Final Results

Caffyns PLC 03 June 2004 Preliminary Results of Caffyns plc For the year ended 31 March 2004 Caffyns plc, the leading motor distributor covering fourteen car franchises in the South-East of England, announces its preliminary results for the year ended 31 March 2004. Highlights 2004 2003 â€¢ Sales Â£153.1m Â£148.5m â€¢ Profit on ordinary activities before taxation Â£3,109,000 Â£4,743,000 â€¢ Profit on ordinary activities before taxation, goodwill amortisation and exceptional items Â£3,352,000 Â£3,178,000 â€¢ Basic earnings per share 88.1p 144.0p â€¢ Adjusted earnings per share 95.5p 88.1p â€¢ Proposed final dividend 15.0p 14.0p â€¢ Total dividend for the year 22.5p 21.0p Chairman's Statement At the end of a year of major investment in new acquisitions and substantial redevelopment work, I am delighted that the Company has produced an improved profit before tax, amortised goodwill and exceptional items of Â£3.35 million and a return on turnover of 2.2%. I congratulate everyone who helped make this possible. During the year we have appointed two non-executive directors to the Board. Brian Birkenhead who joined the Company in January 2004 and Andrew Goodburn who joined the Company in February 2004. Both bring considerable experience and expertise and provide continuity to the Board ahead of the retirement of Ian Watt and Robert Caffyn next year. I am also very pleased to welcome to the Company the staff in our three new businesses in Brighton, Tunbridge Wells and Eastbourne. The opportunities available to them and all members of staff are most exciting. Following the buy back of shares in the last two years, it is very encouraging to see the adjusted earnings per share rise from 88.1p to 95.5p which reflects the strong underlying performance of the Company. An interim dividend of 7.5p per ordinary share (2003 - 7.0p) was paid on 14 January. An increased final dividend of 15.0p (2003 - 14.0p) is now being recommended which, if approved, will be payable on 29 July 2004 to shareholders on the register on 25 June 2004, giving a total of 22.5p for the year (2003 - 21.0p). B A CARTE Chairman 3 June 2004 Chief Executive's Review Results The profit before tax for the Group of Â£3.1 million has been achieved during a year of major reinvestment in existing sites as well as the acquisition of a number of franchised dealerships. It is therefore very encouraging to report that, despite the inevitable disruption to the refurbished sites, the underlying profit before tax, goodwill amortisation and exceptional items has improved to a record Â£3.35 million, giving a return of 2.2% on turnover of Â£153.1 million. Acquisitions Three major franchise dealership acquisitions have taken place since my last review and all build on our successful relationships with our leading manufacturer partners. In July 2003 we acquired the Audi franchise for Eastbourne which we will be relocating to a prime site in a new facility to enable us to grow the business to its full potential. This gives us representation for Audi from Worthing through Brighton and Haywards Heath to Eastbourne and beyond to Bexhill and Hastings. In February 2004 we bought the Vauxhall business in Tunbridge Wells which consolidates our relationship with Vauxhall, giving us a key market area covering East Grinstead, Tunbridge Wells, Ashford and Folkestone. Last month, in May, we purchased the Volkswagen business in Brighton, giving us representation for Volkswagen covering the same areas as our Audi operation. All three dealerships are already contributing well and all have considerable potential. In addition, substantial operational efficiencies will be realised from these large market areas. Refurbishment and Relocation As I mentioned above, we have invested in a refurbishment programme which covered two of our Volkswagen sites in Haywards Heath and Eastbourne. Both projects inevitably caused considerable disruption to these businesses and I am grateful for the patience and application shown by our staff and customers at these dealerships. Although the profits were sharply reduced we now have two outstanding facilities which are already delivering improved results. In Ramsgate we have added the Daewoo franchise to the existing MG Rover business which extends the range of products on offer to a wider market. Our parts wholesale business in Hove has been relocated to leasehold premises nearby, enabling us to market for sale a prime freehold site on the seafront. Closures and Consolidation To strengthen ongoing business and realise the efficiencies from operating with reduced overhead costs, we have relocated the MG Rover business in Tunbridge Wells to our site in nearby Tonbridge and, similarly, the Vauxhall business in Hythe has transferred to Folkestone and Ashford. Both freehold sites are now released for sale. Again it is worth noting that despite the disruption caused through refurbishment, closure and relocation, as well as the induction of the new businesses, the underlying profit of the Group improved on last year. VAT In line with other groups within the motor retail industry we are in negotiations with HM Customs and Excise over refunds due to the company arising from changes in VAT case law. We hope to announce the conclusion of these negotiations shortly. Financial Services Authority The industry is facing further regulatory changes issued by the Financial Services Authority in response to a EU directive which will affect the sale and administration of insurance based products from January 2005. We are taking the necessary steps to ensure we comply with the new regulation. People and Training As always, our results are driven by the dedication and professionalism of our people. In addition to our new boardroom appointments, I am also delighted to see so many internal promotions with many responding so positively to the opportunities that we have been able to give them. We continue to invest in training and development and it is exciting to see the benefits of this translated into individual career growth and improved dealership performances. I am very grateful to all members of staff for their continued support and hard work. The Future We have further acquisition and refurbishment plans which will be financed by the proceeds of the sale of the three freehold sites mentioned earlier, the expected VAT refunds and, of course, ongoing profit. Whilst the new car market remains good there is talk of upward movement in interest rates. After a year of major redevelopment and acquisitions we are in a strong position to build on our success. S G M CAFFYN Chief Executive 3 June 2004 For further information: Simon Caffyn, Chief Executive Mark Harrison, Finance Director 01323 730201 Caffyns plc Preliminary Announcement For the year ended 31 March 2004 Consolidated Profit and Loss Account Note 2004 2003 Â£'000 Â£'000 Turnover Continuing operations 146,017 148,483 Acquisitions 7,087 - ------- ------ 153,104 148,483 ------- ------ Cost of sales (129,309) (125,888) Exceptional costs on discontinued operation 2 - (330) ------- ------ Total cost of sales (129,309) (126,218) ------- ------ Gross profit 23,795 22,265 Other operating charges (19,906) (18,867) ------- ------ Operating profit ------- ------ Continuing operations before exceptional costs 3,697 3,728 Acquisitions 192 - Exceptional costs on discontinued operation - (330) ------- ------ Total operating profit 3,889 3,398 Exceptional items 2 (209) 1,919 ------- ------ Profit on ordinary activities before interest 3,680 5,317 Interest payable (571) (574) ------- ------ Profit on ordinary activities before taxation 3,109 4,743 Taxation 3 (471) (473) ------- ------ Profit on ordinary activities after taxation 2,638 4,270 Dividends (equity and non-equity) 4 (750) (706) ------- ------ Retained profit 1,888 3,564 ------- ------ Earnings per ordinary share 5 Basic 88.1p 144.0p Adjusted 95.5p 88.1p Note of Historical Cost Profits and Losses Reported profit on ordinary activities before taxation The difference between the historical cost 3,109 4,743 depreciation and depreciation based on revalued amounts 45 46 Realisation of property revaluation deficits - (693) ------- ------ Historical cost profit on ordinary activities before taxation 3,154 4,096 ------- ------ Historical cost profit for the year retained after taxation and dividends 1,933 2,917 ------- ------ There were no recognised gains or losses other than the profit for the financial year. Caffyns plc Consolidated Balance Sheet at 31 March 2004 2004 2003 Note Â£'000 Â£'000 Fixed assets Intangible assets 161 10 Tangible assets 29,229 23,510 ------ ------ 29,390 23,520 ------ ------ Current assets Stocks 22,011 19,725 Property 2 - 951 Debtors 9,860 7,923 Bank balances and cash 62 51 ------ ------ 31,933 28,650 Creditors Amounts falling due within one year (28,501) (20,944) ------ ------ Net current assets 3,432 7,706 ------ ------ Total assets less current liabilities 32,822 31,226 Creditors Amounts falling due after more than one year (3,013) (3,207) Provisions for liabilities and charges (403) (502) ------ ------ 29,406 27,517 ------ ------ Capital and reserves Called up share capital 2,676 2,676 Share premium account 272 271 Capital redemption reserve 282 282 Revaluation reserve 4,500 4,545 Profit and loss account 21,676 19,743 ------ ------ 29,406 27,517 ------ ------ Equity shareholders' funds 28,169 26,280 Non-equity shareholders' funds 1,237 1,237 ------ ------ Total shareholders' funds 6 29,406 27,517 ------ ------ Caffyns plc Consolidated Cash Flow Statement for the year ended 31 March 2004 2004 2003 Note Â£'000 Â£'000 Â£'000 Â£'000 Net cash inflow from operating activities 7 1,029 3,360 Returns on investment and servicing of finance Interest paid (571) (574) Preference dividends paid (102) (102) ------ ------ (673) (676) Taxation UK Corporation tax paid (400) (650) Capital expenditure Purchase of tangible fixed assets (3,814) (931) Sale of property in current assets 951 - Sale of tangible fixed assets 167 48 ------ ------ Net cash outflow from capital expenditure (2,696) (883) Acquisitions and disposals Payment in respect of acquisitions (4,348) - Disposals (231) 5,124 ------ ------ (4,579) 5,124 Equity dividends paid (619) (549) ------ ------ Cash (outflow) /inflow before financing (7,938) 5,726 Financing Capital element of finance leases (37) (140) Issue of shares 1 127 Purchase of own shares - (2,675) Loan repayments - (4,000) ------ ------ Net cash outflow from financing (36) (6,688) ------ ------ Decrease in cash 8 (7,974) (962) ====== ====== Caffyns plc Notes to the Preliminary Announcement for the year ended 31 March 2004 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 2004 on which the auditors issued an unqualified audit opinion on 3 June 2004. These financial statements have not yet been delivered to the Registrar of Companies. The principal accounting policies have remained unchanged from the previous year. 2. Exceptional items 2004 2003 Â£'000 Â£'000 Discontinued operations - Caffyns Motor Contracts - (330) ------ ------ 2004 2003 Â£'000 Â£'000 Profit on disposal of businesses - 942 Net profit on disposal of tangible fixed assets 22 1,541 Closure and disposal costs (231) (173) Provision for diminution in value of freehold property - (391) ------ ------ (209) 1,919 ------ ------ Closure and disposal costs relate to branches closed in the year. These were MG Rover in Tunbridge Wells, Express Factor operations in Worthing and Crawley and the Vauxhall dealership in Hythe. From 1 April 2003 to the dates of disposal or closure, these businesses contributed Â£8,542,000 to turnover and made losses before taxation of Â£216,000. During the year, a freehold property in Ashford, which was formerly occupied by Vauxhall and Skoda dealerships prior to their relocation, was sold for Â£990,000. After adjusting for disposal costs, a loss of Â£391,000 arose and full provision for that loss was made in the year ended 31 March 2003. 3. Taxation 2004 2003 Â£'000 Â£'000 Analysis of charge for year: Current tax: UK Corporation tax at 30% 820 695 Advance corporation tax recovered (367) (266) Adjustment relating to prior years (53) 12 ------ ----- 400 441 Deferred taxation Origination and reversal of timing differences 71 32 ------ ----- Tax on profit on ordinary activities 471 473 ------ ----- The group's UK corporation tax charge has been reduced by Â£30,000 (2003 - Â£52,000) as a result of branch closure costs (note 2) and a further Â£12,000 (2003: Â£71,000) 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 2004 2003 Â£'000 Â£'000 Non equity 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 7.5p (2003 - 7.0p) 216 201 Final dividend proposed of 15.0p (2003 - 14.0p) 432 403 ------ ----- 648 604 ------ ----- Total 750 706 ------ ----- 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. As at 31 March 2004, all such shares in this scheme had been allotted. 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 2004 2003 2004 2003 Â£'000 Â£'000 Â£'000 Â£'000 Profit before tax 3,109 4,743 3,109 4,743 Adjustments: Goodwill amortisation 34 24 Exceptional items 209 (1,589) -------- ------- Adjusted profit before tax 3,352 3,178 Taxation (501) (525) (471) (473) Preference dividends (102) (102) (102) (102) -------- ------- ------- ------- Earnings 2,749 2,551 2,536 4,168 -------- ------- ------- ------- Adjusted earnings per share 95.5p 88.1p -------- ------- Basic earnings per share 88.1p 144.0p ------- ------- 2004 2003 Number Number Weighted average number of fully paid ordinary shares in issue during the year 2,879,298 2,893,772 ----------- ----------- 6. Reconciliation of movements in shareholders' funds 2004 2003 Â£'000 Â£'000 Â£'000 Â£'000 Profit for the financial year 2,638 4,270 Dividends (750) (706) ------ ------- 1,888 3,564 Purchase of own shares - (286) Equity shares issued in year 1 127 ------ ------- Net increase in shareholders' funds 1,889 3,405 Brought forward at beginning of year 27,517 24,112 ------ ------- Carried forward at end of year 29,406 27,517 ------ ------- Shareholders' funds are attributable as follows: Equity interests 28,169 26,280 Non-equity interests 6.5% Cumulative First preference shares of Â£1 each 389 389 10% Cumulative Preference shares of Â£1 each 648 648 6% Cumulative Second Preference shares of 10p each 200 1,237 200 1,237 ------ ------ ------ ------- 29,406 27,517 ------ ------- 7. Reconciliation of operating profit to net cash inflow from operating activities 2004 2003 Â£'000 Â£'000 Operating profit 3,889 3,398 Depreciation charge 995 975 Amortisation of goodwill 34 24 (Increase)/decrease in stocks (1,119) 2,503 Increase in debtors (1,937) (123) Decrease in creditors (663) (3,346) Decrease in provisions for liabilities and charges (170) (71) ------ ------- Net cash inflow from operating activities 1,029 3,360 ------ ------- 8. Reconciliation of net cash flow to movement in net debt 2004 2003 Â£'000 Â£'000 Decrease in cash in the year (7,974) (962) Movement in loans - 4,000 Cash outflow from capital repayments of finance leases 37 140 ------ ------- Movement in net debt in the year (7,937) 3,178 Net debt at beginning of year (3,445) (6,623) ------ ------- Net debt at end of year (11,382) (3,445) ------ ------- 9. Analysis of net debt At 31 March At 1 April 2004 Cash flow 2003 Â£'000 Â£'000 Â£'000 Bank overdrafts (net) 8,382 7,974 408 ---------- ------- ------- Debt falling due after more than 1 year 3,000 - 3,000 Finance leases - (37) 37 ---------- ------- ------- 3,000 (37) 3,037 ---------- ------- ------- Total 11,382 7,937 3,445 ---------- ------- ------- 10. Annual Report Copies of the Annual Report will be dispatched to shareholders by 2 July 2004. 11. Financial Calendar Final dividend to be paid on 29 July 2004 to shareholders on the register as at 25 June 2004. (Ex Dividend date - 23 June 2004). Annual General Meeting at the Hydro Hotel, Eastbourne on Thursday 29 July 2004 at 2.30 p.m. This information is provided by RNS The company news service from the London Stock Exchange

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