REG - Caffyns PLC - Half-year Report <Origin Href="QuoteRef">CFYN.L</Origin> - Part 2
24/11/2017 07:05
- Part 2: For the preceding part double click ID:nRSX4010Xa
561 839 1,596
Underlying basic earnings per share 20.8p 30.2p 58.0p
Diluted earnings per share 20.7p 30.2p 58.0p
The number of fully paid ordinary shares in issue at the period end was
2,879,298 (2016: 2,879,298). Excluding the shares held for treasury, the
weighted average shares in issue for the purposes of the earnings per share
calculation were 2,694,790 (2016: 2,773,616). The shares granted under the
Company's SAYE scheme are dilutive. The number of dilutive shares under option
at fair value was 12,374 (2016: 2,011) giving a total diluted weighted average
number of shares of 2,707,164 (2016: 2,775,627).
The Directors consider that underlying earnings per share figures provide a
better measure of comparative performance.
7. DIVIDENDS
Ordinary shares of 50p each
The interim dividend proposed at the rate of 7.50 pence per share (2016: 7.50
pence) is payable on 8 January 2018 to shareholders on the register at the
close of business on 8 December 2017. The shares will be marked ex-dividend
on 7 December 2017.
Preference shares
Preference dividends were paid in October 2017. The next preference dividends
are payable in April 2018. The cost of the preference dividends has been
included within finance costs.
8. PENSIONS
The pension scheme deficit reflects a defined benefit obligation that has been
updated to reflect its valuation as at 30 September 2017. This has been
calculated by a qualified actuary using a consistent valuation method to that
which was adopted in the audited financial statements for the year ended 31
March 2017 and in the period to 30 September 2016, and which complies with the
accounting requirements of IAS 19 (revised).
The net liability for defined benefit obligations has decreased from
£8,554,000 at 31 March 2017 to £6,063,000 at 30 September 2017. The decrease
of £2,491,000 comprises the net charge to the Statement of Financial
Performance of £117,000 and a net remeasurement gain credited to the Statement
of Comprehensive Income of £2,436,000 and contributions of £172,000. Although
assets have decreased, the liabilities have decreased by a greater amount as a
result of an increase in the discount rate from 2.40% at 31 March 2017 to
2.55% at 30 September 2017.
9. DISCONTINUED OPERATIONS
In the prior financial year, in April 2016, the Group sold the business and
assets (excluding the freehold property) of its Land Rover business to
Harwoods Limited ("Harwoods"). Cash consideration of £7.5 million comprised
£5.5 million for goodwill together with £0.2 million for property, plant and
equipment and £1.9 million for inventories less £0.1 million 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 Harwoods will continue
to operate the Land Rover business remains with the Group, and is being leased
to Harwoods for a four year period to 29 April 2020.
As a result of this transaction, the operating activities attributed to that
business have been disclosed as a discontinued operation.
Half year to30 September2017£'000 Half year to30 September2016£'000 Year to31 March2017£'000
Revenue - 5,828 5,828
Cost of sales - (5,516) (5,516)
Gross profit - 312 312
Operating expenses - (370) (370)
Operating loss - (58) (58)
Finance expense - (3) (3)
Loss before taxation - (61) (61)
Income tax credit - 10 12
Loss attributed to discontinued operations - (51) (49)
Profit on sale of business net of deferred tax - 3,888 3,888
Profit for the period from discontinued operations - 3,837 3,839
The results of the business shown above represent its trading from the start
of the financial year until disposal on 29 April 2016.
Half year to30 September2017£'000 Half year to30 September2016£'000 Year to31 March2017£'000
Proceeds generated on sale of business - 7,512 7,512
Sale of property, plant and equipment - (218) (218)
Transfer of inventories - (1,921) (1,921)
Transfer of liabilities - 116 116
- 5,489 5,489
Associated transaction costs:
Professional fees - (470) (470)
Adjustments arising on completion - (230) (230)
Provision for onerous costs - (105) (105)
Net transaction costs - (805) (805)
Net gain on sale of business - 4,684 4,684
Deferred tax expense - (796) (796)
Profit on sale of business net of deferred tax - 3,888 3,888
10. RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which could have a
material impact on the Group's performance over the remaining six months of
the financial year and could cause actual results to differ materially from
expected and historical results. The Board believes these risks and
uncertainties to be consistent with those disclosed in our latest Annual
Report, including general economic factors, their impact on the Group's
defined benefit pension scheme, liquidity and financing, the Group's
dependency on its manufacturers' and their stability, used car prices and
regulatory compliance. Following the UK's decision to leave the EU, a degree
of uncertainty in the UK economy has been created and we believe that the main
risks to arise from this relate to consumer confidence and the potential
impact that Sterling/Euro exchange rates may have on vehicle prices.
11. CONTINGENT LIABILITIES
In September 2015, Volkswagen Aktiengesellschaft announced that certain diesel
vehicles manufactured by Volkswagen, Skoda, SEAT and Audi, which contain 1.2,
1.6 and 2.0 litre EA 189 diesel engines were fitted with software which is
thought to have operated such that when the vehicles were experiencing test
conditions, the characteristics of nitrogen oxides ("NOx") were affected. The
vehicles remain safe and roadworthy.
Technical measures have been approved by the German type approval authority,
the Kraftfahrt-Bundesamt (the "KBA") in respect of Volkswagen and Audi branded
vehicles, by the UK type approval authority, the Vehicle Certification Agency
(the "VCA") in respect of Skoda branded vehicles, and by the Ministerio de
Industria, Energía y Turismo (the "MDI") in respect of SEAT branded vehicles.
The KBA and VCA have confirmed for all affected vehicles that the
implementation of all technical measures does not adversely impact fuel
consumption figures, CO2 emissions figures, engine output, maximum torque and
noise emissions. The MDI is also content that the technical measures be
applied to those SEAT vehicles for which they are the relevant approval
authority.
We understand that to date in the region of 810,000 affected UK vehicles have
now had the technical measures applied.
Notwithstanding the above, claims on behalf of multiple claimants, arising out
of or in relation to their purchase or ownership of a Volkswagen Group vehicle
affected by the NOx issue, have been brought or intimated against a number of
Volkswagen entities and dealers, including Caffyns. To date, one firm of
solicitors acting on behalf of sixteen claimants has threatened legal action
against Caffyns in respect of the NOx issue, claiming breach of contract and a
breach of the Consumer Protection from Unfair Trading Regulations 2008. As
litigation progresses further, there is the potential for the number of
claimants bringing claims against Caffyns to increase.
A claim in respect of one of the sixteen claimants has been issued
protectively in the High Court (due to the limitation period being close to
expiry), served and stayed by consent pending the determination of the Group
Litigation Order ("GLO") application. On 28 October 2016, one of the claimant
firms served its application for a GLO. During a hearing in the High Court on
30 January 2017, the Senior Master adjourned by consent the hearing of the
application for a GLO to 12 and 13 October 2017. The hearing was further
adjourned by consent to a date to be agreed at a directions hearing scheduled
for 27 November 2017. As at 23 November 2017 no other claim form has been
served on Caffyns in relation to the NOx issue.
At present, litigation with the potential to coalesce into a group civil claim
in respect of the NOx issue is in its early stages, and therefore at this
stage it is too early to assess reliably the merit of any such claim.
Accordingly, no provision for liability has been made in these financial
statements.
Notwithstanding the early stage of the litigation, Volkswagen has agreed to
indemnify Caffyns for the reasonable legal costs of defending the litigation
and any damages and adverse legal costs that Caffyns may be liable to pay to
the claimants as a result of the litigation and the conduct of the Volkswagen
Group. The possibility, therefore, of an economic cost to Caffyns resulting
from the defence of the litigation is remote.
12. RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a) the Half Year Report has been prepared in accordance with IAS34
'Interim Financial Reporting';
b) the Half Year Report includes a fair review of the information
required by DTR 4.2.7R of the Disclosure and Transparency Rules (indication of
important events during the first six months and their impact on the set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year); and
c) the Half Year Report includes a fair review of the information
required by DTR 4.2.8R of the Disclosure and Transparency Rules (disclosure of
related parties' transactions and changes therein).
By order of the Board
S G M Caffyn
Chief Executive
M Warren
Finance Director
23 November 2017
INDEPENDENT REVIEW REPORT
to Caffyns plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report of Caffyns plc for the six
months ended 30 September 2017 which comprises the Condensed Consolidated
Statement of Financial Performance, the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Statement of Financial
Position, the Consolidated Statement of Changes in Equity, the Condensed
Consolidated Cash Flow Statement and the related notes. We have read the other
information contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
This report is made solely to the company, in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim
Financial Information performed by the Independent Auditor of the Entity'
issued by the Auditing Practices Board. Our review work has been undertaken so
that we might state to the company those matters we are required to state to
it in an independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company for our review work, for this report, or for the
conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the company are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed set of
financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2017 is not prepared,
in all material respects, in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Crawley
23 November 2017
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