Final Results

RNS Number : 4053I

Caffyns PLC

30 May 2014

Caffyns plc

Preliminary Results for the year ended 31 March 2014

Summary

	2014	2013**
	£'000	£'000

Revenue	193,166	164,965

Underlying* profit before tax	2,166	1,218

Profit before tax	1,566	1,122

Underlying* EBITDA	3,941	2,981


	p	p

Underlying* earnings per share	75.5	37.3

Earnings per share	51.0	35.5

Dividend per share for the year	18.0	12.0

Proposed final dividend per share	12.0	7.0

* Underlying results exclude items that have non-trading attributes due to their size, nature or incidence.
** Restated to reflect the impact of the adoption of IAS 19 (2011).

Highlights

· Underlying profit before tax up 78% to £2,166,000 (2013: £1,218,000)

· Profit before tax up 40% to £1,566,000 (2013: £1,122,000)

· Like for like new car unit sales up 18.6%

· Like for like used car unit sales up 17.5%

· Net cash generated by operating activities of £5.37m (2013: outflow £0.04m)

· Underlying earnings per share increased by 102% to 75.5p (2013: 37.3p)

· Basic earnings per share increased by 44% to 51.0p (2013: 35.5p)

· Recommended dividend per ordinary share for year increased by 50% to 18.0p (2013:12.0p)

· New flagship Volkswagen dealership opened in Worthing

· Property portfolio revalued at 31 March 2014 - £6.0m surplus (not included in accounts)

Commenting on the results, Simon Caffyn, Chief Executive said: "Caffyns enjoyed a successful year with sales, profits, earnings per share and dividends all increasing substantially. By adopting a strategy of trading from larger sites, and by focussing on our excellent franchises, we have been able to record an improved operational performance in both new and used cars. We look forward to taking further advantage of the growth opportunities presented by improved economic conditions in the UK."

Enquiries:

Caffyns plc	Simon Caffyn, Chief Executive	Tel:	01323 730201
	Mark Harrison, Finance Director

HeadLand	Tom Gough	Tel:	0207 367 5228
			07717 896701

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 £2.17m up 78% from £1.22m last year.

Profit before tax rose to £1.57m from £1.12m last year (as restated*).

Revenue for the year was up 17.1% to £193.2m (2013: £165.0m). Revenue on a like for like basis increased by 28.1% to £193.2m (2013: £150.8m).

Underlying earnings per share for the year were 75.5p (2013: 37.3p as restated). Basic earnings per share were 51.0p (2013: 35.5p as restated).

New and Used Cars

Our new unit sales increased by 18.6% on a like for like basis. Over the same twelve month period, total UK new car registrations rose by 12.5%. Within this, the private and small business sector in which we operate rose by 17.8% so we again outperformed both the overall UK average and our specific sector. Our premium and premium-volume franchises continue to perform well.

Used car unit sales were up 17.5% on a like for like basis continuing the strong improvement started in the second half of last year. Used car margins improved and gross profits were also ahead of our expectations.

Aftersales

With annual new car registrations still below pre-recession levels, we have seen a slight increase in the overall size of the 0 to 5 year old car servicing market resulting in a 2.5% increase in like for like aftersales revenues. The action we have taken to enhance our aftersales marketing and retention procedures, together with our improving new and used car sales will help to further accelerate this trend.

Operations and redevelopment

We relocated our Volkswagen business in Worthing to our new 15 car showroom and 12 bay workshop at the beginning of April 2014. This substantial development offers customers significantly greater opportunity to view new and used cars and provides increased aftersales facilities. Initial trading from this new site has been encouraging. The anticipated cost of the development of £4.75m was achieved within budget and on time and will be partially offset, in due course, by the sale of the existing site formerly occupied by Volkswagen in Goring.

In December 2013 we further strengthened our Volkswagen operations by acquiring a freehold property next to our Volkswagen dealership in Eastbourne. This will allow for future growth and it is encouraging to see this dealership produce another strong result. We expect to redevelop this site during the current year incorporating the premises acquired.

The new build showroom and aftersales facilities for our Skoda dealership in Ashford are now complete, on budget, with the business already showing signs of growth in these bigger premises.

In February 2013, we bought a freehold property immediately adjacent to our Land Rover dealership in Lewes. As anticipated, this purchase has brought greater efficiencies to the operation of the site. We have seen a significant improvement in profitability and it has enabled us to vacate the previously leased service facility.

Our Vauxhall business in Ashford has had a good trading year and we are currently updating the showroom and facilities to reflect the new corporate identity. Having relocated the adjacent Skoda business to a new showroom and workshop on the other side of the site, we will have an opportunity in the second half of the current year to further grow the used car activity once the building works are completed.

In Tunbridge Wells we have seen a substantial improvement in results and have begun a programme to update the facilities to reflect the latest corporate identities for the Skoda and Seat franchises.

In Eastbourne we have expanded our Audi used car display area and have begun work to increase the size of the showroom to meet new corporate standards and to cater for increased demand. Work on the showroom began in April and is scheduled to be completed by August 2014. All three Audi businesses showed excellent growth on the previous year.

The new car market continues to be driven by manufacturer offers which are positively impacting our retail sales. While Europe is showing signs of recovery, it is encouraging to see manufacturers continuing to support the UK market. Whilst we expect to experience continued growth in new car sales, we continue to place particular emphasis on increasing our levels of used car sales and customer retention for aftersales business.

Groupwide projects

During the year, we continued our focus on improvements in the three key areas of used car sales, used car finance and aftersales. All of these have contributed to the increase in profits. We also are looking to further improve our use of technology to ease the customer's journey, from internet based research to the experience they have when visiting our showrooms.

Property

We operate primarily from freehold properties and our property portfolio provides additional strategic flexibility to our business model. During the year, we incurred capital expenditure of £7.46m (2013: £3.67m) principally on the sites noted above, namely the new Volkswagen site in Worthing (£4.15m spent in the year), the new Skoda dealership in Ashford (£1.1m) and the freehold land purchased in Eastbourne adjacent to our Volkswagen site (£0.88m). The refurbishment of our Volkswagen dealership in Haywards Heath was completed in May 2013, as was the refurbishment of the aftersales facility at our Land Rover dealership in Lewes, following the acquisition of the freehold property in February 2013.

The sale of freehold land in Hailsham for £1.4m is conditional upon an appropriate planning approval, application for which has been submitted. Our freehold property in Upperton Road, Eastbourne has been marketed and an offer accepted, subject to a planning approval. However, contracts have not yet been exchanged. Following the vacation of the former Volkswagen site in Worthing, the site has been marketed and we are currently reviewing our options. We have recently obtained a planning approval for 12 residential units adjacent to our Land Rover dealership in Lewes and marketing has commenced to sell this freehold property. Following the exchange of contracts to sell our freehold property in Folkestone in May 2013, proceeds of £452,000 net of sale costs were received in August 2013.

A valuation of the Company's freehold premises was carried out at 31 March 2014 by chartered surveyors CBRE Limited on the basis of existing use value. The excess of the valuation over net book value of freehold properties, excluding the Group's investment property in Uckfield and the three freehold properties being offered for sale at 31 March 2014, was £6.0m. In accordance with the Group's accounting policies (which reflect those utilised throughout the industry), this surplus has not been incorporated into the Company's accounts.

Bank facilities

In order to assist in the financing of our capital investment programme, the Company entered into a £5m Term Loan with Volkswagen Bank in November 2013. The loan is secured on certain freehold properties and is repayable over 10 years. Our other facilities remain at £18.0m, including facilities from HSBC at £11.0m which incorporate a three year revolving credit facility of £7.5m expiring in April 2015, and a £3.5m overdraft. In addition, we have an overdraft facility of £7.0m provided by Volkswagen Bank. Bank borrowings net of cash balances at 31 March 2014 were £11.93m (2013: £9.85m). Bank borrowings as a proportion of shareholders' funds at 31 March 2014 were 67% (2013: 64%).

Pension Scheme

The Group operates a defined benefit pension scheme which was closed to future accrual in 2010. In common with many companies, the directors have very little control over the key assumptions required by the accounting standards in the valuation calculations. The deficit as at 31 March 2014 reduced to £11.4m (31 March 2013: £13.6m). The deficit, net of deferred tax, at 31 March 2014 was £9.1m (2013: £10.5m) primarily due to lower than expected inflation.

The amended accounting standard, IAS19 has been implemented in the year by replacing the expected return on assets with a return based upon the discount rate. This has given rise to a charge in the year to 31 March 2014 of £600,000. The net credit shown in the Annual Report for the year to 31 March 2013 was £67,000. Following implementation of the revised standard, the charge for that period has been restated to £330,000, reducing profit before tax by £400,000. However, the net actuarial losses in the Consolidated Statement of Comprehensive Income have also reduced by £400,000. Consequently, there are no changes to the balance sheet previously reported. The pension cost under IAS 19, as in the previous year, continues to be charged as a non-underlying cost.

The Pension Scheme Recovery Plan agreed with the trustees requires a cash payment of £358,000 in the year to 31 March 2015 increasing by 3.4% per annum thereafter.

The Board continues to review options, together with the independent pension fund trustees, to reduce the cost of operating the scheme and any actions that could further reduce the deficit over the medium and longer term. Following advice on the investment strategy of the assets, during the year over two thirds of the assets were reinvested in two Diversified Funds with the intention of improving returns and reducing exposure to risk.

People

During the year we have had less disruption through redevelopment work and I am delighted that we have been able to take advantage of a more stable environment to deliver improved results. The positive approach shown by all employees throughout the company has been key to this success and I should like to thank them personally for their hard work and enthusiasm.

On 25 September 2013 we announced the appointment of Nigel Gourlay to the Board as an independent non-executive director. Nigel has prior Board experience with Mitsubishi UK and is Chairman of the Audit Committee at Feronia Inc. which is quoted on the TSX-V in Toronto. Andrew Goodburn retired from the Board on 25 October 2013 and I, and other members of the Board, would like to thank him for his valuable contribution over more than nine years' service.

Apprenticeships

At the start of the recession we decided to increase the number of people taken onto our award-winning apprenticeship programme. We have recruited 50 apprentices over the last four years of which 70% are still with us. We look to recruit further personnel across the company as we continue to grow.

Dividend

The Board has decided to recommend a final dividend of 12.0p per Ordinary Share (2013: 7.0p). If approved at the Annual General Meeting, this will be paid on 31 July 2014 to shareholders at close of business on 27 June 2014. The shares will be marked ex-dividend on 25 June 2014.

Together with the interim dividend of 6.0p per Ordinary Share (2013: 5.0p) paid during the year, the total dividend for the year will be 18.0p per Ordinary Share (2013: 12.0p).

Strategy

Our strategy of focusing on representing premium and premium-volume franchises continues to deliver stronger results. The decision to continue our relationship with Vauxhall at our Ashford dealership has delivered improved profitability in a market suited to the brand.

We continue to invest the proceeds from the sale of properties and closed operations in developing larger business opportunities in stronger markets delivering higher returns on capital. With fewer but bigger sites, we are now more effective in delivering profit improvements.

Our focus on improving operational processes has seen an encouraging increase in used car sales. This, together with used finance and aftersales retention, remains at the centre of our drive to enhance profitability.

Outlook

The growing economy in the UK and improved consumer confidence has led to continued growth of the new car market. There are signs that some European markets are also recovering but manufacturers continue to see opportunities for further growth in the UK and continue to support our market with strong consumer offers. We are also seeing strong and sustained growth in our used car sales and the resultant increase in the size of our overall customer base will generate growth in our aftersales operations.

Our improved profitability combined with our excellent franchise representation in larger and more efficient premises leaves us well placed to take advantage of these improved economic conditions.

S G M Caffyn

Chief Executive

30 May 2014

*The results for the year to 31 March 2013 have been restated following the implementation of the amended accounting standard IAS19 "Employee Benefits" with a resultant reduction in reported profit before tax of £400,000. This change is referred to below in the section on "Pensions".

Consolidated Income Statement

for the year ended 31 March 2014

	Note	Underlying	Non-underlying (note 5)	2014	Underlying (as restated)*	Non-underlying (note 5) (as restated)*	2013
		£'000	£'000	£'000	£'000	£'000	£'000


Revenue		193,166	-	193,166	150,847	14,118	164,965

Cost of sales		(169,878)	-	(169,878)	(131,969)	(12,117)	(144,086)


Gross profit		23,288	-	23,288	18,878	2,001	20,879

Operating expenses

Distribution costs		(12,759)	-	(12,759)	(11,030)	(1,750)	(12,780)

Administration expenses		(7,481)	(20)	(7,501)	(5,738)	(1,727)	(7,465)


Operating profit before other income		3,048	(20)	3,028	2,110	(1,476)	634

Other income (net)		-	-	-	-	1,718	1,718


Operating profit		3,048	(20)	3,028	2,110	242	2,352



Finance expense	6	(882)	-	(882)	(892)	(25)	(917)

Finance expense on pension scheme		-	(580)	(580)	-	(313)	(313)


Net finance (expense)/income		(882)	(580)	(1,462)	(892)	(338)	(1,230)


Profit before taxation		2,166	(600)	1,566	1,218	(96)	1,122

Income tax (expense)/credit	7	(78)	(77)	(155)	(186)	46	(140)


Profit for the year from continuing operations		2,088	(677)	1,411	1,032	(50)	982


Earnings per share continuing operations

Basic	8			51.0p			35.5p

Diluted	8			50.3p			34.4p


Non GAAP measure

Basic	8			75.5p			37.3p

Diluted	8			74.4p			36.2p

*see note 2 for details of restatement

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2014

	2014	2013
	£'000	£'000
		(as restated)*

Profit for the year	1,411	982


Other comprehensive income:

Items that will never be reclassified to profit and loss: Remeasurement of net defined liability	2,515	(7,443)

Deferred tax on remeasurement	(912)	1,711


Total other comprehensive income, net of taxation	1,603	(5,732)


Total comprehensive income for the year	3,014	(4,750)

*see note 2 for details of restatement

Consolidated Statement of Financial Position

at 31 March 2014

	2014 £'000	2013 £'000

Non-current assets

Property, plant and equipment	37,637	31,073
Investment property	525	528
Goodwill	286	286
Deferred tax asset	676	1,743


	39,124	33,630


Current assets

Inventories	26,853	25,650
Trade and other receivables	6,163	6,174
Cash and cash equivalents	949	1,159
Non-current assets classified as held for sale	-	446


	33,965	33,429


Total assets	73,089	67,059


Current liabilities

Interest bearing loans and borrowings	1,000	3,500
Trade and other payables	29,496	25,658
Current tax payable	208	208


	30,704	29,366



Net current assets	3,261	4,063

Non-current liabilities

Interest bearing loans and borrowings	11,875	7,500
Preference shares	1,237	1,237
Retirement benefit obligations	11,360	13,641


	24,472	22,378


Total liabilities	55,176	51,744


Net assets	17,913	15,315


Capital and reserves
Share capital	1,439	1,439
Share premium account	272	272
Capital redemption reserve	282	282
Non-distributable reserve	2,390	2,390
Other reserve	30	120
Retained earnings	13,500	10,812


Total equity attributable to shareholders of Caffyns plc	17,913	15,315

Consolidated Statement of Changes in Equity

for the year ended 31 March 2014

	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 2013	1,439	272	282	2,390	120	10,812	15,315


Total comprehensive income

Profit for the period	-	-	-	-	-	1,411	1,411

Other comprehensive income	-	-	-	-	-	1,603	1,603


Total comprehensive income for the year	-	-	-	-	-	3,014	3,014

Transactions with owners:

Dividends	-	-	-	-	-	(360)	(360)

Purchase of own shares	-	-	-	-	-	(386)	(386)

Issue of shares - SAYE scheme						292	292

Transfer inter reserve	-	-	-	-	(128)	128	-

Share-based payment	-	-	-	-	38	-	38


At 31 March 2014	1,439	272	282	2,390	30	13,500	17,913

for the year ended 31 March 2013

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Non-distributable reserve £'000	Other reserve £'000	Retained earnings £'000	Total £'000
						(as restated)*	(as restated)*

At 1 April 2012	1,439	272	282	2,390	96	15,891	20,370


Total comprehensive income

Profit for the period	-	-	-	-	-	982	982

Other comprehensive income	-	-	-	-	-	(5,732)	(5,732)


Total comprehensive income for the year	-	-	-	-	-	(4,750)	(4,750)

Transactions with owners:

Dividends	-	-	-	-	-	(332)	(332)

Issue of shares - SAYE scheme	-	-	-	-	-	3	3

Share-based payment	-	-	-	-	24	-	24


At 31 March 2013	1,439	272	282	2,390	120	10,812	15,315

*see note 2 for details of restatement

Consolidated Cash Flow Statement

for the year ended 31 March 2014

	Note	2014	2013
		£'000	£'000
			(as restated)*

Net cash inflow/(outflow) from operating activities	10	5,372	(41)


Investing activities

Proceeds on disposal of property, plant and equipment		457	2,896

Purchases of property, plant and equipment		(7,460)	(3,670)


Net cash outflow from investing activities		(7,003)	(774)


Financing activities

Secured loans repaid		(125)	-

Secured loans received		5,000	-

Purchase of own shares		(386)	-

Issue of shares - SAYE scheme		292	3

Dividends paid		(360)	(332)


Net cash inflow/(outflow) from financing activities		4,421	(329)


Net increase/(decrease) in cash and cash equivalents		2,790	(1,144)


Cash and cash equivalents at beginning of year		(2,341)	(1,197)


Cash and cash equivalents at end of year		449	(2,341)




		31 March	31 March
		2014	2013
		£'000	£'000

Cash and cash equivalents		949	1,159

Overdrafts		(500)	(3,500)


Net cash and cash equivalents		449	(2,341)

*see note 2 for details of restatement

Notes

for the year ended 31 March 2014

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 30 May 2014.

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 2013.

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 2013 apart from the disclosure of the pension charge to the Income Statement. As a result of the amendments to IAS 19: Employee Benefits, the Group has changed its accounting policy with respect to determining income or expense relating to its defined benefit pension scheme. The standard prescribes that an interest expense or income is calculated on the net benefit liability/(asset) by applying the discount rate to the net defined benefit liability/(asset). This replaces the interest expense on the defined benefit obligation and the expected return on plan assets. The revised standard requires retrospective application; prior periods have been restated accordingly together with the associated tax. The amounts are all non-underlying in nature and result in the following changes:

Consolidated Statement of Financial Performance		Year to 31 March 2013 £'000

	Increase in finance expense		(313)
	Decrease in finance income		(87)
	Decrease in income tax expense		93
	Decrease in profit for the period		(307)
	Decrease in basic earnings per share (pence)		(11.1)p
	Decrease in diluted earnings per share (pence)		(10.8)p

Consolidated Statement of Comprehensive Income

	Other comprehensive income:
	Decrease in defined benefit actuarial loss		400
	Decrease in income tax income		(93)
	Increase in other comprehensive income		307

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2014 or 2013, but is derived from those accounts. Statutory accounts for the year ended 31 March 2013 have been delivered to the Registrar of Companies and those for the year to 31 March 2014 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 2014 will be available at www.caffynsplc.co.uk and will be posted to shareholders by 1 July 2014.

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 April 2015, and short-term overdraft facilities of £10.5m of which £7.0m was renewed on 2 May 2014 for the period to 31 May 2015. The other overdraft facility of £3.5m is renewable in August 2014. 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 Report which projects that the 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 this financial information. These forecasts indicate that the Group will be able to operate within the financing facilities that are 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 and the Company have 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 annual 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.

Except as described below, 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 2013.

5. NON-UNDERLYING ITEMS

		2014	2013*
		£'000		£'000

Impairment of property, plant and equipment		-		(178)

Net profit on disposal of property, plant and equipment		-		1,896


Other income (net)		-		1,718


Within operating expenses:

Losses incurred on closed businesses		-		(1,067)

	Redundancy costs	-		(414)


		-		(1,481)


Total other income (net of costs)		-		237

Net finance income and service cost on pension scheme		(600)		(333)


Total non-underlying items before taxation		(600)		(96)

Income tax expense - tax charge on non-underlying items		(77)		46


Total after tax		(677)		(50)

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

There were no impairment provisions required (2013: £178,000), no losses resulting from the closure of businesses (2013: £1,067,000) and no branch specific redundancy costs (2013: £414,000).

The net financing return and service cost on pension obligations in respect of the defined benefit scheme closed to future accrual is presented as a non-underlying item due to the volatility of this amount.

* Restated to reflect the impact of the adoption of IAS 19 (2011) - see note 2.

6. FINANCE EXPENSE

	2014 £'000	2013 £'000


Interest payable on bank borrowings	299	329

Vehicle stocking plan interest	433	370

Financing costs amortised	48	116

Preference dividends (see note 9).	102	102


Finance expense	882	917


Interest payable on bank borrowings is after capitalising interest in additions to freehold properties of £90,000 at a rate of 3.5% (2013: £13,000, rate: 4.4%).

7. TAXATION

			2014 £'000	2013 £'000
Current tax

		UK corporation tax	-	-


Deferred tax

		Origination and reversal of temporary differences	(351)	(182)

		Adjustments recognised in the period due to change in rate of corporation tax	333	42

		Adjustments recognised in the period for deferred tax of prior periods	(137)	-


			(155)	(140)


	Total tax charged in the Income Statement		(155)	(140)


	The tax (charge)/credit arises as follows:

	On normal trading		(78)	(186)

	Non-underlying (see note 5)		(77)	46


			(155)	(140)




			2014	2013
			£'000	£'000
The charge for the year can be reconciled to the profit per the Income Statement as follows:

Profit before tax			1,566	1,122


Tax at the UK corporation tax rate of 23% (2013: 24%)			(360)	(269)

Tax effect of expenses that are not deductible in determining taxable profit			(9)	(21)

Change in rate of corporation tax from 23% to 20% (2013: 24% to 23%)			333	42

Accounting depreciation/impairment for which no tax relief is due			(88)	(130)

Difference between accounts profits and taxable profits on capital asset disposals			18	479

Movement in rolled over and held over gains			88	(241)

Adjustments to tax charge in respect of prior years			(137)	-


Tax charge for the year			(155)	(140)

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
		2014 £'000	2013* £'000	2014 £'000	2013* £'000

	Profit before tax	1,566	1,122	1,566	1,122

	Adjustments:

	Non-underlying items (note 2)	600	96	-	-


	Adjusted profit before tax	2,166	1,218	1,566	1,122

	Taxation	(78)	(186)	(155)	(140)


	Earnings	2,088	1,032	1,411	982


	Earnings per share	75.5p	37.3p	51.0p	35.5p


	Diluted earnings per share	74.4p	36.2p	50.3p	34.4p


* As restated to reflect the impact of the adoption of IAS19 (2011) - see note 2

	The number of fully paid ordinary shares in circulation at the year-end was 2,757,213 (2013: 2,767,553). The weighted average shares in issue for the purposes of the earnings per share calculation were 2,766,903 (2013: 2,766,973). The shares granted under the Company's SAYE scheme are dilutive. The weighted average number of dilutive shares under option at fair value was 37,808 (2013: 85,831) giving a total diluted weighted average number of shares of 2,804,711 (2013: 2,852,804).

9. DIVIDENDS

	2014	2013
Paid	£'000	£'000

Preference

6.5% Cumulative First Preference	25	25

10% Cumulative Preference	65	65

6.0% Cumulative Second Preference	12	12


Included in finance expense (see note 6)	102	102


Ordinary

Interim dividend paid in respect of the current year of 6.0p (2013: 5.0p)	166	138

Final dividend paid in respect of the March 2013 year end of 7.0p (2012: 7.0p)	194	194


	360	332

Proposed

In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2014 of 12.0p per share which will absorb £331,000 of shareholders' funds (2013: 7.0p per share absorbing £194,000). 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.

10. NOTES TO THE CASH FLOW STATEMENT

	2014 £'000	2013* £'000

Profit before taxation	1,566	1,122

Adjustment for net finance expense	1,462	1,230


	3,028	2,352

Adjustments for:

Depreciation of property, plant and equipment	893	916

Impairment of property, plant and equipment	-	178

Change in retirement benefit obligations	(326)	(375)

Gain on disposal of property, plant and equipment	(5)	(1,896)

Share-based payments	38	24


Operating cash flows before movements in working capital	3,628	1,199

(Increase)/decrease in inventories	(1,203)	(26)

Decrease/(increase) in receivables	11	546

Decrease in payables	3,838	(843)


Cash generated by operations	6,274	876

Income taxes	-	-

Interest paid	(902)	(917)


Net cash derived from operating activities	5,372	(41)