit for the financial year. Caffyns plc Consolidated Balance Sheet at 31 March 2003 2003 2002 Note Â£'000 Â£'000 Fixed assets Intangible assets 10 34 Tangible assets 23,510 26,356 ------ ------ 23,520 26,390 ------ ------ Current assets Stocks 19,725 23,629 Property 2 951 - Debtors 7,923 7,800 Bank balances and cash 51 554 ------ ------ 28,650 31,983 Creditors Amounts falling due within one year (20,944) (27,302) ------ ------ Net current assets 7,706 4,681 ------ ------ Total assets less current liabilities 31,226 31,071 Creditors Amounts falling due after more than one (3,207) (6,418) year Provisions for liabilities and charges (502) (541) ------ ------ 27,517 24,112 ------ ------ Capital and reserves Called up share capital 2,676 2,686 Share premium account 271 167 Capital redemption reserve 282 249 Revaluation reserve 4,545 4,036 Profit and loss account 19,743 16,974 ------ ------ 27,517 24,112 ------ ------ Equity shareholders' funds 26,280 22,875 Non-equity shareholders' funds 1,237 1,237 ------ ------ Total shareholders' funds 6 27,517 24,112 ------ ------ Caffyns plc Consolidated Cash Flow Statement for the year ended 31 March 2003 Note 2003 Â£'000 2002 Â£'000 Â£'000 Â£'000 Net cash inflow from 7 3,360 4,086 operating activities Returns on investment and servicing of finance Interest paid (574) (720) Preference dividends (102) (102) paid ----- ----- (676) (822) Taxation UK Corporation tax (650) 98 (paid)/refunded Capital expenditure Purchase of tangible (931) (1,943) fixed assets Sale of tangible fixed 48 626 assets ----- ----- Net cash outflow from (883) (1,317) capital expenditure Disposals/(acquisitions) 5,124 (1,620) Equity dividends paid (549) (526) ----- ----- Cash inflow/(outflow) 5,726 (101) before financing Financing Capital element of (140) (129) finance leases Issue of shares 127 3 Purchase of own shares (2,675) - Loan (repayment)/ (4,000) 4,000 advances ----- ----- Net cash (outflow)/ (6,688) 3,874 inflow from financing ----- ----- (Decrease)/increase in 8 (962) 3,773 cash ===== ===== Caffyns plc Notes to the Preliminary Announcement for the year ended 31 March 2003 1. Basis of preparation This preliminary statement, which does not constitute statutory accounts as defined in section 240 of the Companies Act 1985, has been extracted from the statutory financial statements of the company for the year ended 31 March 2003 on which the auditors issued an unqualified audit opinion on 29 May 2003. These financial statements have not yet been delivered to the Registrar of Companies. The principal accounting policies have remained unchanged form the previous year. 2. Exceptional items 2003 2002 Â£'000 Â£'000 Discontinued operations - Caffyns Motor Contracts (330) - ------- --------- The contract hire operation of the company, Caffyns Motor Contracts, was closed to new business in March 2001. Used car residual values have since fallen further than expected and the further provision above of Â£330,000 has been made. 2003 2002 Â£'000 Â£'000 Profit on disposal of businesses 942 - Net profit on disposal of tangible fixed assets 1,541 57 Closure and disposal costs (173) (301) Provision for diminution in value of freehold property (391) - ------- --------- 1,919 (244) -------- ------- In July 2002, the group disposed of its Mercedes-Benz franchises in Salisbury and Dorchester. The group received Â£974,000 for goodwill and, after adjusting for disposal costs, recorded a profit of Â£942,000. The company's freehold properties at Salisbury and Dorchester were sold for Â£2,875,000 recording profits on disposal after adjusting for disposal costs, of Â£1,541,000. The profit on the historical cost basis was Â£848,000. The closure and disposal costs relate to the disposal of the above dealerships, the costs of closing a branch in Bexhill-on-Sea and the closure of a petrol forecourt in Hailsham. After the company's year-end on 31 March 2003, a freehold property in Ashford, which was formerly occupied by Vauxhall and Skoda dealerships prior to their relocation, has been sold for Â£990,000. After disposal costs, a loss of Â£391,000 has arisen and full provision for that loss has been made. 3. Taxation 2003 2002 Â£'000 Â£'000 Analysis of charge for year: Current tax: UK Corporation tax at 30% (695) (689) Advance corporation tax recovered 266 303 Adjustment relating to prior years (12) 8 ------ ------ (441) (378) Deferred taxation Origination and reversal of timing differences (32) (45) ------ ------ Tax on profit on ordinary activities (473) (423) ------ ------ The group's UK corporation tax charge has been reduced by Â£52,000 (2002 - Â£90,000) as a result of branch closure costs (note 2) and a further Â£71,000 (2002: Â£60,000) due to utilisation of tax losses. There is no corporation tax charge arising on the exceptional profit due to the availability of roll-over relief and indexation. 4. Dividends 2003 2002 Non equity Â£'000 Â£'000 Preference 6.5% Cumulative First Preference 25 25 6.0% Cumulative Second Preference 12 12 10% Cumulative Preference 65 65 ----- ----- 102 102 ----- ----- Equity Ordinary Interim dividend paid of 7.0p (2002 - 6.0p) 201 204 Final dividend proposed of 14.0p (2002 - 12.0p) 403 348 ----- ----- 604 552 ----- ----- Total 706 654 ----- ----- 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. Shares held in employee share schemes 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. Earnings Number of 2003 Earnings Earnings Number of 2002 Earnings Â£'000 shares per share Â£'000 shares per share '000 '000 As restated Profit on 4,168 2,260 ordinary ------ ------ activities after taxation and preference dividends Weighted average 2,894 3,397 number of shares Basic earnings 144.0p 66.5p per share ------- ------- Number of shares - 48 under option Number of shares - (33) that would have ------ ------ been issued at average market value Diluted earnings 4,168 2,894 144.0p 2,260 3,412 66.2p per share ------- ------ ------- ------ ------ ------- 6. Reconciliation of movements in shareholders' funds 2003 2002 Â£'000 Â£'000 Â£'000 Â£'000 Profit for the financial year 4,270 2,362 Dividends (706) (654) ------ ------- 3,564 1,708 Purchase of own shares (286) (2,389) Equity shares issued in year 127 3 ------ ------- Net increase/(decrease) in 3,405 (678) shareholders' funds Brought forward at 1 April 24,112 24,790 ------ ------- Carried forward at 31 March 27,517 24,112 ------ ------- Shareholders' funds are attributable as follows: Equity interests 26,280 22,875 Non-equity interests 6.5% Cumulative First preference shares 389 389 of Â£1 each 10% Cumulative Preference shares of Â£1 648 648 each 6% Cumulative Second Preference shares 200 1,237 200 1,237 of 10p each ------ ------ ----- ------- 27,517 24,112 ------ ------- 7. Reconciliation of operating profit to net cash inflow from operating activities 2003 2002 Â£'000 Â£'000 Operating profit 3,398 3,749 Depreciation charge 975 1,029 Amortisation of goodwill 24 15 Decrease/(increase) in stocks 2,503 (1,228) Increase in debtors (123) (1,675) (Decrease)/increase in creditors (3,346) 2,708 Decrease in provisions for liabilities and charges (71) (512) ----- ----- Net cash inflow from operating activities 3,360 4,086 ----- ----- 8. Reconciliation of net cash flow to movement in net debt 2003 2002 Â£'000 Â£'000 (Decrease)/increase in cash in the year (962) 3,773 Movement in loans 4,000 (4,000) Cash outflow from capital repayments of finance 140 129 leases ----- ----- Movement in net debt in the year 3,178 (98) Net debt at 1 April (6,623) (6,525) ----- ----- Net debt at 31 March (3,445) (6,623) ----- ----- 9. Analysis of net debt At 31 March 2003 Disposal Cash flow At 1 April 2002 Â£'000 Â£'000 Â£'000 Â£'000 Overdrafts/(cash 408 (5,177) 6,139 (554) at bank) ------ ------- ------ ----- Debt falling due - - (1,500) 1,500 within 1 year Debt falling due 3,000 - (2,500) 5,500 after more than 1 year Finance leases 37 - (140) 177 ------ ------- ------ ----- 3,037 - (4,140) 7,177 ------ ------- ------ ----- Total 3,445 (5,177) 1,999 6,623 ------ ------- ------ ----- 10. Annual Report Copies of the Annual Report will be dispatched to shareholders by 27 June 2003. 11. Financial Calendar Final dividend to be paid on 23 July 2003 to shareholders on the register as at 27 June 2003. (Ex Dividend date - 25 July 2003). Annual General Meeting at the Hydro Hotel, Eastbourne on Wednesday 23 July 2003 at 2.30 p.m. This information is provided by RNS The company news service from the London Stock Exchange LFIAEEITFIV

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