For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231201:nRSA2717Va&default-theme=true
RNS Number : 2717V Caffyns PLC 01 December 2023
HALF YEAR
REPORT
for the six months ended 30 September 2023
Summary
Half year to Half year to
30 September 30 September
2023 2022
£'000 £'000
Revenue 134,252 118,992
Profit before tax 44 1,558
Underlying EBITDA (see note 1 below) 2,564 3,283
Underlying profit before tax (see note 1 below) 259 1,566
Pence Pence
Underlying basic earnings per share 7.1 47.3
Basic earnings per share 1.1 47.0
Interim dividend per Ordinary share 5.0 7.5
Financial and operational review
· Underlying profit before tax of £0.26 million (2022: £1.57 million)
· Profit before tax of £0.04 million (2022: £1.56 million)
· Like-for-like revenue increase of 13% (see note 2 below)
· Underlying basic earnings per share of 7.1 pence (2022: 47.3 pence)
· Basic earnings per share of 1.1 pence (2022: 47.0 pence)
· Interim ordinary dividend declared of 5.0 pence (2022: 7.5 pence)
· Net bank borrowings at 30 September 2023 of £9.5 million (2022:
£9.5 million)
Simon Caffyn, Chief Executive, commented:
"Revenue growth enabled us to maintain gross profits despite a challenging
economic background and significant pressures on used car profitability.
Inflationary pressures on costs remain elevated, particularly for funding
charges and energy costs, significantly impacting overall profitability. In
time, the levels of both these costs are expected to fall back, although
short-term pressures will remain."
Enquiries:
Caffyns plc Simon Caffyn, Chief Executive Tel: 01323 730201
Mike Warren, Finance Director
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 £0.22 million (2022: £0.01 million) and are detailed in Note 4 to
these condensed consolidated financial statements. Underlying EBITDA of £2.5
million (2022: £3.3 million) represents Operating profit before
non-underlying items of £1.5 million (2022: £2.2 million) and Depreciation
and Amortisation of £1.0 million (2022: £1.1 million).
Note 2: Like-for-like comparisons exclude the impact of the Lotus business at
Lewes, as this dealership did not trade for the full six-month period in the
previous financial period and the LEVC dealership in Eastbourne, which was
closed in March 2023. All other businesses operated throughout both the whole
of the current and prior six-month periods.
INTERIM MANAGEMENT REPORT
Summary
The underlying profit before tax of £0.3 million for the half year ended 30
September 2023 ("the period") is a significant reduction on the £1.6 million
profit reported last year. While our profit performance from new cars and
aftersales in the period has been satisfactory, we experienced a significant
reduction in used car profitability, compounded by scarcity of supply of
appropriately priced, one-to-four year old cars. Customer demand for such cars
has remained robust, despite the challenging economic backdrop. Taken
together, total gross margins generated in the period fell by just £0.2
million, or 1%. However, inflationary pressures on costs remained elevated
and, in particular, funding charges and energy costs alone increased by £0.9
million in the period. In time, the levels of both these costs are expected to
fall back, although short-term pressures will remain.
Revenue for the period increased by 13% to £134.3 million (2022: £119.0
million), primarily due to improved levels of new car sales as supply
constraints from our manufacturers eased.
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.
The Company's defined-benefit pension scheme deficit, calculated in accordance
with the requirements of IAS 19 Pensions, showed an increase of £0.7 million
from the March 2023 year-end to £9.5 million at 30 September 2023. Financial
returns on investments were slightly lower than had been expected, which
resulted in the widening of the deficit in the period.
Profit before tax for the period was £44,000 (2022: £1,557,000) with basic
earnings per share of 1.1 pence (2022: 47.0 pence). Underlying basic earnings
per share were 7.1 pence (2022: 47.3 pence).
The Company has declared an interim dividend of 5.0 pence per Ordinary share,
reflecting the performance for the period and the board's confidence in the
prospects for the Company.
Operating review
New and used cars
Our new car deliveries rose by 23% on a like-for-like basis from the prior
year period. Nationally, the Society of Motor Manufacturers and Traders
reported a 21% increase in total new car registrations but only a 3% increase
in the retail and small business market segment in which we primarily operate.
We are pleased that the majority of our brands performed ahead of the UK
market.
Our used car sales volumes for the period fell by 4% on a like-for-like basis.
Demand remained buoyant as customers looked for used car purchases due to the
lack of availability of new cars but the supply of appropriately-priced used
cars remained challenging. We are putting in place actions to enhance our
supply of used cars and to increase margin retention. Increasing the
efficiency of our procurement processes is expected to enable management to
improve our sales performance in the second half.
Aftersales
Our aftersales revenues rose by 5% in the period on a like-for-like basis
despite the recruitment of vehicle technicians remaining challenging and
adversely affecting throughput levels. We continued to realise improvements to
our customer retention processes.
Operations
During this period, we have seen some manufacturers move to agency
distribution models away from the traditional wholesale agreements. In June,
Volvo moved to an agency arrangement and, after an initial transitional
period, the new system is performing in line with expectations. Under this
model, the manufacturer transacts with the customer for the sale of new cars
whilst we retain the handover process as an agent, for which we receive a fee.
Of our other brands, CUPRA and Skoda have already moved their electric models
to this agency arrangement and Volkswagen and Audi brands are scheduled to
transition in the coming months.
As mentioned above, we are putting in place actions to increase our supply of
used cars and to enhance margin retention. We increasingly use market-driven
data to secure better quality used cars with higher expected margins and
faster selling times. Semi-automated systems will speed this process and
improve the efficiency of the procurement of used cars enabling sales
management to target a better sales performance in the second half.
We have just completed the refurbishment of our Volvo dealership in Worthing,
providing much improved showroom and aftersales facilities. In Tunbridge Wells
we have refurbished and enlarged our showroom to enable the addition of the
CUPRA franchise.
Property
Capital expenditure in the period was £1.8 million (2022: £0.6 million) and
included assets in the course of construction of £1.2 million (2022: £0.3
million), primarily being a redevelopment of the Company's Volvo premises in
Worthing.
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
£11.5 million at 31 March 2023, 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.
The board continues to evaluate opportunities for our freehold premises in
Lewes and no sale is expected to complete for at least a twelve-month period.
Currently, the main showroom is being utilised for our Lotus Sussex operation,
while the side showroom and workshop are let to third-party tenants.
Pensions
The Company's defined-benefit pension scheme started the period with a net
deficit of £8.8 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. The actuary's
estimate of the deficit increased by £0.7 million to £9.5 million at 30
September 2023 (2022: £1.5 million). Net of deferred tax, the net deficit at
30 September 2023 was £7.0 million (2022: £1.1 million).
During the period, the net present value of the Scheme's future pension
liabilities fell by £5.5 million due to a combination of the payment of £2.2
million of pensions and changes to assumptions on future mortality and
discount rates. However, this reduction was less than the fall in the value of
the Scheme's assets, producing an overall widening of the net deficit position
by £0.7 million.
The pension cost under IAS 19 Pensions is recognised in the Condensed
Consolidated Statement of Financial Performance and continues to be charged as
a non-underlying cost, amounting to £215,000 (2022: £46,000).
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 £0.4
million (2022: £0.4 million). 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 of
£5.6 million, originally of £7.5 million, and a revolving-credit facility of
£6.0 million, both of which will become renewable in April 2026. 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 of £0.3
million, originally of £5.0 million, which is repayable over the period to
March 2024.
The Company was cash generative during the period with £1.0 million (2022:
£2.2 million) generated from operating activities. Working capital levels
remained broadly unchanged in the period, as in the prior period. The primary
cash outflows in the period were from capital expenditure, dividends and lease
payments.
Bank borrowings, net of cash balances, at 30 September 2023 were £9.5 million
(2022: £9.5 million), up from £8.1 million at 31 March 2023. As a proportion
of shareholders' funds, bank borrowings, net of cash balances, were 31% at 30
September 2023 (2022: 26%).
During the period, the Company received a loan of £350,000 from a
manufacturer partner under their dealership development assistance programme.
The loan is repayable over a five-year period.
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 31% (2022: 19%). The
current year effective tax rate is greater than the standard rate of
corporation tax in force for the year of 25% due to certain items that are
disallowable for corporation tax.
Payments of corporation tax in the period, net of refunds, were £28,000
(2022: £196,000).
At 30 September 2023, the company recognised a deferred tax asset on the
Statement of Financial Position of £0.2 million (2022: deferred tax liability
of £1.8 million).
People
The response from everyone in the Company to inflationary pressures and other
marketplace challenges is commendable and the board would like to express its
gratitude to them for their hard work and professional application. The
efforts of our operational and support teams to continue to improve our
efficiency will be instrumental in our ability to deliver a stronger second
half performance.
Dividend
Despite the uncertainty that remains over the outlook for the UK economy and
the effect on used car profitability in our second quarter, the board remains
confident in the prospects of the Company and has, therefore, declared an
interim dividend of 5.0 pence per Ordinary share (2022: 7.5 pence per Ordinary
share). This will be paid on 12 January 2024 to shareholders on the register
at close of business on 15 December 2023. The Ordinary shares will be marked
ex-dividend on 14 December 2023.
Strategy
Our continuing strategy is to focus on representing premium and premium volume
franchises as well as maximising opportunities for used cars and aftersales
service, 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 while also seeking new
opportunities to invest in the future growth of the business.
We concentrate on stronger market areas so as to deliver higher returns from
fewer but larger sites. We are focusing on delivering performance improvement,
particularly in our used car and aftersales operations.
Current trading and outlook
Our forward-order bank for new cars is strong with improved levels of supply
and we are targeting an improved used car performance in the second half.
However, the high level of economic and political uncertainty, both in the UK
and abroad, is a concern. 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 great stability. We continue to enhance 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
30 November 2023
Condensed Consolidated Statement of Financial Performance
for the half year ended 30 September 2023
Unaudited Unaudited Audited
Half year to Half year to Year ended
N o t e 30 September 2023 30 September 2022 31 March 2023
Total Total Total
£'000 £'000 £'000
Revenue 134,252 118,992 251,426
Cost of sales (118,262) (102,839) (217,844)
Gross profit 15,990 16,153 33,582
Operating expenses (14,641) (14,088) (29,085)
Operating profit before other income 1,349 2,065 4,497
Other income (net) 3 153 189 344
Operating profit 1,502 2,254 4,841
Operating profit before non-underlying items 1,513 2,227 4,827
Non-underlying items within operating profit 4 (11) 27 14
Operating profit 1,502 2,254 4,841
Net finance expense 5 (1,254) (661) (1,687)
Non-underlying net finance expense on pension scheme 4 (204) (35) (64)
Net finance expense (1,458) (696) (1,751)
Profit before taxation 44 1,558 3,090
Profit before tax and non-underlying items 259 1,566 3,140
Non-underlying items within operating profit 4 (11) 27 14
Non-underlying net finance expense on pension scheme 4 (204) (35) (64)
Profit before taxation 44 1,558 3,090
Taxation 6 (14) (290) (566)
Profit for the period 30 1,268 2,524
Earnings per share
Basic 7 1.1p 47.0p 93.6p
Diluted 7 1.1p 46.4p 92.4p
Non-GAAP measure
Underlying basic earnings per share 7 7.1p 47.3p 95.1p
Underlying diluted earnings per share 7 7.0p 46.6p 93.9p
Condensed Consolidated Statement of Comprehensive Expense
for the half year ended 30 September 2023
Note Unaudited Unaudited Audited
Half year to Half year to Year to
30 September 30 September 31 March 2023
2023 2022
£'000 £'000 £'000
Profit for the period 30 1,268 2,524
Items that will never be reclassified to profit and loss:
Remeasurement of net pension scheme obligation 12 (872) 958 (6,715)
Deferred tax on remeasurement of pension scheme obligation 218 (239) 1,679
Other comprehensive (expense)/income, net of tax (654) 719 (5,036)
Total comprehensive (expense)/income for the period (624) 1,987 (2,512)
Condensed Consolidated Statement of Financial Position
at 30 September 2023
Unaudited Unaudited Audited
30 September 2023 30 September 2022 31 March
Note 2023
£'000 £'000 £'000
Non-current assets
Right-of-use assets 9 2,148 1,241 2,348
Property, plant and equipment 9 39,121 38,796 38,145
Investment properties 10 7,474 7,588 7,531
Interest in lease 145 306 225
Goodwill 286 286 286
Deferred tax asset 171 - -
Total non-current assets 49,345 48,217 48,535
Current assets
Inventories 38,950 32,937 39,989
Trade and other receivables 6,903 6,138 7,121
Interest in lease 162 167 164
Current tax recoverable - - -
Cash and cash equivalents 2,739 3,214 4,226
Total current assets 48,754 42,456 51,500
Total assets 98,099 90,673 100,035
Current liabilities
Interest-bearing overdrafts, loans and borrowings 1,695 1,875 1,875
Trade and other payables 42,485 35,781 43,674
Lease liabilities 422 289 511
Current tax payable - 76 28
Total current liabilities 44,602 38,021 46,088
Net current assets 4,152 4,435 5,412
Non-current liabilities
Interest-bearing loans and borrowings 10,530 10,875 10,437
Lease liabilities 2,039 1,394 2,203
Preference shares 11 812 812 812
Pension scheme obligation 12 9,461 1,482 8,799
Deferred tax liability - 1,751 34
Total non-current liabilities 22,842 16,314 22,285
Total liabilities 67,444 54,335 68,373
Net assets 30,655 36,338 31,662
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 26,513 32,196 27,520
Total equity 30,655 36,338 31,662
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 September 2023 (unaudited)
Capital Non-distributable
Share Share redemption reserve Retained earnings
capital premium reserve £'000 £'000 Total
£'000 £'000 £'000 equity
£'000
At 1 April 2023 1,439 272 707 1,724 27,520 31,662
Total comprehensive expense
Profit for the period - - - - 30 30
Other comprehensive expense - - - - (654) (654)
Total comprehensive expense for the period - - - - (624) (624)
Transactions with owners:
Dividends (404) (404)
Share-based payment - - - - 21 21
At 30 September 2023 (unaudited) 1,439 272 707 1,724 26,513 30,655
for the half year ended 30 September 2022 (unaudited)
Capital Non-distributable
Share Share redemption reserve Retained earnings
capital premium reserve £'000 £'000 Total
£'000 £'000 £'000 equity
£'000
At 1 April 2022 1,439 272 707 1,724 30,589 34,731
Total comprehensive income
Profit for the period - - - - 1,268 1,268
Other comprehensive income - - - - 719 719
Total comprehensive income for the period 1,987 1,987
Transactions with owners:
Dividends - - - - (404) (404)
Share-based payment - - - - 24 24
At 30 September 2022 (unaudited) 1,439 272 707 1,724 32,196 36,338
for the year ended 31 March 2023 (audited)
Capital Non-distributable
Share Share redemption reserve Retained earnings
capital premium reserve £'000 £'000 Total
£'000 £'000 £'000 equity
£'000
At 1 April 2022 1,439 272 707 1,724 30,589 34,731
Total comprehensive expense
Profit for the year - - - - 2,524 2,524
Other comprehensive expense - - - - (5,036) (5,036)
Total comprehensive expense for the year (2,512) (2,512)
Transactions with owners:
Dividends - - - - (606) (606)
Issue of shares - SAYE - - - - 3 3
Share-based payment - - - - 46 46
At 31 March 2023 (audited) 1,439 272 707 1,724 27,520 31,662
Condensed Consolidated Cash Flow Statement
for the half year ended 30 September 2023
Unaudited Unaudited Audited
Half year to Half year to Year to
30 September 2023 30 September 2022 31 March
£'000 £'000 2023
£'000
Cash flows from operating activities
Profit before taxation 44 1,558 3,090
Adjustments for:
Net finance expense and pension scheme service cost 1,458 696 1,751
Depreciation of property, plant and equipment, investment properties and 1,035 1,056 2,128
right-of-use assets
Cash payments into the defined-benefit pension scheme (425) (403) (800)
Loss on disposal of property, plant and equipment - - -
Share-based payments 21 24 46
Decrease/(increase) in inventories 535 (5,391) (12,444)
Decrease/(increase) in receivables 218 (875) (1,857)
(Decrease)/increase in payables (676) 6,367 14,296
Cash generated from operations 2,210 3,032 6,210
Net tax paid (28) (196) (320)
Interest paid (1,201) (645) (1,653)
Net cash generated from operating activities 981 2,191 4,237
Investing activities
Proceeds generated on disposal of property, plant and equipment - - 1
Purchases of property, plant and equipment (1,754) (717) (902)
Receipt from investment in lease 93 93 185
Net cash used in investing activities (1,661) (624) (716)
Financing activities
Manufacturer development loan advanced 350 - -
Secured loans repaid (437) (437) (875)
Issue of shares - SAYE scheme - - 3
Dividends paid (404) (404) (606)
Repayment of lease liabilities (316) (271) (576)
Net cash used in financing activities (807) (1,112) (2,054)
Net (decrease)/increase in cash and cash equivalents (1,487) 455 1,467
Cash and cash equivalents at beginning of period 4,226 2,759 2,759
Cash and cash equivalents at end of period 2,739 3,214 4,226
Notes to the Condensed Consolidated Financial Statements
for the half year ended 30 September 2023
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 2023 and similarly for the half year to 30 September 2022 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 2023.
The comparative financial information for the year ended 31 March 2023 in
these condensed consolidated financial statements does not constitute
statutory accounts for that year. The statutory accounts for 31 March 2023
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 30 November 2023.
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 2023.
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.
Under the Company's first covenant test, it is required to make underlying
earnings before bank interest, depreciation and amortisation ("senior EBITDA")
for a rolling twelve-month period which is at least four times the level of
interest payable on bank borrowings to HSBC and Volkswagen Bank ("senior
interest"). In November 2023, the multiple set for future tests of this
covenant was reduced from four to a multiple of three.
The Company's second covenant test requires total bank borrowings to HSBC and
Volkswagen Bank not to exceed 375% of senior EBITDA for a rolling twelve-month
period.
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.
These covenant tests are conducted biannually in March and September and all
tests were passed for the period under review.
In the coming twelve months, each of the three covenant tests must be passed
at 31 March 2024 and 30 September 2024, with the test on 30 September 2024
being the final test to be carried out within the twelve-month period from the
anniversary of the signing of these condensed consolidated financial
statements. The Company has modelled this period and conclude that there is
headroom that would allow for an approximate 6% reduction in expected new and
used units over this period. External market commentary provided by the
Society of Motor Manufacturers and Traders ("SMMT") for the 2023 calendar
indicate that new car registrations are forecast to show a year-on-year
increase of 17% to 1.89 million, followed by a further 4% increase for the
2024 calendar year to 1.97 million registrations as global supply chain
pressures ease, allowing manufacturing levels to rise. The used car market has
remained stable over the five years from 2015 to 2019, at between 7.6 and 8.2
million transactions and dropped by only 15% in 2020 due to the effects of the
covid-19 pandemic, compared to a comparable 29% fall in new car registrations.
As social-distancing regulations were eased in 2021, demand for used cars was
buoyant and transactions grew by 12% in the calendar year, before falling back
by 9% in 2022 to 6.9 million transactions. However, the continuing shortage in
new car supply has assisted the used car market and is expected to continue to
do so and indications for the quarters so far available for 2023 is that the
used market will regain what it lost in 2022, returning the number of market
transactions to that seen in 2021. While the Company's overall financial
results in the period were disappointing, margin generation remained robust
and the current new car order take held for future delivery remains at
elevated levels.
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 and bank overdraft and medium-term revolving credit
facilities and term loans. At 30 September 2023, the medium-term banking
facilities included a term loan with an outstanding balance of £5.6 million
and a revolving credit facility of £6.0 million from HSBC, its primary
bankers, with both facilities being renewable in April 2026. HSBC also make
available a short-term overdraft facility of £3.5 million, which is renewed
annually in August. At 30 September 2023, £4.5 million of these facilities
was undrawn. The Company also has a ten-year term loan from Volkswagen Bank
with a balance outstanding at 30 September 2023 of £0.25 million, which is
repayable to March 2024, and a short-term revolving credit facility of £4.0
million, which is renewed annually in October. At 30 September 2023, £3.0
million of these facilities was undrawn. 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 its covenant tests 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
2023 2022 2023
£'000 £'000 £'000
Rent receivable 153 151 307
Liquidation distribution received - 38 37
Loss on disposal of tangible fixed assets - - -
Total other income 153 189 344
4. NON-UNDERLYING ITEMS
Unaudited Unaudited Audited
Half year to Half year to year to
30 September 30 September 31 March
2023 2022 2023
£'000 £'000 £'000
Other income:
Liquidation distribution received - 38 37
Net loss on disposal of property, plant and equipment - - -
Within operating expenses:
Service cost on pension scheme (11) (11) (23)
Total non-underlying items within operating profit (11) 27 14
Net finance expense on pension scheme (204) (35) (64)
Total non-underlying items within profit before taxation (215) (8) (50)
During the previous financial period the Company received a final distribution
from the liquidator to MG Rover Group Limited.
5. NET FINANCE EXPENSE
Unaudited Unaudited Audited
Half year to Half year to year to
30 September 30 September 31 March
2023 2022 2023
£'000 £'000 £'000
Interest in lease interest receivable (10) (8) (17)
Interest receivable on cash deposits (17) - -
Interest payable on bank borrowings 450 245 621
Interest payable on inventory stocking loans 687 312 856
Interest on lease liabilities 63 24 51
Financing costs amortised 45 52 104
Preference dividends 36 36 72
Finance expense 1,254 661 1,687
6. TAXATION
Unaudited Unaudited Audited
Half year to Half year to year to
30 September 30 September 31 March
2023 2022 2023
£'000 £'000 £'000
Current UK corporation tax
Charge for the period - 76 152
Adjustments recognised in the period for current tax of prior periods - - -
Total current tax charge - 76 152
Deferred tax
Origination and reversal of timing differences 39 209 442
Change in corporation tax rate - - 10
Adjustments recognised in the period for deferred tax (25) 5 (38)
of prior periods
Total deferred tax charge 14 214 414
Total tax charged in the Income Statement 14 290 566
The tax charge arises as follows:
Unaudited Unaudited Audited
Half year to Half year to year to
30 September 30 September 31 March
2023 2022 2023
£'000 £'000 £'000
On normal trading 68 291 576
Non-underlying items (54) (1) (10)
Total tax charge 14 290 566
Taxation of trading items for the half year has been provided at an effective
rate of taxation of 31% (2022: 19%) expected to apply to the full year. This
effective rate is higher than the standard rate of corporation tax in force of
25% due to certain items that are deemed disallowable for corporation tax.
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
2023 2022 2023
£'000 £'000 £'000
Basic
Profit after tax for the period 30 1,268 2,524
Basic earnings per share 1.1p 47.0p 93.6p
Diluted earnings per share 1.1p 46.4p 92.4p
Underlying
Profit before tax 44 1,558 3,090
Adjustment: Non-underlying items (note 4) 215 8 50
Underlying profit for the period 259 1,566 3,140
Taxation on normal trading (note 6) (68) (291) (576)
Underlying earnings 191 1,275 2,564
Underlying basic earnings per share 7.1p 47.3p 95.1p
Underlying diluted earnings per share 7.0p 46.6p 93.9p
The number of fully paid Ordinary shares in issue at the period-end was
2,879,298 (2022: 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 2,696,485 (2022: 2,695,586).
The shares granted under the Company's current SAYE scheme for the period, and
for the year ended 31 March 2023, are dilutive. The weighted average number of
shares in issue for the purposes of the diluted earnings per share calculation
were 2,730,331 (2022: 2,732,604).
The directors consider that underlying earnings per share figures provide a
better measure of comparative performance.
8. DIVIDENDS
Ordinary shares of 50 pence each
An interim dividend of 5.0 pence per Ordinary share has been declared and will
be paid to shareholders on 12 January 2024 to those shareholders on the
register at the close of business on 15 December 2023. The Ordinary shares
will be marked ex-dividend on 14 December 2023. An interim dividend of 7.5
pence per Ordinary share was declared in respect of the half-year ended 30
September 2022 and a final dividend of 15.0 pence per Ordinary share was
declared in respect of the year ended 31 March 2023.
Preference shares
Preference dividends were paid in October 2023. The next preference dividends
are payable in April 2024. 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
2023
£'000
Property, plant and equipment at 1 April 2023 38,145
Less: Depreciation charges (778)
Less: Net book value of disposals -
Add: Purchases 1,754
Property plant and equipment at 30 September 2023 39,121
Purchases in the period included assets in the course of construction of
£1,233,000 (2022: £301,000).
Right-of-use assets:
Unaudited
Half year to
30 September
2023
£'000
Right-of-use assets at 1 April 2023 2,348
Less: Amortisation of right-of-use assets (200)
Right-of-use assets at 30 September 2023 2,148
10. INVESTMENT PROPERTIES
The following is a reconciliation of changes in the balances of Investment
properties.
Investment properties:
Unaudited
Half year to
30 September
2023
£'000
Investment properties at 1 April 2023 7,531
Less: Depreciation charges (57)
Investment properties at 30 September 2023 7,474
11. LOANS AND BORROWINGS
Liabilities
Bank and Revolving arising from Bank and cash balances
other credit Lease Preference financing £'000 Net
loans facilities liabilities shares activities debt
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2023 (audited) 6,312 6,000 2,714 812 15,838 (4,226) 11,612
Cash movement (87) - (316) - (403) 1,487 1,084
Non-cash movement - - 63 - 63 - 63
At 30 September 2023 6,225 6,000 2,461 812 15,498 (2,739) 12,759
(unaudited)
Current liabilities/(assets) 1,695 - 422 - 2,117 (2,739) (622)
Non-current liabilities 4,530 6,000 2,039 812 13,381 - 13,381
At 30 September 2023 6,225 6,000 2,461 812 15,498 (2,739) 12,759
12. PENSIONS
The pension scheme deficit reflects a defined benefit obligation that has been
updated to reflect its valuation as at 30 September 2023. 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 2023 and in the period to 30 September 2022, and which complies with the
accounting requirements of IAS 19 Pensions (revised).
The net liability for defined benefit obligations increased from £8,799,000
at 31 March 2023 to £9,461,000 at 30 September 2023. The increase of
£662,000 comprised the net charge to the Condensed Consolidated Statement of
Financial Performance of £215,000, a net adverse remeasurement adjustment
debited to the Condensed Consolidated Statement of Comprehensive Income of
£872,000 reduced by employer contributions of £425,000.
Asset values fell in the period, by £6,138,000, including divestments to pay
pension transfers and benefits in the period of £2,217,000. The net present
value of pension liabilities also fell, by £5,476,000, due to the combination
of pensions settled in the period and an increase in the rate applied to
discount the Scheme's liabilities from 4.75% at 31 March 2023 to 5.55% at 30
September 2023. The assumption on future CPI inflation also increased from
2.95% applied at 31 March 2023 to 3.00% at 30 September 2023.
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 effect of increasing interest base rates on the UK
economy and their impact on the Group's defined benefit pension scheme,
liquidity and financing, the Group's dependency on its manufacturers and their
stability and ability to supply new car product, used car prices and
regulatory compliance.
14. CAPITAL COMMITMENTS
At 30 September 2023, the Company had capital commitments of £0.6 million
(2022: £Nil), primarily in relation to the redevelopment of its Volvo
premises in Worthing.
15. 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
30 November 2023
INDEPENDENT REVIEW REPORT
to Caffyns plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023 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.
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2023 which comprises the Statement of Comprehensive Income, the
Statement of Changes in Equity, the Statement of Financial Position, the
Statement of Cash Flows and the related notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). 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.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK-adopted International
Accounting Standard 34, Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the Group to
cease to continue as a going concern.
Responsibilities of 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.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of 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.
Stephen Le Bas
BDO LLP
Chartered Accountants
Southampton, UK
30 November 2023
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 FZMFMKGLGFZM