REG - Caffyns PLC - Annual Financial Report
02/06/2023 07:00
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RNS Number : 4101B Caffyns PLC 02 June 2023
Caffyns plc
Preliminary Results for the year ended 31 March 2023
Summary
2023 2022
£'000 £'000
Revenue 251,426 223,928
Underlying EBITDA (see note A) 6,955 7,712
Underlying profit before tax (see note A) 3,140 4,574
Profit before tax 3,090 4,385
pence pence
Underlying earnings per share 95.1 117.0
Earnings per share 93.6 111.3
Proposed final dividend per Ordinary share 15.0 15.0
Dividend per ordinary share for the year 22.5 22.5
Note A: Underlying results exclude items that have non-trading attributes due
to their size, nature or incidence. Non-underlying items for the year totalled
a charge of £50,000 (2022: £189,000) and are detailed in Note 2 to these
consolidated financial statements. Underlying EBITDA of £6,955,000 (2022:
£7,712,000) represents Operating profit before non-underlying items of
£4,827,000 (2022: £5,690,000) adding back Depreciation and Amortisation of
£2,128,000 (2022: £2,022,000).
Overview
· Revenue up 12% to £251.4 million (2022: £223.9 million)
· Like-for-like new car unit deliveries up by 34%
· Like-for-like used car unit sales down by 4%
· Like-for-like aftersales revenues up by 9% to £27.0 million
· Underlying profit before tax of £3.1 million (2022: £4.6 million)
· Final dividend of 15.0 pence per Ordinary share (2022: 15.0 pence per
Ordinary share)
· Net bank borrowings at 31 March 2023 were £8.1 million (2022: £10.4
million)
· Property portfolio revaluation at 31 March 2023 showed a reduced
surplus to net book value of £11.5 million (2022: £13.3 million) due to a
general softening in the property market. This surplus is not recognised in
these accounts).
Like-for-like comparisons exclude the impact of the Lotus and MG businesses at
Ashford, both of which were opened during the prior year and the Lotus
business which was opened in Lewes during the year under review. All other
businesses operated for the full twelve-month period in both years.
Commenting on the results Simon Caffyn, Chief Executive, said: "Underlying
profit before tax for the year of £3.1 million, whilst lower than the £4.6
million recorded for the prior year, was a strong result and still remained
significantly ahead of that reported in the years running up to the covid-19
pandemic."
Enquiries:
Caffyns plc
Simon Caffyn,
Chief
Executive
Tel: 01323 730201
Mike Warren, Finance Director
Operational and Business Review
Summary
Trading levels in the financial year ended 31 March 2023 (the "year") were
robust, generating higher levels of sales and gross profits. However,
profitability was constrained by significant upward cost pressures in areas
such as business rates and funding and other overhead costs in an inflationary
environment.
Full-year turnover increased by 12% to £251.4 million (2022: £223.9
million), predominantly due to significantly higher levels of car deliveries
and car price inflation. Operating profit was £4.8 million (2022: £5.7
million).
Underlying profit before tax for the year of £3.1 million, whilst lower than
the £4.6 million recorded for the prior year, still remained significantly
ahead of that reported in the years running up to the covid-19 pandemic and
was achieved without the positive impact from Government support measures on
business rates and the rebound in trading that followed the reopening of
business after the covid-19 lockdowns.
Statutory profit before tax for the year was £3.1 million (2022: £4.4
million). Basic earnings per share for the year were 93.6 pence (2022: 111.3
pence). Underlying earnings per share for the year were 95.1 pence (2022:
117.0 pence).
The Company's defined benefit pension scheme deficit, calculated in accordance
with the requirements of IAS 19 Pensions, increased significantly to £8.8
million at 31 March 2023 (2022: £2.8 million). Although higher interest rates
led to significant reductions in the net present value of the Scheme's
liabilities, they also resulted in sharp falls in the value of certain of the
Scheme's investments, and the investment performance during the year was
adversely affected by volatile market movements.
The Company continues to own all but two of the freeholds of the dealership
premises from which it operates, and this provides the dual strengths of a
strong asset base and minimal exposure to rent reviews.
The board declared an interim dividend of 7.5 pence per Ordinary share (2022:
7.5 pence), which was paid in January 2023, and is proposing a final dividend
for the year of 15.0 pence per Ordinary share (2022: 15.0 pence).
Net bank borrowings at 31 March 2023 were £8.1 million (2022: £10.4
million), which equated to gearing of 26% (2022: 30%).
Omni-channel retailing
Our omni-channel offering allows customers to interact with us in the way that
suits them best, from the traditional showroom discussion through to a fully
online sales process, and any combination in between. We learnt a great deal
during the lockdown periods of the pandemic and were able to introduce new
options which significantly advanced our on-line selling capabilities. These
were further enhanced in the year allowing us to provide our customers with a
full omni-channel approach to purchasing their vehicle.
Our people
I am very grateful for the dedication of our employees and the effort they
applied throughout the year to provide our customers with a first-class
experience. As a result of the hard work and professionalism shown by everyone
involved, the business remains in a strong position in the competitive retail
environment in which we operate and we continue to be an employer of choice in
our Kent and Sussex area of operations.
The Company has a long tradition of investing in apprenticeship programmes.
Despite the pressures on the business, we have kept our apprenticeship numbers
at a high level and continue to see the benefits flow through the business as
more apprentices complete their training and become fully qualified. Due to
our apprentice numbers, we continued to fully utilise our Government
apprenticeship levy payments within the stipulated time limits.
We remain firmly committed to the long-term benefits of apprenticeships and
our recruitment programme continues with the aim of maintaining a healthy
complement in the current year, which will assist the Company to continue to
grow.
New and used car sales
The Company's total revenues increased by £27 million over the previous year,
of which £25 million arose from the sale of new and used cars.
Total UK new car registrations in the year increased by 3% to 1.69 million as
the impacts from the global shortage of semiconductors began to wane. However,
the continuing conflict in Ukraine added additional strains to supply chains
and growing cost-of-living pressures have made customers more careful of
spending. Within this total, new car registrations in the private and small
business sector, in which we principally operate, actually fell by 1%. Our own
retail new car deliveries rose by 5% on a like-for-like basis, which was
better than the movement for those manufacturers that we represent, whilst our
Audi corporate agency business doubled the registrations it achieved for the
year. In total, our new car deliveries for the year increased by 34%.
Our volume of used cars sales fell in the year by 4% on a like-for-like basis.
Although not a perfect match, used car data from the Society of Motor
Manufacturers and Traders showed the number of used cars being transacted in
the UK fell by 9% in the 2022 calendar year, so our performance exceeded that
of the general market. Our unit margins in the year fell from the exceptional
levels achieved in the covid-impacted prior year, although the continuing
constraints on the supply of new car product to the market helped to buoy used
car prices. Lower levels of new car registrations over the last three years
have also reduced the number of less than 3-year-old used cars, again helping
to shore up prices. Great efforts have been made over the last twelve months
to further enhance and develop our omni-channel offering for our customers and
we continue to see this providing a major opportunity for further growth. The
number of used cars sold again exceeded the number of new cars sold in the
year, although by a reduced amount than in the prior year. Procedures have
been strengthened to monitor and control used car stock turn and yield and to
broaden our sources for replenishing inventory.
Aftersales
Our aftersales business performed strongly during the year with service
revenues rising by 9% on a like-for-like basis. We continue to place great
emphasis on our customer retention programmes and in growing sales of service
plans. Our parts business also reported higher sales, up by 9% on a
like-for-like basis from the previous year.
Operations
Our Audi and Volkswagen businesses produced very strong financial performances
in the year, with both growing their new car deliveries. Sales of used cars
were broadly in line with last year. Both franchises continue to be boosted by
the strength of the brands, the excellent model range, and exciting new
products.
Our Volvo businesses had a transitional year, with the redevelopment of our
Eastbourne business completing in the year and that at Worthing about to
commence. The brand continues to reap the benefits of an excellent model range
of cars, which are being positively received by customers.
Our combined SEAT/Skoda businesses continued to perform well, despite a lack
of availability of new car product, and will be boosted in the coming year by
the addition of the CUPRA brand.
Our Vauxhall business in Ashford under-performed in the year. However,
Stellantis, its parent company, have publicly announced plans to restructure
and slim down their dealer networks, of which we will be a part, so we
anticipate a brighter future for this brand.
During the year, we opened an additional business for Lotus, in Lewes, to
operate alongside our original Lotus business at Ashford in Kent. The business
was constrained from a lack of new car product in the year but deliveries of
the Emira began in earnest in March 2023. Lotus' second new model, the Eletre,
was launched to much acclaim and, with deliveries expected in the current
year, the board remains encouraged with the opportunity for this brand.
Trading at Caffyns Motorstore, our used car business in Ashford, remained
subdued as the business struggled to source used cars. However, we remain
reassured that the concept continues to be well received by our customers, who
particularly value the reassurance of the Caffyns brand. A second Performance
Motorstore was opened during the year, alongside our Lotus business in Lewes.
Groupwide projects
We remain focused on generating further improvements in used car sales, used
car finance and service labour sales. These three areas will be key to
achieving increases in profitability in the coming years. In addition, we
continue to make very good progress utilising technology to enhance the
customer-buying experiences from their first point of contact right through
the buying process, as well as improving aftersales retention.
New brands and models
We continue to invest in enhanced facilities to allow us to sell and service
our manufacturers' ever-increasing range of electric and hybrid vehicles.
During the year, we extended our representation for Lotus, part of the
Zhejiang Geely group that also owns Volvo, with the opening of a new
dealership in Lewes and expect shortly to commence the redevelopment of our
Volvo premises in Worthing. However, with effect from 31 March 2023, we
relinquished the franchise for The London Electric Vehicle Company, LEVC.
Zero-emission vehicle ("ZEV") targets
With effect from 1 January 2024 the Government has announced that vehicle
manufacturers will be required to meet minimum annual registration targets for
ZEV cars, with the target for the 2024 calendar year to be set at 22% of
registrations. Failure to achieve the set target would result in potential
financial penalties being levied on the manufacturer. We have reviewed our
franchise relationships in the light of these announcements and are satisfied
that we remain well placed based on the manufacturers that we represent.
Climate-related emissions
The board is acutely aware of the impact that the Company's operations have on
the environment, its responsibility to minimise these wherever possible, and
to supporting the Government's efforts to transition towards net-zero carbon
emissions. To assist with this process an Environmental, Sustainability and
Efficiency Committee was constituted in the year, headed by a senior
operational manager who reports directly to the Chief Executive. The Committee
started its work in August 2022 with the aim of scrutinising and reducing the
Company's energy usage and was able to achieve savings in electricity and gas
usage in the year. Investments are being made to improve the efficiency of
lighting and heating equipment and further progress in making energy savings
is expected in future periods.
Property
We operate primarily from freehold sites, which provides additional stability
to our business model. As in previous years, our freehold premises were
revalued at the balance sheet date by chartered surveyors CBRE Limited, based
on an existing use valuation. The excess of the valuation over net book value
of our freehold properties at 31 March 2023 was £11.5 million (2022: £13.3
million). The reduction in the valuation in the year reflected the general
softening of the property market. In accordance with our accounting policies,
this surplus has not been incorporated into our accounts.
During the year, we incurred capital expenditure of £0.9 million (2022: £2.9
million). This reflected a mixture of replacement spend on existing assets and
further installations of electric charging points.
The board is progressing the sale process of our freehold premises in Lewes
which is currently being utilised for Lotus Sussex. Completion of this process
will be dependent both on the potential purchaser gaining an appropriate
planning consent and, potentially, the approval of our shareholders. The board
expects this process will take at least two years. Due to the uncertainty of a
successful outcome the property has continued to be shown as an investment
property on the Company's balance sheet.
The Company operates two of its franchised businesses from leased premises as
well as having two leased vehicle storage compounds, which are shown on the
balance sheet as right of use assets. During the year, the lease for one of
those premises was extended for a further five years. As a result, the
valuation of that lease increased by £1.2 million, equal and opposite to an
increase in its lease liability.
Bank facilities and borrowings
The Company's banking facilities with HSBC comprise a term loan, originally of
£7.5 million, repayable by instalments over a twenty-year period to 2038 and
a revolving credit facility of £6.0 million, both of which will next become
renewable in April 2026. HSBC also provides an overdraft facility of £3.5
million, renewable annually. The Company continues to enjoy a supportive
relationship with HSBC and successfully refinanced its borrowings in the prior
year, twelve months in advance of the scheduled review date for the
facilities.
In addition to its facilities with HSBC, the Company also has a revolving
credit facility of £4.0 million provided by Volkswagen Bank, renewable
annually, together with a term loan, originally of £5.0 million, which is
repayable by instalments over the ten years to March 2024.
The term loan and revolving credit facilities provided by HSBC include certain
covenant tests which were comfortably passed at the year-end on 31 March 2023.
Any failure of a covenant test would render these facilities repayable on
demand at the option of the lender.
During the year, cash generated by operating activities was £4.2 million
(2022: £3.4 million), reflecting profitable trading in the year. Changes in
net working capital were minimal, although inventories and payables both
increased significantly as levels of new cars held on consignment from
manufacturers increased as the global shortage of semiconductors began to
wane, allowing car production levels to increase. Other significant cash
movements in the year included capital expenditure of £0.9 million (2022:
£2.8 million), repayment of bank term loans, also of £0.9 million (2022:
£2.9 million) and dividends paid to shareholders of £0.6 million (2022:
£0.2 million). Cash balances held at 31 March 2023 were £4.2 million, an
increase of £1.5 million from the previous year-end.
Bank borrowings, net of cash balances, at 31 March 2023 were £8.1 million
(2022: £10.4 million) and as a proportion of shareholders' funds at 31 March
2023 were 26% (2022: 30%). This reduction in gearing level reflected cash
generated from operating activities combined with a lower requirement for
capital expenditure in the year. In addition to the year-end cash balances,
available but undrawn facilities with HSBC and Volkswagen Bank at 31 March
2023 were £7.5 million (2022: £7.5 million).
Taxation
The year ended 31 March 2023 produced a tax charge against profits of £0.6
million (2022: £1.4 million). The effective tax rate for the year was similar
to the standard rate of corporation tax in force for the year of 19%.
The Company has no current outstanding trading losses awaiting relief (2022:
£Nil). There are also no capital losses awaiting relief. Capital gains which
remain unrealised, where potentially taxable gains arising from the sale of
properties and goodwill have been rolled over into replacement assets,
amounted to £6.8 million (2022: £7.1 million) which could equate to a future
potential tax liability of £1.7 million (2022: £1.8 million). The Company
was able to utilise £0.5 million of its Advanced Corporation Tax in the year,
leaving an amount carried forward to future trading periods of £0.3 million
(2022: £0.8 million).
Pension scheme
The Company's defined benefit scheme was closed to future accrual in 2010. The
board has little control over the key assumptions in the valuation
calculations as required by accounting standards and movements in yields of
gilts and bonds can have a significant impact on the net funding position of
the scheme. At 31 March 2023, the deficit of the scheme was £8.8 million
(2022: £2.8 million). The deficit, net of deferred tax, was £6.6 million
(2022: £2.1 million). Although higher interest rates led to significant
reductions in the net present value of the Scheme's liabilities they also
resulted in sharp falls in the value of certain of the Scheme's investments,
and the investment performance during the year was adversely affected by
volatile market movements.
The Scheme operates with a fiduciary manager and the board, together with the
independent pension fund trustees, continues to review options to reduce the
cost of operation and its deficit. Actions that could further reduce the risk
profile of the assets and more closely match the nature of the Scheme's assets
to its liabilities continue to be considered.
The pension cost under IAS 19 is charged as a non-underlying cost and amounted
to £0.1 million in the year (2022: £0.2 million).
The most recent completed triennial valuation of the Scheme was as at 31 March
2020 and was formally submitted to the Pensions Regulator in June 2021. A
recovery plan to address the Scheme deficit identified from this triennial
valuation was agreed with the trustees under which the annual recovery plan
payment was set at a base level of £0.75 million for the year ended 31 March
2022, along with an additional one-off contribution of £1.0 million which was
paid in the prior year. The recurring annual recovery plan payment for each
subsequent year thereafter would then increase by 2.25%, until superseded by
any future new recovery plan to be agreed between the Company and the
trustees. In accordance with the recovery plan, the Company made deficit
reduction contributions into the Scheme during the year of £0.8 million
(2022: £1.8 million).
A formal valuation of the Scheme will be carried out as at 31 March 2023, to
be agreed with the trustees and submitted to the Pensions Regulator by 30 June
2024.
Dividend
The board declared an interim dividend of 7.5 pence per Ordinary share (2022:
7.5 pence). The board is also declaring a final dividend for the year of 15.0
pence per Ordinary share (2022: 15.0 pence) which will be paid on 11 August
2023 to those shareholders on the register at close of business on 14 July
2023, subject to shareholder approval at the 2023 Annual General Meeting. The
Ordinary shares will be marked ex-dividend on 13 July 2023.
Strategy
Our continuing strategy is to focus on growing our loyal customer base through
representing premium and premium-volume franchises, maximising opportunities
for premium used cars and delivering an excellent after sales service. We
recognise that we operate in a rapidly changing environment and continue to
carefully monitor the appropriateness of this strategy. We continue to seek
opportunities to invest in the future growth of our business.
We are concentrating on business opportunities in stronger markets 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, and to enhance both the purchasing and aftersales experience for
our customers.
Annual General Meeting
The Annual General Meeting will be held on 3 August 2023 and will be an open
meeting, to which shareholders will be invited to attend in person.
Outlook
We have started the new financial year with a strong new car forward-order
book, although we are mindful of the challenges that inflationary pressures
and higher interest rates will have on our cost base and on our customers'
confidence levels. We are also actively aware of other cost increases that
will arise in the coming year such as business rates and utility costs.
The current financial year will see certain manufacturers begin their
transition to new agency arrangements for their dealer networks, which might
result in some short-term disruption to the market.
In recent months enquiry rates for electric cars have fallen since the removal
of government incentives for retail customers and with increases in
electricity prices. However, our manufacturers are well placed for the future
with a pipeline of market-leading electric new car product due to come to
market over the next few years.
Our businesses enjoy an exceptional workforce who represent excellent brands.
We also continue to enjoy supportive relationships with our banking partners,
HSBC and Volkswagen Bank, with cash in hand balances at the year-end of £4.2
million and available but undrawn facilities of £7.5 million. The balance
sheet is appropriately funded and our freehold property portfolio is a source
of stability. We remain confident in the prospects of the Company and are
ready to exploit future business opportunities.
S G M Caffyn
Chief Executive
1 June 2023
Group Income Statement
for the year ended 31 March 2023
2023 2022
Note £'000 £'000
Revenue 251,426 223,928
Cost of sales (217,844) (191,982)
Gross profit 33,582 31,946
Operating expenses
Distribution costs (19,009) (17,442)
Administration expenses (10,076) (9,227)
Operating profit before other income 4,497 5,277
Other income (net) 344 390
Operating profit 4,841 5,667
Operating profit before non-underlying items 4,827 5,690
Non-underlying items within operating profit 5 14 (23)
Operating profit 4,841 5,667
Finance expense 6 (1,687) (1,116)
Finance expense on pension scheme (64) (166)
Net finance expense (1,751) (1,282)
Profit before taxation 3,090 4,385
Profit before tax and non-underlying items 3,140 4,574
Non-underlying items within operating profit 5 14 (23)
Non-underlying items within finance expense on pension scheme 5 (64) (166)
Profit before taxation 3,090 4,385
Taxation 7 (566) (1,386)
Profit for the year 2,524 2,999
Earnings per share
Basic 8 93.6p 111.3p
Diluted 8 92.4p 109.6p
Underlying earnings per share
Basic 8 95.1p 117.0p
Diluted 8 93.9p 115.2p
Group Statement of Comprehensive Income
for the year ended 31 March 2023
2023 2022
Note £'000 £'000
Profit for the year 2,524 2,999
Items that will never be reclassified to profit and loss:
Remeasurement of net defined benefit liability (6,715) 5,045
Deferred tax on remeasurement 17 1,679 (1,261)
Effect of change in deferred tax rate 17 - 511
Total other comprehensive (expense)/income, net of taxation (5,036) 4,295
Total comprehensive(expense)/income for the year (2,512) 7,294
Group Statement of Financial Position
at 31 March 2023
2023 2022
Note £'000 £'000
Non-current assets
Right-of-use assets 10 2,348 1,413
Property, plant and equipment 11 38,145 38,975
Investment properties 12 7,531 7,646
Interest in lease 13 225 389
Goodwill 14 286 286
Deferred tax asset 17 - -
48,535 48,709
Current assets
Inventories 15 39,989 27,546
Trade and other receivables 7,121 5,264
Interest in lease 13 164 168
Current tax recoverable - 40
Cash and cash equivalents 4,226 2,759
51,500 35,777
Total assets 100,035 84,486
Current liabilities
Interest-bearing bank overdrafts and loans 1,875 1,875
Trade and other payables 16 43,674 29,495
Lease liabilities 511 496
Current tax payable 28 236
46,088 32,102
Net current assets 5,412 3,675
Non-current liabilities
Interest-bearing bank loans 10,437 11,312
Lease liabilities 2,203 1,434
Deferred tax liability 17 34 1,298
Preference shares 812 812
Retirement benefit obligations 8,799 2,797
22,285 17,653
Total liabilities 68,373 49,755
Net assets 31,662 34,731
Capital and reserves
Share capital 1,439 1,439
Share premium account 272 272
Capital redemption reserve 707 707
Non-distributable reserve 1,724 1,724
Retained earnings 27,520 30,589
Total equity attributable to shareholders 31,662 34,731
Group Statement of Changes in Equity
for the year ended 31 March 2023
Capital Non-
Share Share redemption distributable Retained
capital premium reserve reserve Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2022 1,439 272 707 1,724 30,589 34,731
Total comprehensive
Income/(expense)
Profit for the year - - - - 2,524 2,524
Other comprehensive - - - - (5,036) (5,036)
expense
Total comprehensive - - - - (2,512) (2,512)
expense
Transactions with
owners:
Dividends - - - - (606) (606)
Issue of shares - SAYE - - - - 3 3
Share-based payment - - - - 46 46
At 31 March 2023 1,439 272 707 1,724 27,520 31,662
for the year ended 31 March 2022
Capital Non-
Share Share redemption distributable Retained
capital premium reserve reserve Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2021 1,439 272 707 1,724 23,444 27,586
Total comprehensive
Income
Profit for the year - - - - 2,999 2,999
Other comprehensive - - - - 4,295 4,295
income
Total comprehensive - - - - 7,294 7,294
income
Transactions with
owners:
Dividends - - - - (202) (202)
Issue of shares - SAYE - - - - - -
Share-based payment - - - - 53 53
At 31 March 2022 1,439 272 707 1,724 30,589 34,731
Group Cash Flow Statement
for the year ended 31 March 2023
2023 2022
Note £'000 £'000
Net cash inflow from operating activities 18 4,237 3,390
Investing activities
Proceeds on disposal of property, plant and equipment 1 -
Purchases of property, plant and equipment (902) (2,837)
Receipt from investment in lease 185 185
Net cash outflow from investing activities (716) (2,652)
Financing activities
Revolving-credit facility repaid - (2,000)
Secured loans repaid (875) (875)
Bank refinancing arrangement fees - (98)
Issue of shares - SAYE scheme 3 -
Dividends paid (606) (202)
Repayment of lease liabilities (576) (539)
Net cash outflow from financing activities (2,054) (3,714)
Net increase/(decrease) in cash and cash equivalents 1,467 (2,976)
Cash and cash equivalents at beginning of year 2,759 5,735
Cash and cash equivalents at end of year 4,226 2,759
Notes
for the year ended 31 March 2023
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.
This financial information has been extracted from the consolidated financial
statements which were approved by the directors on 1 June 2023.
2. ACCOUNTING POLICIES
The financial statements have been prepared in accordance with UK adopted
international accounting standards in conformity with the requirements of the
Companies Act 2006 and in accordance with International Financial Reporting
Standards ("IFRS") as adopted in the United Kingdom.
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.
The financial information set out does not constitute the Company's statutory
accounts for the year ended 31 March 2023, but is derived from those accounts.
Statutory accounts for the year ended 31 March 2022 have been delivered to the
Registrar of Companies and those for the year ended 31 March 2023 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 2023 will be available
at www.caffynsplc.co.uk and will be posted to shareholders by 10 July 2023.
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 directors have considered the going concern basis and have undertaken a
detailed review of trading and cash flow forecasts for a period of one year
from the date of approval of this Annual Report. This has focused primarily
on the achievement of the banking covenants. All three bank covenant tests
have been passed for the year under review. Under the Company's first covenant
test, it is required to make underlying profits before senior interest (that
being paid to HSBC and VW Bank on its term loan and revolving credit facility
borrowings), corporation tax, depreciation and amortisation ("senior EBITDA")
for a rolling twelve-month period which is at least four times the level of
senior interest. Under the second test, the Company's borrowings from HSBC and
VW Bank on its term loan and revolving credit facilities must be less than
375% of its senior EBITDA.
The Company's final covenant test requires that the level of its bank
borrowings do not exceed 70% of the independently assessed value of its
charged freehold properties. Property values would need to reduce by some
two-thirds before this covenant test became at risk of failure.
These Company's covenants are tested quarterly with the test on 31 March 2024
being the final test to be carried out within the twelve-month period from the
anniversary of the signing of these financial statements. The Company's
financial results in the year under review were robust and the current new
car orders held for future delivery is at elevated levels. External market
commentary provided by the Society of Motor Manufacturers and Traders ("SMMT")
indicate that new car registrations are forecast to show a year-on-year
increase of 9% in 2023 to 1.8 million, with a further 9% increase into 2024 to
reach almost two million registrations. The used car market remains healthy,
at just under 7 million annual transactions in 2022, and the recent shortages
in new car supply have assisted the used car market and are expected to
continue to do so. Financial modelling for the coming twelve-month period has
allowed the directors to conclude that there is satisfactory headroom in the
Company's banking covenants.
The directors have also given consideration to the current uncertainties in
the state of the UK economy, as well as to cost pressures which are impacting
on businesses such as increases to staffing costs from the rise in the
National Minimum and National Living Wages, from business rates and from
increases to funding costs from rising interest base rates.
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 overdraft and revolving-credit facility, and
medium-term revolving credit facilities and term loans. At the year-end, the
medium-term banking facilities included a term loan with an outstanding
balance of £5.8 million and a revolving credit facility of £6.0 million from
HSBC, its primary bankers, with both facilities being next renewable in April
2026. HSBC also make available a short-term overdraft facility of £3.5
million, which is renewed annually each August. The Company also has a
ten-year term loan from Volkswagen Bank with a balance outstanding at 31 March
2023 of £0.5 million, which is repayable, to March 2024, and a short-term
revolving-credit facility of £4.0 million, which is renewed annually each
August. 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. At 31 March 2023 the Company held cash in hand
balances of £4.2 million and had undrawn borrowing facilities of £7.5
million, all of which would be immediately available.
Information concerning the Company's liquidity and financing risk are set out
in the financial statements on page 14 and note 21.
The directors have a reasonable expectation that the Company has adequate
resources and headroom against the covenant tests to be able to continue in
operational existence for the foreseeable future and for a period of one year
from the date of approval of the Annual Report. For those reasons, they
continue to adopt the going concern basis in preparing this Annual Report.
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.
These judgements and estimates are continually evaluated and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
Certain critical accounting estimates in applying the Company's accounting
policies are listed below.
Retirement benefit obligation
The Company has a defined benefit pension scheme. The obligations under this
scheme are recognised in the balance sheet and represent the present value of
the obligation calculated by independent actuaries, with input from
management. These actuarial valuations include assumptions such as discount
rates, return on assets and mortality rates. These assumptions vary from time
to time depending on prevailing economic conditions. Details of the
assumptions used are provided in note 23. At 31 March 2023, the net liability
of the scheme included in the Statement of Financial Position was £8.8
million (2022: £2.8 million).
Impairment
The carrying value of property, plant and equipment and goodwill are tested
annually for impairment as described in notes 11, 12, 13 and 15. For the
purposes of the annual impairment testing, the directors recognise Cash
Generating Units (CGUs) to be those assets attributable to an individual
dealership, which represents the smallest group of assets which generate cash
inflows that are independent from other assets or CGUs. The recoverable amount
of each CGU is based on the higher of its fair value less costs to sell and
its value in use. The fair value less costs to sell of each CGU is based upon
the market value of any property contained within it and is determined by an
independent valuer, and its value in use is determined through discounting
future cash inflows (as described in detail in note 15). As a result of this
review, the directors considered that no impairments were required to the
carrying value of its property assets (2022: no impairments) (see notes 11,
12, 13 and 14).
Surplus ACT recoverable
The Company carries a balance of surplus unrelieved advanced corporation tax
("ACT") which can be utilised to reduce corporation tax payable subject to a
restriction to 19% of taxable profits less shadow ACT calculated at 25% of
dividends. Uncertainty arises due to the estimation of future levels of
profitability, levels of dividends payable and the reversal of deferred tax
liabilities in respect of accelerated capital allowances and on unrealised
capital gains. For example, a reduction in the Company's profitability could
result in a delay in the utilisation of surplus unrelieved ACT. However, based
on the Company's current projections, the directors have a reasonable
expectation that the surplus ACT will be fully relieved against future
corporation tax liabilities by 31 March 2025.
5. Non-underlying items
The following amounts have been presented as non-underlying items in these
financial statements:
2023 2022
£'000 £'000
Net loss on disposal of property, plant and equipment - -
Other income, net 37 -
Within operating expenses:
Service cost on pension scheme (23) (23)
(23) (23)
Non-underlying items within operating profit 14 (23)
Net finance expense on pension scheme (64) (166)
Non-underlying items within net finance expense (64) (166)
Total non-underlying items before taxation (50) (189)
Taxation credit on non-underlying items 10 36
Total non-underlying items after taxation (40) (153)
The following item was recorded in the year as a non-underlying item:
· A sum of £37,000 was received from the liquidators of MG Rover Group
Limited.
6. Finance expense
2023 2022
£'000 £'000
Interest payable on bank borrowings 621 297
Interest payable on inventory stocking loans 856 581
Interest on lease liabilities 51 37
Finance costs amortised 104 141
Preference dividends (see note 9) 72 72
Finance income on interest in lease (17) (12)
Finance expense 1,687 1,116
7. Tax
2023 2022
£'000 £'000
Current tax
UK corporation tax 152 432
Adjustments recognised in the period for current tax of prior periods - (5)
Total charge 152 427
Deferred tax (see note 17)
Origination and reversal of temporary differences 442 312
Change in corporation tax rate 10 647
Adjustments recognised in the period for deferred tax of prior periods (38) -
Total charge 414 959
Tax charged in the Income Statement 566 1,386
2023 2022
The tax charge arises as follows: £'000 £'000
On normal trading 576 1,422
On non-underlying items (see note 5) (10) (36)
Tax charged in the Income Statement 566 1,386
The charge for the year can be reconciled to the profit per the Income
Statement as follows:
2023 2022
£'000 £'000
Profit before tax 3,090 4,385
Tax at the UK corporation tax rate of 19% (2022: 19%) 587 833
Tax effect of expenses that are not deductible in determining taxable profit 106 126
Other differences (6) -
Effect of change in corporation tax rate 10 647
Movement in rolled over and held over gains (93) (215)
Adjustment to tax charge in respect of prior periods (38) (5)
Tax charge for the year 566 1,386
The current year total tax charge is impacted by the effect of non-deductible
expenses, which includes non-qualifying depreciation.
The total tax charge for the year is made up as follows:
2023 2022
£'000 £'000
Total current tax charge 152 427
Deferred tax (credit)/charge
Charged in the Income Statement 414 959
(Credited)/charged against other comprehensive income (1,679) 750
Total deferred tax (credit)/charge (1,265) 1,709
Total tax (credit)/charge for the year (1,113) 2,136
Factors affecting the future tax charge
The Company has unrelieved advance corporation tax of £0.3 million (2022:
£0.8 million), which is available to be utilised against future mainstream
corporation tax liabilities and is accounted for in deferred tax.
8. Earnings per ordinary share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number
of shares in issue during the year.
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:
Underlying Basic
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Profit before tax 3,090 4,385 3,090 4,385
Adjustments:
Non-underlying items (note 5) 50 189 - -
Profit before tax 3,140 4,574 3,090 4,385
Tax (note 7) (576) (1,422) (566) (1,386)
Profit after tax 2,564 3,152 2,524 2,999
Earnings per share (pence) 95.1p 117.0p 93.6p 111.3p
Diluted earnings per share (pence) 93.9p 115.2p 92.4p 109.6p
2023 2022
£'000 £'000
Underlying earnings after tax 2,564 3,152
Underlying earnings per share (pence) 95.1p 117.0p
Underlying diluted earnings per share (pence) 93.9p 115.2p
Non-underlying losses after tax (40) (153)
Losses per share (pence) (1.5)p (5.7)p
Diluted losses per share (pence) (1.5)p (5.6)p
Total earnings 2,524 2,999
Earnings per share (pence) 93.6p 111.3p
Diluted earnings per share (pence) 92.4p 109.6p
The number of fully paid Ordinary shares in circulation at the year-end was
2,696,343 (2022: 2,695,502). The weighted average number of shares in issue
for the purposes of the earnings per share calculation were 2,695,678 (2022:
2,695,418). The shares granted in the year under the Company's SAYE scheme
have been treated as dilutive. For the purposes of this calculation, the
weighted average number of shares in issue for the purposes of the earnings
per share calculation were 2,730,313 (2022: 2,737,264).
9. Dividends
2023 2022
£'000 £'000
Preference shares
7% Cumulative First Preference 12 12
11% Cumulative Preference 48 48
6% Cumulative Second Preference 12 12
Included in finance expense (see note 6) 72 72
Ordinary shares
Interim dividend of 7½ pence per ordinary share paid in respect 202 202
of the current year (2022: Nil pence)
Final dividend paid of 15 pence per Ordinary share in respect of the 404 -
March 2022 year end (2021: Nil pence)
606 202
A final dividend of 15.0 pence per ordinary share has been declared in respect
of the year ended 31 March 2023.
10. Right-of-use assets
£'000
Deemed cost
At 1 April 2022 2,323
Additions in the year 1,308
At 31 March 2023 3,631
Accumulated depreciation
At 1 April 2022 910
Depreciation for the year 373
At 31 March 2023 1,283
Net book value
At 31 March 2023 2,348
The right-of-use assets above represent four long-term property leases for
premises from which the Company operates a Volkswagen dealership in Brighton,
a Volvo dealership in Worthing and two car storage compounds in Eastbourne and
Tunbridge Wells.
Depreciation charges of £373,000 (2022: £339,000) in respect of right-of-use
assets was recognised within Administration Expenses in the Income Statement.
The interest expense on the associated lease liability of £51,000 (2022:
£37,000) is disclosed in note 6.
Payments made in the year on the above leases were £391,000 (2022:
£353,000).
11. Property, plant and equipment
Freehold Leasehold Fixtures & Plant &
property improvements fittings machinery Total
£'000 £'000 £'000 £'000 £'000
Cost or deemed cost
At 1 April 2022 42,697 728 5,629 5,076 54,130
Additions at cost 327 - 314 169 810
Disposals - - (448) (505) (953)
At 31 March 2023 43,024 728 5,495 4,740 53,987
Accumulated depreciation
At 1 April 2022 6,729 654 4,368 3,404 15,155
Depreciation charge
for the year 673 74 500 393 1,640
Disposals - - (448) (505) (953)
At 31 March 2023 7,402 728 4,420 3,292 15,842
Net book value
31 March 2023 35,622 - 1,075 1,448 38,145
Short-term leasehold property for both the Company and the Group comprises net
book value of £Nil in the Statement of Financial Position (2022: £74,000).
Depreciation charges of £1,640,000 (2022: £1,578,000) in respect of
Property, plant and equipment was recognised within Administration Expenses in
the Income Statement.
The Company valued its portfolio of freehold premises and investment
properties as at 31 March 2023. The valuation was carried out by CBRE Limited,
Chartered Surveyors, in accordance with the Royal Institution of Chartered
Surveyors valuation - global and professional standards requirements. The
valuation is based on existing use value which has been calculated by applying
various assumptions as to tenure, letting, town planning, and the condition
and repair of buildings and sites including ground and groundwater
contamination. Management are satisfied that this valuation is materially
accurate. The excess of the valuation over net book value as at 31 March 2023
of those sites was £11.5 million (2022: £13.3 million). In accordance with
the Company's accounting policies, this surplus has not been incorporated into
these financial statements.
12. Investment properties
£'000
Cost
At 1 April 2022 and 31 March 2023 9,650
Accumulated depreciation
At 1 April 2022 2,004
Depreciation for the year 115
At 31 March 2023 2,119
Net book value
At 31 March 2023 7,531
Depreciation charges of £115,000 (2022: £105,000) in respect of Investment
properties was recognised within Administration Expenses in the Income
Statement.
As described in note 11, the total excess of the valuation of all of the
Company's freehold properties over net book value as at 31 March 2023 was
£11.5 million (2022: £13.3 million). Investment properties accounted for
£0.7 million (2022: £0.8 million) of this surplus.
13. Net investment in lease
2023 2022
£'000 £'000
Due after more than one year 225 389
Due within one year 164 168
At 31 March 2023 389 557
The premises shown above are sub-let to a third-party under a lease which has
the same terms and duration as the Company's own lease.
14. Goodwill
Group and Company: £'000 £'000
Cost
At 1 April 2022 and 31 March 2023 481 481
Provision for impairment
At 1 April 2022 and 31 March 2023 195 195
Carrying amounts allocated to CGUs
Volkswagen, Brighton 200 200
Audi, Eastbourne 86 86
At 31 March 2023 286 286
For the purposes of the annual impairment testing, goodwill is allocated to a
CGU. Each CGU is allocated against the lowest level within the entity at which
goodwill is monitored for management purposes. Consequently, the directors
recognise CGUs to be those assets attributable to individual dealerships and
the table above sets out the allocation of goodwill into the individual
dealership CGUs. The carrying amount of goodwill allocated to the Volkswagen,
Brighton CGU is the only amount considered significant in comparison with the
Group's total carrying amount of goodwill.
Goodwill impairment reviews are undertaken annually, or more frequently if
events or changes in circumstances indicate that the carrying amount may not
be recoverable and a potential impairment may be required. Impairment reviews
have been performed for all CGUs for the years ended 31 March 2022 and 2023.
Valuation basis
The recoverable amount of each CGU is based on the higher of its fair value
less selling costs and value in use. The fair value less selling costs of each
CGU is based initially upon the market value of any property contained within
it and is determined by an independent valuer as described in note 12. Where
the fair value less selling costs of a CGU indicates that an impairment may
have occurred, a discounted cash flow calculation is prepared in order to
assess the value in use of that CGU, involving the application of a pre-tax
discount rate to the projected, risk-adjusted pre-tax cash inflows and
terminal value.
Period of specific projected cash flows (Volkswagen, Brighton CGU)
The recoverable amount of the Volkswagen, Brighton CGU is based on value in
use. Value in use is calculated using cash flow projections for a five-year
period from 1 April 2023 to 31 March 2028. These projections are based on the
most recent budget which has been approved by the board being the budget for
the year ending 31 March 2024. The key assumptions in the most recent annual
budget on which the cash flow projections are based relate to expectations of
sales volumes and margins, and expectations around changes in the operating
cost base. These assumptions are based on past experience, adjusted to
expected changes, and on external sources of information. The cash flows
include ongoing capital expenditure required to maintain the dealership but
exclude any growth capital expenditure projects to which the Group was not
committed at the reporting date.
Growth rates, ranging from 1% (2022: -1%) to 12% (2022: 15%) have been used to
forecast cash flows for a further four years beyond the budget period, through
to 31 March 2028. These growth rates reflect the products and markets in which
the CGU operates. These growth rates do not give rise to an impairment. Growth
rates are internal forecasts based on a combination of internal and external
information. Based on these forecasts, the headroom available on the total
future profits is £1.4 million (2022: £3.2 million) before an impairment
would be necessary.
Period of specific projected cash flows (Volvo, Worthing CGU)
The recoverable amount of the Volvo, Worthing CGU is based on value in use.
Value in use is calculated using cash flow projections for a five-year period
from 1 April 2023 to 31 March 2028. These projections are based on the most
recent budget which has been approved by the board being the budget for the
year ending 31 March 2024. The key assumptions in the most recent annual
budget on which the cash flow projections are based relate to expectations of
sales volumes and margins, and expectations around changes in the operating
cost base. These assumptions are based on past experience, adjusted to
expected changes, and on external sources of information. The cash flows
include ongoing capital expenditure required to maintain the dealership but
exclude any growth capital expenditure projects to which the Group was not
committed at the reporting date.
Growth rates, ranging from -25% (2022: -46%) to 9% (2022: 7%) have been used
to forecast cash flows for a further four years beyond the budget period,
through to 31 March 2028. These growth rates reflect the products and markets
in which the CGU operates. These growth rates do not give rise to an
impairment. Growth rates are internal forecasts based on a combination of
internal and external information. Based on these forecasts, the headroom
available on the total future profits is £2.4 million (2022: £1.1 million)
before an impairment would be necessary.
Discount rate
The cash flow projections have been discounted using a rate derived from the
Group's pre-tax weighted average cost of capital, adjusted for industry and
market risk. The discount rate used was 12.4% (2022: 12.4%).
Terminal growth rate
The cash flows subsequent to the forecast period are extrapolated into the
future over the useful economic life of the CGU using a steady or declining
growth rate that is consistent with that of the product and industry. These
cash flows form the basis of what is referred to as the terminal value. The
growth rate to perpetuity beyond the initial budgeted cash flows used in the
value in use calculations to arrive at a terminal value is 0.5% (2022: 0.5%).
Terminal growth rates are based on management's estimate of future long-term
average growth rates.
Conclusion
At 31 March 2023, no impairment charge in respect of goodwill was identified
(2022: no impairment charge).
Sensitivity to changes in key assumptions
Impairment testing is dependent on estimates and judgements, particularly as
they relate to the forecasting of future cash flows. The outcome of the
impairment test is not sensitive to reasonably possible changes in respect of
the projected cash flows, the discount rate applied, nor in respect of the
terminal growth rate assumed.
15. Inventories
Group and Company: 2023 2022
£'000 £'000
Vehicles 28,651 22,561
Vehicles on consignment 10,229 3,969
Oil, spare parts and materials 1,100 1,009
Work in progress 9 7
At 31 March 2023 39,989 27,546
2023 2022
Group and Company: £'000 £'000
Inventories recognised as an expense during the year 216,265 185,398
Inventories stated at net realisable value 976 884
Carrying value of inventories subject to retention of title clauses 22,519 14,675
All vehicle inventories held under consignment stocking arrangements are
deemed to be assets of the Group and are included on the Statement of
Financial Position from the date of consignment. The corresponding liabilities
to the manufacturers are included within trade and other payables. Inventories
can be held on consignment for a maximum consignment period set by the
manufacturer, which is generally between 180 and 365 days. Interest is payable
in certain cases for part of the consignment period, at various rates
indirectly linked to the Bank of England base rate.
During the year, £24,000 (2022: 25,000) was recognised in respect of the
write-down of inventories of spare parts due to general obsolescence.
16. Trade and other payables
2023 2022
£'000 £'000
Trade payable 21,810 14,034
Obligations relating to consignment stock 10,229 3,969
Vehicle stocking loans 7,511 7,327
Social security and other taxes 1,204 823
Accruals 2,342 2,732
Deferred income 493 532
Other creditors 85 78
At 31 March 2022 43,674 29,495
Trade and other payables principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for these
trade-related purchases was 27 days (2022: 28 days).
The directors consider that the carrying amount of trade payables approximates
to fair value.
The Group finances the purchases of new car inventory through the use of
consignment funding facilities provided by its manufacturer partners and which
are shown above as Obligations relating to consignment stock. Vehicles are
physically supplied by the manufacturers with payment deferred until the
earlier of the registration of the vehicle or the end of the consignment
period, generally between 180 and 365 days. In certain circumstances
consignment periods can be extended with the agreement of the manufacturer.
The consignment funding facilities attract interest at a commercial rate.
The Group utilises vehicle stocking loans to assist with the purchase of
certain used car inventory. Facilities are available from both its
manufacturer partners and a third-party finance provider and are generally
available for a period of 90 days from the date of purchase. These vehicle
stocking loans attract interest at a commercial rate.
Interest charges on consignment stocking loans and vehicle stocking loans
described above for the year ended 31 March 2023 were £856,000 (2022:
£581,000).
The obligations relating to consignment stock are all subject to retention of
title clauses for the vehicles to which they relate. Obligations for used and
demonstrator cars which have been funded are secured on the vehicles to which
they relate and are shown above as vehicle stocking loans. From a risk
perspective, the Company's funding is split between manufacturers through
their related finance arms and that funded by the Company through bank
borrowings.
The movements in deferred income in the year were as follows:
2023 2022
£'000 £'000
At 1 April 2022 532 614
Utilisation of deferred income in the year (1,021) (1,401)
Income received and deferred in the year 982 1,319
At 31 March 2023 493 532
17. Deferred tax
The following are the major deferred tax assets and liabilities recognised and
the movements thereon during the current and prior reporting period.
Accelerated tax Unrealised capital gains Retirement benefit obligations Short-term
depreciation £'000 £'000 temporary differences Recoverable
£'000 £'000 ACT Total
£'000 £'000
At 1 April 2022 (940) (1,784) 700 189 537 (1,298)
Change in tax rates and
prior year adjustments (252) - - - 280 28
Utilisation of ACT - - - - (475) (475)
Timing differences 202 94 (179) (85) - 32
Recognised in other
comprehensive income - - 1,679 - - 1,679
At 31 March 2023 (990) (1,690) 2,200 104 342 (34)
The Finance Act 2021 introduced an increase in the main corporation tax rate
to 25% from 1 April 2023.
The Company carries a balance of surplus unrelieved advanced corporation tax
("ACT") which can be utilised to reduce corporation tax payable subject to a
restriction of 19% of taxable profits less shadow ACT calculated at 25% of
shareholder Ordinary dividends. Shadow ACT has no effect on the corporation
tax payable itself but any surplus shadow ACT on dividends must be fully
absorbed before surplus unrelieved ACT can be utilised. At the commencement of
the financial year on 1 April 2023 there was no Shadow ACT outstanding. During
the year all Shadow ACT generated by the payment of dividends was fully
utilised, which allowed for a further utilisation of the available ACT,
leaving the remaining value of surplus ACT available for utilisation in future
periods at 31 March 2023 of £342,000 (2022: £537,000).
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and it is considered that this requirement is fulfilled. The offset amounts
are as follows:
2023 2022
£'000 £'000
Deferred tax liabilities (2,680) (2,724)
Deferred tax assets 2,646 1,426
At 31 March 2023 (34) (1,298)
The unrealised capital gains include deferred tax on gains recognised on
revaluing the land and buildings in 1995 and where potentially taxable gains
arising from the sale of properties have been rolled over into replacement
assets. Such tax would become payable only if such properties were sold
without it being possible to claim rollover relief.
There were no trading losses available for use in future periods (2022:
£Nil).
18. Notes to the cash flow statement
2023 2022
£'000 £'000
Profit before tax for the year 3,090 4,385
Adjustments for net finance expense 1,751 1,282
4,841 5,667
Adjustments for:
Depreciation of property, plant and equipment, investment properties and
right-of-use assets 2,128 2,022
Cash payments into the defined-benefit pension scheme (800) (1,781)
Loss on disposal of property, plant and equipment - -
Share-based payments 46 53
Operating cash flows before movements in working capital 6,215 5,961
(Increase)/decrease in inventories (12,444) 9,016
Increase in receivables (1,857) (94)
Increase/(decrease) in payables 14,296 (9,911)
Cash generated by operations 6,210 4,972
Tax paid, net of refunds (320) (503)
Interest paid (1,653) (1,079)
Net cash derived from operating activities 4,237 3,390
All interest payments are treated as operating cash movements as they arise
from movements in working capital.
Reconciliation of debt
Liabilities
Revolving arising from Bank and cash balances
Bank credit Lease Preference financing £'000 Net
Group and loans facilities liabilities shares activities debt
Company: £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2022 7,187 6,000 1,930 812 15,929 (2,759) 13,170
Cash movement (875) - (576) - (1,451) (1,467) (2,918)
Non-cash movement - - 1,360 - 1,360 - 1,360
At 31 March 2023 6,312 6,000 2,714 812 15,838 (4,226) 11,612
Current liabilities 875 1,000 511 - 2,386 (4,226) (1,840)
Non-current liabilities 5,437 5,000 2,203 812 13,452 - 13,452
At 31 March 2023 6,312 6,000 2,714 812 15,838 (4,226) 11,612
Non-cash movements in lease liabilities relate to an extension in the year of
one existing lease and one new lease that was entered into during the year.
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