REG - Caffyns PLC - Half-year Report
26/11/2021 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211126:nRSZ6452Ta&default-theme=true
RNS Number : 6452T Caffyns PLC 26 November 2021
HALF YEAR
REPORT
for the six months ended 30 September 2021
Summary
6 months to 6 months to
30 September 30 September
2021 2020
£'000 £'000
Revenue 110,785 85,352
Profit before tax 2,295 1,414
Underlying EBITDA (see note 1 below) 3,950 3,218
Underlying profit before tax (see note 1 below) 2,396 1,534
Pence Pence
Underlying basic earnings per share 73.0 55.9
Basic earnings per share 69.9 52.3
Interim dividend per ordinary share 7.5 -
Financial and operational review
· Underlying profit before tax of £2.40 million (2020: £1.53
million)
· Profit before tax of £2.30 million (2020: £1.41 million)
· Like-for-like revenue increase for the period of 29% (see note 2
below)
· Underlying basic earnings per share up by 31% to 73.0 pence (2020:
55.9 pence)
· Basic earnings per share up by 34% to 69.9 pence (2020: 52.3 pence)
· Resumption of dividend payment reflecting first half performance
· Net bank borrowings at 30 September 2021 of £8.7 million (2020:
£12.2 million)
Simon Caffyn, Chief Executive, commented:
"Our results to September benefited from an unprecedented used car
performance. We have also implemented greater operational efficiencies
throughout the group and I am proud of the way our operational and support
teams have risen to the challenges to deliver this strong performance'"
Enquiries:
Caffyns plc Simon Caffyn, Chief Executive Tel: 01323 730201
Mike Warren, Finance Director
Headland Chloe Francklin Tel: 020 3805 4855
Note 1: Underlying results exclude items that have non-trading attributes due
to their size, nature or incidence. Non-underlying items for the period
totalled £0.10 million (2020: £0.12 million) and are detailed in Note 4 to
these condensed consolidated financial statements. Underlying EBITDA of £3.95
million (2020: £3.22 million) represents Operating profit before
non-underlying items of £2.97 million (2020: £2.23 million) and Depreciation
and amortisation of £0.98 million (2020: £0.99 million).
Note 2: Like-for-like comparisons exclude from the current year the impact of
the Lotus and MG businesses at Ashford, both of which were opened during the
period, as well as the LEVC business in Eastbourne which opened during the
prior year period. All other businesses operated throughout both the current
and prior six-month periods.
INTERIM MANAGEMENT REPORT
Summary
The board is very pleased to report a strong underlying profit before tax of
£2.40 million for the half-year ended 30 September 2021 ("the period").
This is a considerable improvement on the £1.53 million recorded for the
comparative period in 2020. Trading in the period, especially for used cars,
has been robust and actions implemented over the last year have strengthened
the resilience of the business, including against the adverse effects of the
covid-19 pandemic. During the period, the Company utilised the support made
available by Government from reductions in business rates for retail premises
and to a lesser extent from Coronavirus Job Retention Scheme furlough grants,
which assisted us to maintain employment. New car availability for the
important September bi-annual registration plate change on 1 September was
constrained by the global shortage of semiconductors adversely affecting car
production levels and we expect this issue also to affect the second half of
the current financial year.
Revenue for the period increased by 30% to £110.8 million (2020 £85.4
million). The increase resulted primarily from business activity in the prior
period being heavily restricted in two of the six months due to covid-19, but
partially offset by the global shortage of semiconductors affecting the
availability of new cars in the period. Underlying basic earnings per share
were 73.0 pence (2020: 55.9 pence).
The Company's defined-benefit pension scheme deficit, calculated in accordance
with the requirements of IAS 19 Pensions, showed an encouraging reduction of
£4.5 million from the last financial year-end at 31 March 2021 to £4.9
million at 30 September 2021. The Scheme's investments performed well,
outpacing the increase in the present value of the Scheme's pension
liabilities, resulting in a welcome narrowing of the deficit.
The Company continues to own all but two of the freeholds of the properties
from which it operates and this provides the dual strengths of a strong asset
base and minimal exposure to rent reviews, which is reassuring in these
uncertain times.
Profit before tax for the period was £2.30 million (2020: £1.41 million)
with basic earnings per share of 69.9 pence (2020: 52.3 pence).
The Board is aware of the importance of dividend payments to its shareholders
and is mindful that it has not paid a dividend for two years due to the
inherent uncertainty the covid-19 pandemic has placed on the business. Having
considered the interests of all stakeholders and, in light of the strong
financial performance and associated cash generation in the period and the
longer-term prospects for the business, the board has judged that it is
appropriate to re-start payment of dividends and has declared an interim
dividend of 7.5 pence per ordinary share (2020: Nil pence per ordinary share).
Operating review
New and used cars
Our new car deliveries in the period rose by 12% from the previous year on a
like-for-like basis with our VAG-branded new car deliveries performing
strongly, ahead of the increase in the UK market. Nationally, the SMMT
reported a 19% increase in new car registrations in the retail and small
business market segment in which we primarily operate. Used car sales volumes
for the period rose by 36% on a like-for-like basis. A number of improvements
have been made to our on-line presence and customer journeys over the last
year which have helped to make for a much more enjoyable customer experience.
Demand was further boosted by customers switching into used car purchases due
to the lack of availability of new cars towards the end of the period.
Aftersales
Our aftersales revenues rose by 21% in the period on a like-for-like basis,
despite a slow start to the period in April and May as that two-month period
coincided with the 12-month anniversary of the first covid-19 lockdown in
2020. The period also faced the headwind of staff shortages from the
"pingdemic" and from social-distancing requirements adversely affecting
productivity levels. Throughout the period, we have continued to realise
improvements to our customer retention processes.
Operations
Given the headwinds to trading that the business has experienced in the period
from the background covid-19 pandemic and the growing lack of availability of
new cars, it was extremely pleasing that all six of our established franchise
businesses reported improved profitability in comparison to the previous
period. Our Audi and Volkswagen businesses, in particular, performed very
strongly. Our Motorstore used car operation performed satisfactorily in the
period, particularly as the business was disrupted by building improvement
works at its base in Ashford.
During the period, we commenced representation with Lotus and MG, opening in
Ashford on 1 July 2021. Both businesses have performed well, and we are
encouraged by the starts that they have made.
The Company benefited in the period from the Government's business rates
holiday for retail premises with savings of £0.5 million (2020: £0.6
million). Savings will continue until March 2022, albeit at a lower level. The
Company also utilised the Government's Coronavirus Job Retention Scheme,
receiving £0.1 million in the period (2020: £1.7 million).
Property
Capital expenditure in the period was £1.2 million (2020: £0.2 million).
This included £0.7 million of assets in the course of construction associated
with an upgrade to our Volvo site in Eastbourne, to allow for an expansion of
the showroom facility to better represent Volvo's extended model range. This
upgrade will be completed in the second half of the year.
We operate primarily from freehold sites and our property portfolio provides
additional stability to our business model. Annually, we obtain an independent
assessment of the values of our freehold properties against their carrying
value in our accounts and had an unrecognised surplus to carrying value of
£12.3 million at 31 March 2021, our last financial year-end. The board does
not consider there to have been any material movement in the value of the
Company's freehold properties since the year-end.
As part of the sale of the Land Rover business in April 2016, our freehold
premises in Lewes had been leased to a third-party but that lease came to an
end in early June 2021. The Board is evaluating future opportunities for the
site.
Pensions
The Company's defined-benefit pension scheme started the period with a net
deficit of £9.4 million. The board has little control over the key
assumptions in the valuation calculations as required by accounting standards
and the size and nature of the Scheme's underlying assets and liabilities
means that the deficit can be subject to significant change. However, the
board was pleased to note a significant reduction in the assessed level of the
deficit at 30 September 2021, to £4.9 million. Net of deferred tax, the net
deficit was £4.0 million at 30 September 2021 (2020: £10.8 million) and
£7.6 million at 31 March 2021. In the period, growth in the value of the
Scheme's gross assets was good, increasing in value by £5.8 million, whilst
the Scheme's liabilities increased by just £1.3 million.
The pension cost under IAS 19 is recognised in the Condensed Consolidated
Statement of Financial Performance and continues to be charged as a
non-underlying cost, amounting to £101,000 in the period (2020: £113,000).
As the Scheme is in deficit, the Company has in place a recovery plan which
has been agreed with the trustees, and which was last updated in May 2021.
During the period, the Company made cash payments into the Scheme of £1.4
million, which included a one-off payment of £1.0 million in June 2021. The
recurring element of these payments increase by a minimum of 2.25% per annum.
Bank and other funding facilities
The Company has banking facilities with HSBC which comprise a term loan,
originally of £7.5 million, and a revolving-credit facility of £7.5 million,
both of which will become renewable in March 2023. HSBC also provides an
overdraft facility of £3.5 million, renewable annually. In addition, there is
an overdraft facility of £4.0 million provided by Volkswagen Bank, renewable
annually, together with a term loan, originally of £5.0 million, which is
repayable over the ten years to November 2023.
The Company has been cash generative during the period with £2.7 million
(2020: £4.4 million) generated from operating activities, including a
favorable working capital improvement of £1.0 million (2020: £2.0 million).
Bank borrowings, net of cash balances, at 30 September 2021 were £8.7 million
(2020: £12.2 million), down from £10.3 million at 31 March 2021. As a
proportion of shareholders' funds, bank borrowings, net of cash balances were
27% at 30 September 2021 (2020: 50%).
Taxation
The tax charge for the period has been based on an estimation of the effective
tax rate on profits for the full financial year of 20% (2020: 22%). The
current year effective tax rate is marginally higher than the standard rate of
corporation tax in force for the year of 19% due to the effect of items
disallowable for tax purposes.
Payments of corporation tax in the period, net of refunds, were £0.3 million
(2020: refund of £0.1 million).
The narrowing of the deficit of the Company's defined-benefit pension scheme
in the period contributed to the recognition of a deferred tax liability on
the Statement of Financial Position at 30 September 2021 of £0.4 million
(2020: deferred tax asset of £1.1 million).
People
The health and safety of our employees and customers during the ongoing
covid-19 pandemic has been our paramount concern with policies implemented so
that our showroom and workshop activities continue to be undertaken in a
responsible and socially distanced way. The response from everyone in the
Company to the pandemic continues to be outstanding and the board would like
to express its gratitude to them for their hard work and professional
application. Our results to September benefited from an unprecedented used
car performance. We have also implemented greater operational efficiencies
throughout the group and our operational and support teams have risen to the
challenges to deliver this strong performance.
Dividend
The Company has not declared a dividend since the interim dividend in late
2019. The Board is aware of the importance of dividend payments to its
shareholders, and for the need to resume dividend payments once it is
appropriate to do so. Despite the uncertainty that remains over the covid-19
pandemic and the ongoing supply chain issues the industry is facing, the
judgement of the board is that the first half performance and longer term
prospects mean that it is now appropriate to restart dividend payments.
Accordingly it has declared an interim dividend of 7.5 pence per ordinary
share (2020: Nil pence per ordinary share). This interim dividend will be paid
to shareholders on 10 January 2022 to those shareholders on the register at
close of business on 10 December 2021. The ordinary shares will be marked
ex-dividend on 9 December 2021.
Strategy
Our continuing strategy is to focus on representing premium and premium-volume
franchises as well as maximising opportunities for premium used cars, with an
emphasis on delivering the highest quality of customer experience. We
recognise that we operate in a rapidly changing environment and carefully
monitor the appropriateness of this strategy whilst also seeking new
opportunities to invest in the future growth of the business.
We concentrate on stronger markets so as to deliver higher returns from fewer
but bigger sites. We continue to seek to deliver performance improvement, in
particular in our used car and aftersales operations.
Current trading and outlook
Customer demand for used cars remains strong, with few signs of slowing. The
Company's forward-order bank for new cars is at a historically high level,
which is especially encouraging for 2022 when it is hoped that new car
availability will improve. However, in the short-term new cars are expected to
remain in short supply and the high level of national covid-19 infections
continues to be a concern as winter approaches. Given these uncertainties, the
board remains cautious for the second half of the financial year.
Our balance sheet is appropriately funded and our freehold property portfolio
is a source of substantial stability. We have taken several actions over the
last eighteen months that have significantly enhanced our online presence, as
well as improving our productivity and increasing the resilience of the
business. We remain confident in the longer-term prospects for the Company and
are ready to explore future business opportunities as they arise.
Simon G M Caffyn
Chief Executive
25 November 2021
Condensed Consolidated Statement of Financial Performance
for the half year ended 30 September 2021
Unaudited Unaudited Audited
Half year to Half year to Year ended
N o t e 30 September 2021 30 September 2020 31 March 2021
Total Total Total
£'000 £'000 £'000
Revenue 110,785 85,352 165,085
Cost of sales (95,058) (73,884) (142,304)
Gross profit 15,727 11,468 22,781
Operating expenses (13,036) (9,618) (20,798)
Operating profit before other income 2,691 1,850 1,983
Other income (net) 3 259 360 909
Operating profit 2,950 2,210 2,892
Operating profit before non-underlying items 2,966 2,229 3,142
Non-underlying items within operating profit 4 (16) (19) (250)
Operating profit 2,950 2,210 2,892
Net finance expense 5 (570) (695) (1,266)
Non-underlying net finance expense on pension scheme 4 (85) (101) (202)
Net finance expense (655) (796) (1,468)
Profit before taxation 2,295 1,414 1,424
Profit before tax and non-underlying items 2,396 1,534 1,876
Non-underlying items within operating profit 4 (16) (19) (250)
Non-underlying net finance expense on pension scheme 4 (85) (101) (202)
Profit before taxation 2,295 1,414 1,424
Taxation 6 (410) (5) (14)
Profit for the period 1,885 1,409 1,410
Earnings per share
Basic 7 69.9p 52.3p 52.4p
Diluted 7 69.0p 52.3p 52.1p
Non-GAAP measure
Underlying basic earnings per share 7 73.0p 55.9p 66.0p
Underlying diluted earnings per share 7 72.0p 55.9p 65.6p
Condensed Consolidated Statement of Comprehensive Expense
for the half year ended 30 September 2021
Note Unaudited Unaudited Audited
Half year to Half year to Year to
30 September 30 September 31 March 2021
2021 2020
£'000 £'000 £'000
Profit for the period 1,885 1,409 1,410
Items that will never be reclassified to profit and loss:
Remeasurement of net pension scheme obligation 12 3,224 (4,025) (301)
Deferred tax on remeasurement of pension scheme obligation (612) 765 57
Other comprehensive income/(expense), net of tax 2,612 (3,260) (244)
Total comprehensive income/(expense) for the period 4,497 (1,851) 1,166
Condensed Consolidated Statement of Financial Position
at 30 September 2021
Unaudited Unaudited Audited
30 September 2021 30 September 2020 31 March
Note 2021
£'000 £'000 £'000
Non-current assets
Right-of-use assets 9 550 768 610
Property, plant and equipment 9 38,060 38,206 37,624
Investment properties 10 7,703 7,994 7,751
Interest in lease 473 643 557
Goodwill 286 286 286
Deferred tax asset - 1,080 412
Total non-current assets 47,072 48,977 47,240
Current assets
Inventories 27,703 31,309 36,562
Trade and other receivables 4,003 8,106 5,072
Interest in lease 171 175 173
Current tax recoverable - - 34
Cash and cash equivalents 4,958 5,273 5,735
Total current assets 36,835 44,863 47,576
Total assets 83,907 93,840 94,816
Current liabilities
Interest-bearing overdrafts, loans and borrowings 1,875 4,875 3,875
Trade and other payables 30,735 35,737 39,338
Lease liabilities 434 493 495
Current tax payable 165 320 306
Total current liabilities 33,209 41,425 44,014
Net current assets 3,626 3,438 3,562
Non-current liabilities
Interest-bearing loans and borrowings 11,750 12,625 12,187
Lease liabilities 695 1,115 783
Preference shares 812 812 812
Pension scheme obligation 12 4,920 13,310 9,434
Deferred tax liability 411 - -
Total non-current liabilities 18,588 27,862 23,216
Total liabilities 51,797 69,287 67,230
Net assets 32,110 24,553 27,586
Shareholders' equity
Ordinary share capital 1,439 1,439 1,439
Share premium 272 272 272
Capital redemption reserve 707 707 707
Non-distributable reserve 1,724 1,724 1,724
Retained earnings 27,968 20,411 23,444
Total equity 32,110 24,553 27,586
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 September 2021 (unaudited)
Capital Non-distributable
Share Share redemption reserve Retained earnings
capital premium reserve £'000 £'000 Total
£'000 £'000 £'000 equity
£'000
At 1 April 2021 1,439 272 707 1,724 23,444 27,586
Total comprehensive income
Profit for the period - - - - 1,885 1,885
Other comprehensive income - - - - 2,612 2,612
Total comprehensive income for the period - - - - 4,497 4,497
Transactions with owners:
Share-based payment - - - - 27 27
At 30 September 2021 (unaudited) 1,439 272 707 1,724 27,968 32,110
for the half year ended 30 September 2020 (unaudited)
Capital Non-distributable
Share Share redemption reserve Retained earnings
capital premium reserve £'000 £'000 Total
£'000 £'000 £'000 equity
£'000
At 1 April 2020 1,439 272 707 1,724 22,238 26,380
Total comprehensive income/(expense)
Profit for the period - - - - 1,409 1,409
Other comprehensive expense - - - - (3,260) (3,260)
Total comprehensive expense for the period (1,851) (1,851)
Transactions with owners:
Share-based payment - - - - 24 24
At 30 September 2020 (unaudited) 1,439 272 707 1,724 20,411 24,553
for the year ended 31 March 2021 (audited)
Capital Non-distributable
Share Share redemption reserve Retained earnings
capital premium reserve £'000 £'000 Total
£'000 £'000 £'000 equity
£'000
At 1 April 2020 1,439 272 707 1,724 22,238 26,380
Total comprehensive income/(expense)
Profit for the year - - - - 1,410 1,410
Other comprehensive expense - - - - (244) (244)
Total comprehensive income for the year 1,166 1,166
Transactions with owners:
Issue of shares - SAYE - - - - 3 3
Share-based payment - - - - 37 37
At 31 March 2021 (audited) 1,439 272 707 1,724 23,444 27,586
Condensed Consolidated Cash Flow Statement
for the half year ended 30 September 2021
Unaudited Unaudited Audited
Half year to Half year to Year to
30 September 2021 30 September 2020 31 March
£'000 £'000 2021
£'000
Cash flows from operating activities
Profit before taxation 2,295 1,414 1,424
Adjustments for:
Net finance expense and pension scheme service cost 655 796 1,468
Depreciation of property, plant and equipment, investment properties and 984 989 1,982
right-of-use assets
Impairment against investment properties - - 184
Cash payments into the defined-benefit pension scheme (1,391) (262) (526)
Loss on disposal of property, plant and equipment - 1 3
Share-based payments 27 24 37
Decrease in inventories 8,859 1,221 3,484
Decrease/(increase) in receivables 1,069 (3,788) (754)
(Decrease)/increase in payables (8,881) 4,601 697
Cash generated from operations 3,617 4,996 7,999
Net tax (paid)/recovered (307) 66 (31)
Interest paid (562) (683) (1,244)
Net cash generated from operating activities 2,748 4,379 6,724
Investing activities
Proceeds generated on disposal of property, plant and equipment - - -
Purchases of property, plant and equipment (913) (198) (394)
Receipt from investment in lease 93 - 185
Net cash used in investing activities (820) (198) (209)
Financing activities
Bank revolving-credit facility repaid (2,000) (1,000) (2,000)
Revolving-credit facility utilised - - 1,000
Secured loans (repaid)/utilised (437) 781 (657)
Issue of shares - SAYE scheme - - 3
Repayment of lease liabilities (268) (167) (604)
Net cash used in financing activities (2,705) (386) (2,258)
Net (decrease)/increase in cash and cash equivalents (777) 3,795 4,257
Cash and cash equivalents at beginning of period 5,735 1,478 1,478
Cash and cash equivalents at end of period 4,958 5,273 5,735
Cash and cash equivalents 4,958 5,273 5,735
Bank revolving-credit facility (1,000) (4,000) (3,000)
3,958 1,273 2,735
Notes to the Condensed Consolidated Financial Statements
for the half year ended 30 September 2021
1. GENERAL INFORMATION
Caffyns plc is a company domiciled in the United Kingdom. The address of the
registered office is Meads Road, Eastbourne, East Sussex, BN20 7DR.
These condensed consolidated financial statements for the half year to 30
September 2021 and similarly for the half year to 30 September 2020 are
unaudited. They do not include all the information required for full annual
financial statements and should be read in conjunction with the financial
statements of the Company for the year ended 31 March 2021.
The comparative financial information for the year ended 31 March 2021 in
these condensed consolidated financial statements does not constitute
statutory accounts for that year. The statutory accounts for 31 March 2021
have been delivered to the Registrar of Companies. The auditor's report on
those accounts was unqualified, did not draw attention to any matters by way
of emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
These condensed consolidated financial statements have been reviewed by the
Company's auditor and a copy of their review report is set out at the end of
these statements.
These consolidated interim financial statements were approved by the directors
on 25 November 2021.
2. ACCOUNTING POLICIES
The annual financial statements of Caffyns plc are prepared in accordance with
UK adopted International Accounting Standards. The set of condensed
consolidated financial statements included in this half yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34 'Interim Financial Reporting'. As required by the
disclosure guidance and transparency rules of the Financial Conduct Authority,
this set of condensed consolidated financial statements has been prepared in
accordance with the accounting policies set out in the Annual Report for the
year ended 31 March 2021.
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.
Basis of preparation: Going concern
These condensed consolidated financial statements have been prepared on a
going concern basis which the directors consider appropriate for the reasons
set out below.
The directors have considered the going concern basis and have undertaken a
detailed review of trading and cash flow forecasts for a period in excess of
one year from the date of approval of this Interim Report. This has focused
primarily on the achievement of the Company's banking covenants. These
comprise two covenant tests, the first of which requires the Company's
underlying profit before interest for the rolling twelve-month period to the
testing date to exceed 200% of interest paid in that period on bank
borrowings. The second covenant test requires that the Company's bank
borrowings at the testing date remain below 70% of the open-market value of
its freehold properties that have been charged as security. Both bank covenant
tests were passed for the period under review.
The Company has modelled the period to the end of 2022, including the biannual
registration plate change months of March and September 2022, and has
concluded that there is headroom that would allow for a significant reduction
in expected new and used units over this period. External market commentary
provided by the Society of Motor Manufacturers and Traders ("SMMT") indicate
that new car registrations for the final quarter of the calendar year to 31
December 2021 are forecast to be 345,000, some 11% lower than the same
three-month period to December 2020, but thereafter with an 18% increase in
new car registrations being forecast for the 2022 calendar year. The Company's
current new car forward-order book for delivery in December and beyond is
significantly ahead of this time last year. The used car market has remained
stable over the past four years, has been growing strongly in 2021 and is
expected to remain healthy in 2022.
The directors have also considered the Company's working capital requirements.
The Company meets its day-to-day working capital requirements through
short-term stocking loans, bank overdrafts, medium-term revolving credit
facilities and term loans. At the period end, the medium-term banking
facilities included a term loan with an outstanding balance of £6.4 million
and a revolving credit facility of £7.5 million from HSBC, its primary
bankers, with both facilities being renewable in March 2023. HSBC also make
available a short-term overdraft facility of £3.5 million, which is due for
its next annual renewal in August 2022. The Company also has a ten-year term
loan from VW Bank with a balance outstanding at 30 September 2021 of £1.3
million which is repayable to November 2023, and a short-term overdraft
facility of £4.0 million, which is renewable annually with the next scheduled
renewal in August 2022. In the opinion of the directors, there is a reasonable
expectation that all facilities will be renewed at their scheduled expiry
dates. The failure of a covenant test would render these facilities repayable
on demand at the option of the lender.
The directors have a reasonable expectation that the Company has adequate
resources and headroom against the covenant test to be able to continue in
operational existence for the foreseeable future and for at least twelve
months from the date of approval of this Interim Report. For those reasons,
they continue to adopt the going concern basis in preparing these condensed
consolidated financial statements.
Non-underlying items
Non-underlying items are those items that are unusual because of their size,
nature or incidence. Management considers that these items should be disclosed
separately to enable a full understanding of the operating results. Profits
and losses on disposal of property, plant and equipment and property
impairment charges are disclosed as non-underlying, as are certain redundancy
costs and costs attributable to vacant properties held pending their disposal.
The net financing return and service cost on pension obligations in respect of
the defined benefit pension scheme is presented as a non-underlying item due
to the inability of management to influence the underlying assumptions from
which the charge is derived. The defined benefit pension scheme is closed to
future accrual.
All other activities are treated as underlying.
3. OTHER INCOME (NET)
Unaudited Unaudited Audited
half year to half year to year to
30 September 30 September 31 March
2021 2020 2021
£'000 £'000 £'000
Rent receivable 205 361 710
Local Government covid-19 support grants 54 - 202
Loss on disposal of tangible fixed assets - (1) (3)
Total other income 259 360 909
4. NON-UNDERLYING ITEMS
Unaudited Unaudited Audited
half year to half year to year to
30 September 30 September 31 March
2021 2020 2021
£'000 £'000 £'000
Other income:
Net loss on disposal of property, plant and equipment - 1 3
Within operating expenses:
Service cost on pension scheme 16 12 23
Redundancy and restructuring costs - 6 40
Property impairments - - 184
16 18 247
Total non-underlying items within operating profit 16 19 250
Net finance expense on pension scheme 85 101 202
Total non-underlying items within profit before taxation 101 120 452
5. NET FINANCE EXPENSE
Unaudited Unaudited Audited
half year to half year to year to
30 September 30 September 31 March
2021 2020 2021
£'000 £'000 £'000
Interest in lease interest receivable (5) - -
Interest payable on bank borrowings 156 227 367
Interest payable on inventory stocking loans 306 367 681
Interest on lease liabilities 14 12 21
Financing costs amortised 63 53 125
Preference dividends 36 36 72
Finance expense 570 695 1,266
6. TAXATION
Unaudited Unaudited Audited
half year to half year to year to
30 September 30 September 31 March
2021 2020 2021
£'000 £'000 £'000
Current UK corporation tax
Charge for the period 239 320 401
Reversal of impairment of Advanced Corporation Tax asset - (302) -
Adjustments recognised in the period for current tax of prior periods (40) - (33)
Total current tax charge 199 18 368
Deferred tax
Origination and reversal of timing differences 211 (12) (381)
Adjustments recognised in the period for deferred tax - (1) 27
of prior periods
Total deferred tax charge/(credit) 211 (13) (354)
Total tax charged in the Income Statement 410 5 14
The tax charge arises as follows:
Unaudited Unaudited Audited
half year to half year to year to
30 September 30 September 31 March
2021 2020 2021
£'000 £'000 £'000
On normal trading 429 27 100
Non-underlying items (19) (22) (86)
Total tax charge 410 5 14
Taxation of trading items for the half year has been provided at the current
rate of taxation of 20% (2020: 22%) expected to apply to the full year. This
effective rate is marginally higher than the standard rate of corporation tax
in force of 19% due to the effect of items disallowable for tax purposes.
7. EARNINGS PER SHARE
The calculation of 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 period. 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 the earnings and the weighted average number of shares used
in the calculations are set out below.
Unaudited Unaudited Audited
half year to half year to year to
30 September 30 September 31 March
2021 2020 2021
£'000 £'000 £'000
Basic
Profit after tax for the period 1,885 1,409 1,410
Basic earnings per share 69.9p 52.3p 52.4p
Diluted earnings per share 69.0p 52.3p 52.1p
Underlying
Profit before tax 2,295 1,414 1,424
Adjustment: Non-underlying items (note 4) 101 120 452
Underlying profit for the period 2,396 1,534 1,876
Taxation on normal trading (note 6) (429) (27) (100)
Underlying earnings 1,967 1,507 1,776
Underlying basic earnings per share 73.0p 55.9p 66.0p
Underlying diluted earnings per share 72.0p 55.9p 65.6p
The number of fully paid ordinary shares in issue at the period end was
2,879,298 (2020: 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 2,695,376 (2020: 2,694,790).
The shares granted under the Company's current SAYE scheme for the period, and
for the year ended 31 March 2021, are dilutive. The weighted average number of
shares in issue for the purposes of the diluted earnings per share calculation
were 2,733,587 (2020: 2,694,790). The shares granted under the Company's
previous SAYE scheme, in place for the comparative period, have not been
treated as dilutive as the market price of the Company's ordinary shares at 30
September 2020 of £2.70 was less than the option price of £3.99.
The Directors consider that underlying earnings per share figures provide a
better measure of comparative performance.
8. DIVIDENDS
Ordinary shares of 50p each
An interim dividend of 7.5 pence per ordinary share has been declared and will
be paid to shareholders on 10 January 2022 to those shareholders on the
register at the close of business on 10 December 2021. The ordinary shares
will be marked ex-dividend on 9 December 2021. No interim dividend was
declared in respect of the half-year ended 30 September 2020 and no final
dividend was declared in respect of the year ended 31 March 2021.
Preference shares
Preference dividends were paid in October 2021. The next preference dividends
are payable in April 2022. The cost of the preference dividends has been
included within finance costs.
9. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS
The following is a reconciliation of changes in the balances of Property,
plant and equipment and Right-of-use assets.
Property, plant and equipment:
Unaudited
half year to
30 September
2021
£'000
Property, plant and equipment at 1 April 2021 37,624
Less: Depreciation charges (772)
Less: Net book value of disposals -
Add: Purchases 545
Add: Assets in the course of construction 663
Property plant and equipment at 30 September 2021 38,060
At 30 September 2021, assets in the course of construction amounting to
£295,000 had been invoiced but not settled.
Right-of-use assets:
Unaudited
half year to
30 September
2021
£'000
Right-of-use assets at 1 April 2021 610
Less: Amortisation of right-of-use assets (164)
Add: Purchases 104
Right-of-use assets at 30 September 2021 550
10. INVESTMENT PROPERTIES
The following is a reconciliation of changes in the balances of Investment
Properties.
Investment properties:
Unaudited
half year to
30 September
2021
£'000
Investment properties at 1 April 2021 7,751
Less: Depreciation charges (48)
Property plant and equipment at 30 September 2021 7,703
11. LOANS AND BORROWINGS
Liabilities
Revolving arising from Bank and cash balances
Bank credit Lease Preference financing £'000 Net
loans facilities liabilities shares activities debt
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2021 (audited) 8,062 8,000 1,278 812 18,152 (5,735) 12,417
Cash movement (437) (2,000) (268) - (2,705) 777 (1,928)
Other movements - - 119 - 119 - 119
At 30 September 2021 7,625 6,000 1,129 812 15,566 (4,958) 10,608
(unaudited)
Current liabilities/(assets) 875 1,000 434 - 2,309 (4,958) (2,649)
Non-current liabilities 6,750 5,000 695 812 13,257 - 13,257
At 30 September 2021 7,625 6,000 1,129 812 15,566 (4,958) 10,608
12. PENSIONS
The pension scheme deficit reflects a defined benefit obligation that has been
updated to reflect its valuation as at 30 September 2021. 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 2021 and in the period to 30 September 2020, and which complies with the
accounting requirements of IAS 19 Pensions (revised).
The net liability for defined benefit obligations has decreased from
£9,434,000 at 31 March 2021 to £4,920,000 at 30 September 2021. The
reduction of £4,514,000 comprises the net charge to the Condensed
Consolidated Statement of Financial Performance of £101,000, a net
remeasurement surplus credited to the Condensed Consolidated Statement of
Comprehensive Income of £3,224,000 and contributions of £1,391,000.
Asset values increased significantly in the period, by £5,763,000, despite
divestments to pay pension transfers and benefits in the period of
£1,981,000. Despite these transfers and pensions that were paid in the
period, pension liabilities also increased by £1,249,000, as a result of an
increase in the CPI inflation assumption rate from 2.75% at 31 March 2021 to
3.00% at 30 September 2021. The discount rate applied to discount the scheme's
liabilities to their net present value remained unchanged at 30 September
2021, at 1.95%.
13. 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 the ongoing covid-19 pandemic and 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.
14. CAPITAL COMMITMENTS
At 30 September 2021, the Company had capital commitments of £0.9 million
(2020: £Nil) relating to the redevelopment of one dealership's premises.
15. CONTINGENT LIABILITIES
Since 2015, the Company has been named as co-defendant in a number of legal
actions that have been initiated against certain of the vehicle manufacturers
which it represents. These actions contend that customers have been unfairly
treated as a result of their vehicles having been fitted with software which
is suggested by the claimant law firms to have operated such that when the
vehicles were experiencing test conditions, the emission levels of nitrogen
oxides ("NOx") were affected. The vehicles remain safe and roadworthy.
These claims on behalf of multiple claimants,
arising out of or in relation to their purchase
or acquisition on finance of a vehicle affected by the NOx issue, have
been brought against a number of Jaguar Land Rover, Vauxhall, Volkswagen and
Audi group entities and dealers, including the Company. The Company has
been named as a defendant on a number of claim forms alleging fraudulent
misrepresentation, breach of contract, breach of statutory duty, breach of
the Consumer Credit Act 1974 and a breach of
the Consumer Protection from Unfair Trading Regulations 2008, although
not all of these causes of action are being brought against the Company
specifically.
In all cases brought to date, the relevant vehicle manufacturers listed above
have agreed to indemnify the Company 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 these legal
actions. The possibility, therefore, of an economic cost to the
Company resulting from the defence of these legal actions is remote.
At present, no timetable can be determined for the resolution of these cases
and the relevant issues of liability, loss and causation have not yet been
decided. It is
therefore too early to assess reliably the merit of any claim and so
we cannot confirm that any future outflow of resources is probable.
Accordingly, no provision for liability has been made in these
condensed consolidated financial statements.
16. RESPONSIBILTY STATEMENT
We confirm that to the best of our knowledge:
a) these condensed consolidated financial statements
have been prepared in accordance with IAS 34 'Interim Financial Reporting';
b) these condensed consolidated financial statements
include a fair review of the information required by DTR 4.2.7R of the
disclosure guidance 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 guidance 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
25 November 2021
INDEPENDENT REVIEW REPORT
to Caffyns plc
Introduction
We have been engaged by the Company to review the condensed consolidated set
of financial statements in the half year report for the six months ended 30
September 2021 which comprises the Condensed Consolidated Statement of
Financial Performance, the Condensed Consolidated Statement of Comprehensive
Expense, the Condensed Consolidated Statement of Financial Position, the
Condensed Consolidated Statement of Consolidated Changes in Equity, the
Condensed Consolidated Cash Flow Statement and the notes to the set of
financial information.
We have read the other information contained in the half year report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed consolidated set of
financial statements.
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 Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the group will be
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this interim financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, ''Interim Financial Reporting''.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
consolidated set of financial statements in the half year 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 Financial
Reporting Council 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 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 consolidated set of financial statements in the
half-yearly report for the six months ended 30 September 2021 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting its responsibilities in respect of half-yearly
financial reporting in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
Southampton
25 November 2021
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR KZMZMKKLGMZMRecent news on Caffyns
See all newsREG - Caffyns PLC - Disposal
AnnouncementREG - Caffyns PLC - Half-year Report
AnnouncementREG - Caffyns PLC - Disposal
AnnouncementREG - Caffyns PLC - Disposal
AnnouncementREG - Caffyns PLC - AGM Final Results
Announcement