26697 17 June 2019 9:30 am Proof 7Caffyns plc Annual Report 2019Caffyns plcAnnual Report 201926697 Caffyns AR2019.indd 317/06/2019 09:31:25 26697 17 June 2019 9:30 am Proof 7Stock Code: CFYNSummaryOverview2019£’000Restated2018£’000Revenue209,246215,868Underlying* EBITDA3,9823,510Underlying* profit before tax1,4451,390(Loss)/profit before tax(428)1,165p pUnderlying* earnings per share35.345.6(Deficit)/earnings per share(21.0)38.2Proposed final dividend per ordinary share15.0015.00Dividend per share for the year 22.5022.50* Underlying results exclude items that have non-trading attributes due to their size, nature or incidence.• Like-for-like new car unit sales down 10.0% against a 2.8% fall in our market sector• Like-for-like used car unit sales up 5.9% against 2018• Aftersales revenue up 7.4% against 2018• Revenue down 3.1% to £209.2 million• Underlying profit before tax increased to £1.45 million (2018: £1.39 million)• Recommended dividend per ordinary share for the year maintained at 22.50 pence (2018: 22.50 pence)• Property portfolio revaluation as at 31 March 2019 showing an £11.2million (2018: £10.3 million) surplus to net book value (not recognised in the accounts)Revenue* (£’000)171615212,581186,401172,40019209,24618215,868Underlying PBT* (£’000)Underlying earnings per ordinary share* (p)1716152,0511,4651,296191,445181,390100015002000250017161558.048.843.61845.61935.3Visit us at: caffyns.co.ukResults at a Glance26697 Caffyns AR2019.indd 417/06/2019 09:31:26 26697 17 June 2019 9:30 am Proof 7ContentsOur BusinessResults at a GlanceIFCOperational and Business Review02Strategic Report07GovernanceBoard of Directors12Chairman’s Statement on Corporate Governance13Directors’ Remuneration Report19Report of the Directors32Directors’ Responsibilities36FinancialsReport of the Independent Auditor37 Income Statement46Statement of Comprehensive Income47Statements of Financial Position48Statement of Changes in Equity49Cash Flow Statement50Principal Accounting Policies51Notes to the Financial Statements59Other InformationFive Year Review89notes-heading-level-onenotes-heading-level-twonotes-heading-level-threenotes-heading-level-fournotes-straplinenotes-text-body• notes-list-bullet• notes-list-bespoke −notes-list-dashd. notes-list-alpha5. notes-list-numbervi. notes-list-romanHeadingHeadingHeadingTable plain textDefaultDefaultDefaultBackground123Border123Border12326697 Caffyns AR2019.indd 117/06/2019 09:31:39 Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Operational and Business Review
New and used car sales
Our new unit sales fell by 10.0% on a like-for-like basis as one
of our principal manufacturers implemented an agency sales
arrangement for certain classes of new car sales from April
2018 and also from the negative impact of WLTP. Excluding
this one manufacturer, our new car sales would have shown
growth of 2.2% against the prior year. In the year total UK
new car registrations reported a 3.7% reduction while, within
this total, new car registrations in the private and small
business sector in which we principally operate fell by 2.8%.
Although we experienced pressure on new car margins, our
achievement of manufacturer bonus targets was pleasing with
the result that an increase in unit new car gross profit partially
helped to mitigate the fall in sales volumes in the year.
For used cars, unit sales volumes improved by 5.9% on a
like-for-like basis, and with an improvement in unit used car
margins. Over the last five-year period, the Company has
recorded a 42% like-for-like growth in the number of used
cars sold and we continue to see this element of our business
providing a major opportunity for further growth. The number
of used cars sold again exceeded the number of new cars
sold in the year.
Throughout the year under review, we continued to upgrade
our website with multiple enhancements to our customers’
online searching capabilities, leading to an easier, more
enjoyable car-buying experience.
The year under review produced a 4% headline increase
in underlying profit before tax to £1.45 million (2018:
£1.39 million) although the story for the year was more
nuanced. At our half-year stage, I highlighted the adverse
impact on our brands that arose from the new emissions-
testing regime, the Worldwide Harmonised Light Vehicle Test
Procedure, commonly referred to as WLTP, which created a
scarcity of supply of new cars for most of our brands. This
was quickly rectified for some brands but, for others, the
impact lingered well into the second half of the year and was
a significant drag on both turnover and profits. As a result,
our full year turnover fell by 3.1% to £209.2 million (2018:
£215.9 million). However, in areas of the business that were
not impacted by these external issues, we continued to
achieve good growth with used car sales up by 5.9%, and
service and parts revenues up by 7.7% and 7.3% respectively.
Underlying earnings were also boosted by a compensation
receipt, net of costs, of £0.3 million. This arose from an
agreed settlement of a claim for trading losses caused by
disruption from alterations and repairs required to one of our
freehold premises. This credit appears in Other Income in
these financial statements.
The statutory result before tax for the year was also heavily
affected by several non-underlying items, the most significant
of which was a £0.9 million charge for equalising the
Guaranteed Minimum Pensions for the male and female
members of our closed defined-benefit pension scheme,
required following a legal precedent set in November 2018.
The non-underlying items for the year are detailed in note 2 to
the financial statements.
Our statutory result before tax for the year was a loss of
£0.4 million (2018: profit of £1.2 million). Basic deficit per
share was 21.0 pence (2018: earnings of 38.2 pence).
Underlying earnings per share for the year were 35.3 pence
(2018: 45.6 pence).
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Aftersales
Despite the falls in the UK new car market in the financial
year under review, the number of one to three year-old
cars in circulation remains historically at very high levels.
Our three-year car parc has grown over the last five years
and we are encouraged that our service revenues in the
year have continued to rise, by 7.7% 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 sales growth, up by 7.3%
on a like-for- like basis over the previous year.
Operations
The financial results from our Volkswagen businesses
improved markedly in the year as operational performance
issues experienced in the previous year were overcome and
the division returned to profitable trading. Although new car
sales volumes declined from last year’s levels, this was more
than mitigated by an increase in used car sales. Aftersales
revenues, and profits, also improved against the prior year.
We remain confident that the strength of the brand, the
excellent model range and exciting new products will lead to
further improvements in its future trading performance.
Our Volvo business in Eastbourne enjoyed an excellent year
with the XC40 and V60 models being very positively received
by customers. Our Volvo aftersales business also reported
strong growth in profitability for the year. We continue to
assess plans to expand our showroom facility to better
accommodate these extra models and expect to commence
the redevelopment in the current financial year.
Our Audi businesses experienced a very difficult year with the
brand being particularly impacted upon by the introduction
of WLTP, from 1 September 2018. New car supply was
significantly constrained, and the brand reported a national
34% fall in registrations over the following seven months to
our year-end at 31 March 2019. This was significantly worse
than the 8% experienced by the overall UK market. This
scarcity in supply adversely impacted profitability which fell
by more than half against the previous year. New car supply
has now largely returned to more normal levels and we look
forward to improvements to profitability in this business.
In Tunbridge Wells, our SEAT business continued to perform
well and, in conjunction with the adjacent Skoda business,
continues to deliver healthy levels of profitability. Our Skoda
business in Ashford also performed satisfactorily.
Our Vauxhall business in Ashford continued to experience
challenging trading conditions in the year. However, Vauxhall’s
national new car registrations in the year were down by
only 3% which was less than the decline in the overall UK
market. Losses from the business were significantly less than
experienced in the prior financial year.
Trading at Caffyns Motorstore, our used car business
in Ashford, slowed in the year as the business suffered
from growing pains although the concept has been very
well received by our customers who particularly value the
reassurance of the Caffyns brand. Management changes
have been made since the year-end and we expect
performance to improve.
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Stock Code: CFYN
Operational and Business Review (continued)
Groupwide projects
We remain focused on generating further improvements in
used car sales, used car finance and aftersales. These three
key areas helped to achieve the increase in profitability in the
year under review, with very pleasing growth continuing to be
recorded in service labour sales. 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 showroom buying process, as well as
improving aftersales retention.
Property
We operate primarily from freehold sites and our property
portfolio 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 2019 was £11.2 million (2018: £10.3 million).
This is after property impairments on two separate properties
of £0.54 million and £0.40 million. In accordance with our
accounting policies (which reflect those generally utilised
throughout the motor retail industry), this surplus has not been
incorporated into our accounts.
During the year, we incurred capital expenditure of £2.8 million
(2018: £5.6 million). This included the completion of our new
Audi “Terminal” facility at Angmering which opened in July
2018. This facility comprises two state-of-the-art new car
configurator areas in addition to a ten-car showroom as well
as extended used car display areas. The aftersales facility
comprises a fourteen-bay workshop and innovative drive-
through service reception area. The facility will enable the
Worthing business to grow considerably and benefit from
the development of new housing in the area. The business’s
previous base at Broadwater Road in Worthing was leased
to a third party on a 15-year lease that commenced in
February 2019.
Our freehold premises in Lewes remain leased until April 2020
to the purchaser of our former Land Rover business, which
was sold in April 2016. The Board continues to evaluate future
opportunities for the site.
Bank facilities
The Company’s banking facilities with HSBC Bank 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 £7.5 million, both of which will next become
renewable in March 2023. HSBC Bank also provides an
overdraft facility of £3.5 million, renewable annually. In
addition, the Company has an overdraft facility of £7.0 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 November 2023.
Bank borrowings, net of cash balances, at 31 March 2019
were £13.6 million (31 March 2018: £14.0 million) and as a
proportion of shareholders’ funds at 31 March 2019 were
49% (2018: 50%). The reduction in gearing in the year was
primarily the result of cash generated from operating activities
in the year.
Taxation
The year ended 31 March 2019 produced a tax charge of
£0.1 million (2018: £0.1 million). The current year effective
tax rate was significantly lower than the standard rate of
corporation tax in force for the year of 19%, mainly due to
movements in the tax liability on unrealised gains arising from
the sale of properties and goodwill in prior accounting periods.
The lower effective tax rate in the previous financial year was
the result of an adjustment for an over-provision of tax of
£0.14 million in the previous financial year.
The Company has no current outstanding trading or 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, amount to £8.0 million (2018: restated as £9.0 million)
which could equate to a future potential tax liability of
£1.4 million (2018: restated as £1.5 million). The Company
also has an amount of £1.1 million (2018: £1.1 million) of
recoverable Advanced Corporation Tax (“ACT”) and £0.7 million
(2018: £0.8 million) of Shadow ACT. The Board remains
confident in the recoverability of the ACT although the Shadow
ACT must first be fully absorbed before the ACT balance
itself can become available to be utilised. However, given the
inherent uncertainty in recovering this ACT, a partial impairment
has been made to reduce the net deferred tax position to zero
and we have not recognised a deferred tax asset at 31 March
2019.
As noted above, the Company identified an error in both
its calculation and methodology of its potential deferred tax
liability on held-over gains from property disposals and from
accelerated capital allowances in prior accounting periods
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which had resulted in an overstatement of its deferred
tax liability by £790,000 as at 1 April 2017. A prior year
adjustment to the previously stated values has been made in
these Financial Statements to correct this error.
Pension Scheme
The Company’s defined benefit scheme was closed to future
accrual in 2010. In common with many companies, the Board
has little control over the key assumptions in the valuation
calculations as required by accounting standards and the
unprecedented low yields of gilts and bonds continues to
have a significant impact on the net funding position of
the scheme. In addition, the results for the year reflect the
expected financial impact of equalising the Guaranteed
Minimum Pensions of Scheme members. Therefore, it was
very pleasing to note a narrowing of the deficit at 31 March
2019 to £8.6 million (2018: £9.5 million). The deficit, net of
deferred tax, was £7.1 million (2018: £7.9 million).
In the previous financial year, the trustees appointed a
fiduciary manager to the Scheme and the Board, together
with the independent pension fund trustees, continues to
review options to reduce the cost of operating the Scheme
and reducing 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 sought.
The pension cost under IAS 19 continues to be charged as a
non-underlying cost and amounted to £249,000 in the year
(2018: £236,000). In addition, the Income Statement has been
charged with a non-underlying cost of £851,000 which is our
best estimate of the financial impact of equalising Guaranteed
Minimum Pensions between our male and female scheme
members. This follows the legal guidance provided by the
High Court in November 2018. The full process of equalisation
will need to occur over a considerable period of time, but the
estimated cost has been arrived at following advice from the
Scheme’s actuary.
A formal triennial valuation of the Scheme was last carried
out as at 31 March 2017 and was submitted to the Pension
Regulator prior to the 30 June 2018 deadline. A recovery
plan to deal with the Scheme deficit identified from this
triennial valuation was agreed with the trustees and, as a
result, the Company made deficit-reduction contributions
into the Scheme in the year of £480,000 (2018: £314,000).
This annual recovery plan payment for the coming and
each subsequent year will increase by the greater of either
2.25% or the growth in shareholder dividend payments until
superseded by a new recovery plan to be agreed between the
Company and the trustees. The next triennial valuation of the
Scheme will take place with effect from 31 March 2020.
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Stock Code: CFYN
Operational and Business Review (continued)
People
I am very grateful for the dedication of our employees and
the effort they apply to provide our customers with a first-
class experience. Across the Company the hard work and
professional application of our employees has helped to
minimise the fall in car sales volumes and to continue to grow
our aftersales operations.
Nick Hollingworth will be retiring from the Board in July 2019,
having served eleven years as a non-executive director. I, and
other members of the Board, would like to thank him for his
valuable contribution over that period. The search process for
Nick’s successor is well advanced and we expect to make an
appointment by July.
Strategy
Our continuing strategy is to focus on representing premium
and premium-volume franchises as well as maximising
opportunities for used cars. 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
businesses.
We are concentrating on larger business opportunities in
stronger markets to deliver higher returns on capital from
fewer but bigger sites. We continue to deliver performance
improvement, in particular in our used car and aftersales
operations.
Outlook
We closed the year with a strong performance in the
registration-plate change month of March. The current
consensus for the 2019 calendar year is for a further single-
digit fall in the UK new car market so we are cautious about
the outlook and remain dependent on the key months of
September and March. The vehicles emissions regime will
undergo further change in September with the implementation
of Real-Driving Emissions although we are hopeful that
any constraint on new car supply will be considerably
less than that caused by the implementation of WLTP in
September 2018.
Our balance sheet is appropriately funded and our freehold
property portfolio is a source of stability. We remain confident
in the longer-term prospects of the Company and are ready to
exploit future business opportunities.
S G M Caffyn
Chief Executive
31 May 2019
Apprenticeships
The Company has a long tradition of investing in
apprenticeship programmes and this continued alongside the
new Government apprenticeship levy that was implemented
from the start of our previous financial year in April 2017.
Despite early teething problems experienced with the
registration and accreditation processes of the new levy
regime, our own apprenticeship numbers have increased
year-on-year and we 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
currently anticipate that we will be able to fully utilise our 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 taking on an increasing complement in the
coming year to assist the Company to grow.
Dividend
The Board remains confident in the future prospects of the
Company and has therefore declared an unchanged final
dividend of 15.0 pence per ordinary share. If approved at the
Annual General Meeting, this will be paid on 2 August 2019 to
ordinary shareholders on the register at close of business on
5 July 2019.
Together with the interim dividend of 7.5 pence per Ordinary
share (2018: 7.5 pence) paid during the year, the total
dividend for the year will be 22.5 pence per ordinary share
(2018: 22.5 pence).
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Strategic Report
Business model
Caffyns is one of the leading motor retail and aftersales companies in the south-east of England. The Company’s principal
activities are the sale and maintenance of motor vehicles, including the sale of tyres, oil, parts and accessories. The Operational
and Business Review, which forms part of the Strategic Report, principally covers the development and performance of the
business and the external environment and is set out on pages 2 to 6. The main Key Performance Indicators are:
Financial
Revenue
Underlying profit before tax
(Loss)/profit for the year before tax
Underlying earnings per share
(Deficit)/earnings per share
Bank overdrafts and loans (net)
Gearing
Note: Underlying results exclude items that have non-trading attributes due to their size, nature or incidence.
Non-Financial
UK new car market – total registrations
UK new car market – retail and small business sectors
Caffyns new car sales
Caffyns used car sales
Caffyns aftersales revenue (excluding internal sales)
Company employees (full time equivalents)
2019
£’000
£209.25m
£1.45m
£(0.43)m
35.3p
(21.0)p
£13.6m
49%
2018
£’000
£215.87m
£1.39m
£1.17m
45.6p
38.2p
£14.0m
50%
2.35m
1.13m
4,405
5,385
£18.3m
421
2.44m
1.16m
4,895
5,085
£17.0m
413
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Business performance
New and Used Cars
Our new unit sales were down by 10.0% on a like-for-like
basis. Over the twelve-month period, total UK new car
registrations fell by 3.7% and, within this, the private and
small business sector in which we operate fell by 2.8%. Our
sales in the year were adversely impacted by two factors:
the introduction by one of our principal manufacturers of an
agency arrangement for certain new car deliveries and by
WLTP. Excluding that one manufacturer, our new car sales
volumes rose 2.2% from the previous year, better than the
reduction recorded by the private and small business sector.
The performance of our premium and premium-volume
franchises remained satisfactory.
Used car unit sales increased by 5.9%.
Aftersales
We have seen an increase in the overall size of the 0 to 5-year-
old car servicing market and this, combined with improvements
to customer retention rates for many of our marques, has
resulted in a 7.4% increase in like-for-like aftersales revenues.
The actions we have taken to enhance our aftersales marketing
and retention procedures, together with our new and used car
sales, continue to help to further this trend.
Business strategy
The Company continues to focus on the premium and
premium-volume market where it believes that there is greater
resilience to delivering stronger sales, profits and returns. It
now represents a strong portfolio of six franchises of Audi,
SEAT, Skoda, Vauxhall, Volkswagen and Volvo. We generally
operate from our own freehold properties which we believe
offers better long-term returns and greater flexibility. Proceeds
from disposals of properties are generally reinvested in the
property portfolio.
Principal risks and uncertainties
Risk is an accepted part of doing business and the Company
has a risk assessment process that facilitates the identification
and mitigation of risk. While the risk factors listed below
could cause our actual future results to differ materially from
expected results, other factors could also adversely affect
the Company and they should therefore not be considered to
be a complete set of all potential risks and uncertainties. The
risk factors should be considered alongside the statement
on internal control and risk management included in the
Chairman’s Statement on Corporate Governance on pages 13
to 18. Other financial risk management factors are referred to
in notes 16 and 18 to the financial statements.
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Stock Code: CFYN
Strategic Report (continued)
Principal risks
Potential impact/material risk
Key controls and mitigating factors
Business conditions
and the UK
economy
The profitability of the Company could be adversely affected
by a worsening of general economic conditions in the United
Kingdom, where all of its business is transacted, including
as a result of the UK’s decision to leave the European
Union. Other relevant factors would include interest rates,
unemployment, fuel prices, inflation, indirect taxation, the
availability and cost of credit and other factors which affect
levels of consumer confidence.
Vehicle
manufacturer
marketing
programmes
Vehicle manufacturers provide a wide variety of marketing
programmes which are used to promote new vehicle sales.
A withdrawal or reduction in these programmes would have
an adverse impact on our business.
Used car prices
Used car prices can decline significantly. A large proportion
of our business comprises used car sales and these declines
could have a material impact through reduced profits on
sales and write-downs in the value of inventories.
Vehicle
manufacturer
dependencies
Liquidity and
financing
Caffyns operates franchised motor car dealerships. These
franchises are awarded to the Company by the vehicle
manufacturers. For ongoing business, the Company holds
franchise agreements for its dealership operations. These
agreements can be terminated by giving two years’ notice,
or less in the event of a serious unremedied breach including
continued under-performance. The Company is not aware
of any breach of these agreements. Where manufacturers
are reorganising their networks and have issued termination
notices, the Company has received confirmations that it will
be offered new franchise agreements.
Liquidity and financing risks relate to our ability to pay for
goods and services enabling us to trade. Our principal
sources of finance are from our bankers by way of
committed borrowing facilities, from manufacturers to fund
the purchases of inventories and trade credit from our
suppliers. A withdrawal of facilities, or failure to renew them
when due, could lead to a significant reduction in the trading
capability of the Company.
Monitoring of key macroeconomic
indicators against internal performance
leads to anticipation of, and mitigation
for, expected volatilities.
By representing multiple marques,
the Company believes that this diversity
reduces the potential impact on the
group. In addition, the Company
continues to develop its own
marketing initiatives.
Close monitoring of the ageing of
vehicle inventories and a firm policy of
inventory management help to mitigate
this risk. Impact also mitigated by
revenue streams balanced between
aftersales, new and used car sales.
Diversifying through representing
multiple marques reduces the
potential dependency on any single
manufacturer. Revenue streams from
other activities (aftersales and used
vehicles) prevent over-reliance on new
vehicle sales.
We work closely with providers of
finance to help reduce this risk by
managing expectations of trading
results and utilisation of facilities. The
status of our bank facilities is set out
in note 18. These negotiated facilities
provide sufficient liquidity and funding.
We do not presently hedge against
interest rates, but the position is kept
under regular review.
Regulatory
compliance
The Company is subject to regulatory compliance risk which
could arise from a failure to comply fully with the laws,
regulations or codes applicable. Non-compliance could lead
to fines, cessation of certain business activities or public
reprimand.
The direction of new regulatory policy is
monitored through close contact with
relevant trade and representative bodies
and these are carefully considered when
developing strategy.
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Principal risks
Potential impact/material risk
Key controls and mitigating factors
Information systems
The Company is dependent upon certain business
critical systems which, if interrupted for any length
of time, could have a material effect on the efficient
running of our businesses.
Competition
Changes in EU
legislation in relation
to the distribution and
sale of vehicles
Pension scheme
Political uncertainties
The Board has implemented a series of
contingency plans which would enable
the resumption of operations within a
short space of time, thus mitigating the
likelihood of material loss.
To mitigate this risk, we regularly monitor
our competitors’ activities and seek to
price our products competitively, optimise
customer service, efficiently utilise our
customer database and fully understand
our manufacturers’ brands and products.
By continuing to focus on providing
excellent customer facilities, excellent
customer service and providing
high-level representation for the
Company’s manufacturer partners, current
business relationships will be maintained,
providing opportunities for selective
growth.
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Caffyns competes with other franchised vehicle
dealerships, private buyers and sellers, internet-
based dealers, independent service and repair
shops and manufacturers who have entered the
retail market. The sale of new and used vehicles, the
performance of warranty repairs, routine maintenance
business and the supply of spare parts operate in
highly competitive markets. The principal competitive
factors are price, customer service and knowledge
of a manufacturer’s brands and models. We also
compete with funders who finance customers’ vehicle
purchases directly.
Aftersales agreements are legislated by a Block
Exemption, dictating that aftersales businesses
which meet manufacturers’ qualitative standards
criteria have an entitlement to represent the brands’
aftersales service and parts franchise. Sales
agreements are granted by car manufacturers
based on standards, but agreements are restricted
to territories granted by manufacturers, who also
determine choice of partner, enabling them to restrict
the number of outlets any dealer can hold or entry
into the franchise.
Caffyns operates a defined benefit pension plan
which was closed to new entrants in 2006 and closed
to future accrual with effect from 1 April 2010. The
plan relies upon achieving satisfactory investment
returns sufficient to meet the present value of the
accrued liabilities. Reduced investment returns or
higher liabilities due to increased mortality rates and/
or continuing record low interest rates could adversely
affect the surplus or deficit of the plan and may result
in increased cash contributions in future.
The Company regularly reviews the
position of the defined benefit pension
plan through regular meetings of a
Pensions Sub-Committee, chaired by
the Chairman of the Audit Committee.
Through this sub-committee, the
Company has an ongoing review of
possible options to mitigate the risk of
underlying volatility causing an increase in
the deficit.
Following the UK’s decision to leave the European
Union together with wider global political
developments, a degree of uncertainty in the UK
economy has been created. We believe the main
risks to arise from this relate to consumer confidence,
the potential impact that sterling/euro exchange rates
may have on vehicle prices, and possible restriction
on imports of cars and parts into the UK.
We continue to focus on delivering an
excellent service to new and existing
customers, giving confidence in our
operations and building a strong loyalty
base and to maintaining our close working
relationship with our six manufacturers.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Strategic Report (continued)
Corporate Social Responsibility,
Human Rights and Diversity
Caffyns has a long-standing Corporate and Social
Responsibility agenda including its approach to employees,
the environment, and health and safety. We are also
conscious of human rights issues within the Company and
the key area that would impact our business would be across
our supply chain. Our supply chain is predominantly the major
international motor manufacturers who also take these issues
very seriously.
The UK Corporate Governance Code includes a
recommendation that boards should consider the benefits of
diversity, including gender, when making Board appointments.
The Board recognises the importance of gender balance
and the important requirement to ensure that there is an
appropriate range of experience, balance of skills and
background on the Board. We will continue to make changes
to the composition of the Board irrespective of gender or any
form of discrimination so that the best candidate is appointed.
The table below gives the total number of our employees in
each category, by gender, as at 31 March 2019.
Director
Senior management
All other employees
Female
1
–
109
Male
5
11
337
Total
6
11
446
Employees
We recognise that our people are our key asset and are
responsible for delivering our strategy. We continue to invest
in an enhanced training and development programme, with
particular support from our manufacturer partners. The
positive approach shown by all employees throughout the
Company’s businesses has been key to this success.
Employees are encouraged to discuss with management
any matters which they are concerned about and factors
affecting the Company. In addition, the Board takes account
of employees’ interests when making decisions. We have an
HR Director. Suggestions from employees aimed at improving
the Company’s performance are welcomed.
Good performance from employees is recognised every four
months by their peer group who nominate employees for
awards and formal recognition company-wide. A significant
number of employees are remunerated partly by profit-related
bonus schemes.
We have a dedicated “Intranet” which keeps employees up to
date with company developments and activities. This platform
also includes the Company’s policies and procedures. Long
service awards were made during the year to those staff with
25 years’ continuous service. All employment policies remain
compliant with current legislation.
It is our policy to encourage career development for all
employees and to help staff achieve job satisfaction and
increase personal motivation.
We support the recruitment of disabled people wherever
possible. Priority is given to those who become disabled
during their employment. Employment by the Company is
offered on the basis of the person’s ability to work and not on
the basis of race, individual characteristics or political opinion.
We have continued to increase the numbers on our
apprenticeship programme and we are seeing the benefits of
this investment. We look to further recruit both apprentices
and others across the Company’s businesses as we continue
to grow.
Environment
The Company is aware of its environmental responsibilities
arising from its motor retailing and aftersales activities and
recognises that some of its activities affect the environment.
Our Health and Safety Officer has received formal training in
environmental management and is appropriately qualified in
this field. Our policy is to promote and operate processes and
procedures which, so far as is reasonably practicable, avoid
or minimise the contamination of water, air or the ground.
Licences are obtained from the relevant authorities, where
required, to operate certain elements of the Company’s
business. Waste is disposed of by authorised contractors
and is recycled where possible. Special care is taken in the
storage of fuel and oils. Through the management of these
activities, we seek to minimise any adverse effects of its
activities on the environment.
We also seek to reduce our energy and water consumption
and audit processes are in place to measure usage and
make recommendations for improvements. An electrical
test monitoring regime is in force throughout the Company’s
businesses. Use of the latest building materials is made in the
construction of new sites and the refurbishment of existing
locations.
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Caffyns plc Annual Report and Accounts 2019
Mandatory Carbon Reporting
This section includes our mandatory reporting of greenhouse
gas emissions for the period 1 January 2018 to 31 December
2018, the latest annual period for which data is available, and
is pursuant to the Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013. We report our
emissions data using an operational control approach taking
data for which we deem ourselves responsible, including both
energy consumption and vehicle usage for business use.
In the 2018 calendar year our businesses emitted 1,384.96
tonnes of carbon dioxide or CO2 (2017: 1,365.28 tonnes). Our
emissions are principally of carbon dioxide (CO2), and are from
the following sources:
Greenhouse gas
emissions data
Scope 1
Gas Consumption
Owned Transport
Water Supply
Tonnes
of CO2
2018
Tonnes
of CO2
2017
Tonnes
of CO2
2016
308.64
87.44
5.23
286.66
90.50
4.75
303.34
96.21
4.20
Scope 2
Purchased Electricity
Generated Electricity
Statutory total (Scope 1
and 2)
995.86
12.21
982.37
1.00
1,049.60
0.25
1,384.96
1,365.28
1,453.60
Revenue
£186.26m £213.11m £217.35m
We have selected emissions £million of revenues per tonne
as our intensity ratio, as this in our view provides the best
comparative measure over time.
2016 – Intensity ratio (tonnes of CO2 per £million of revenue):
6.69 tonnes per £million of revenue.
2017 – Intensity ratio (tonnes of CO2 per £million of revenue):
6.40 tonnes per £million of revenue.
2018 – Intensity ratio (tonnes of CO2 per £million of
revenue): 6.46 tonnes per £million of revenue
Our Greenhouse Gas emissions associated with waste
arise from a number of waste streams generated from
our business. As conversion to carbon dioxide equivalent,
CO2e, data is not readily available for a number of our
waste streams, we have chosen to report this in weight and
percentage of waste recycled/landfill as opposed to CO2.
Waste in 2018 was 491.64 tonne (2018: 468.66 tonne) of
which 95% was recycled (2018: 93%).
Reducing carbon and waste
During the year, we have continued to assess and monitor
our energy use with improved data information and, where
practicable, to implement measures designed to reduce our
activities’ environmental impact.
Climate change influences seasonal energy usage and while,
at times, we benefit from milder weather we are aware that
any adverse change could affect energy usage. The spring of
2018 saw a significant spell of cold weather in late February
and early March resulting in much higher electricity and gas
usage. To minimise our energy usage we continue, where
practicable, to install LED lights in our sites as these use
significantly less energy than conventional lighting. In addition,
we limit the duration of periods when full lighting is used, using
sensors and timers to further reduce the energy we use. We
continue to improve our energy use and efficiency by replacing
old equipment with new efficient units and ensuring workshop
doors are closed when not in use by fitting automatic closing
devices. We seek to limit our paper consumption and waste
through increasingly paperless communications and systems.
Water use in valeting areas uses recycling facilities, where
practicable, and all sites have appropriate water filtration
systems. We seek to limit our paper consumption and waste
through increasingly paperless communications and systems.
Health and safety
The Board recognises its responsibility to members of staff
and others working or visiting our facilities to provide, so far as
is reasonably practicable, an environment which is safe and
without risk to their health and this is always the first agenda
item at each Board meeting. The Board maintains ultimate
responsibility for health and safety issues with a qualified
Health and Safety Officer responsible on a day-to-day basis,
supported by all levels of management. The Company’s policy
is to identify potential hazards and assess the risks presented
by its activities and to provide systems and procedures
which allow our staff to take responsible decisions in their
work in relation to their own and others’ safety. We promote
awareness of potential risks and hazards and implementation
of corresponding preventative or remedial actions through
online health and safety systems, operations manuals and
monthly communication on topical issues. With clear lines of
operating unit responsibility, staff are supported by specialist
guidance from the Health and Safety Officer. All our staff have
access to a detailed health and safety guide.
By order of the Board
S G M Caffyn
Chief Executive
31 May 2019
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Board of Directors
Directors
RICHARD C WRIGHT PG DIp FIMI FCIM
Chairman
SIMON G M CAFFYN MA FIMI
Chief executive
MICHAEL WARREN BSc ACA
Finance
SARAH J CAFFYN BSc FCIPD AICSA FIMI
Human resources
NIGEL T GOURLAY BSc FCA
Non-executive and senior independent director
NICHOLAS W HOLLINGWORTH BSc
Non-executive
Bankers
HSBC BANK PLC
1st floor, First point, Buckingham Gate, London Gatwick Airport, West Sussex,
RH6 0NT
VOLKSWAGEN BANK
Brunswick Court, Yeomans Drive, Blakelands, Milton Keynes, MK14 5LR
Independent Auditor
GRANT THORNTON UK LLP
Statutory Auditor, Chartered Accountants
2nd floor, St Johns House, Haslett Avenue West, Crawley, RH10 1HS
Company Secretary
SARAH J CAFFYN BSc FCIPD AICSA FIMI
Registered Office
4 Meads Road, Eastbourne, East Sussex, BN20 7DR
Telephone (01323) 730201
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Caffyns plc Annual Report and Accounts 2019
Chairman’s Statement on Corporate Governance
Caffyns plc is committed to maintaining the highest standards
of corporate governance. This Report and the Directors’
Remuneration Report describe how it complies with the
provisions of the UK Corporate Governance Code 2016
(“the Code”).
The Company has complied throughout the year ended
31 March 2019 with the provisions set out in the Code
except that one director has a service contract which runs
for more than 12 months which does not comply with Code
provision D.1.5 (see Directors’ Remuneration Report) which
recommends that such periods should be for one year or
less. The Remuneration Committee reviews the position
annually and decided that it is not in the best interests of the
Company to change the existing contract. Additionally, one
non-executive director has served for a period in excess of
nine years and can no longer be considered independent.
The Board has commenced a search process to identify a
suitable replacement non-executive director and expects to
implement a change before the next Annual General Meeting
in July 2019.
A description of the Company’s business model and strategy
is set out in the Strategic Report on page 7.
Structure of the Board and its
key activities
The Board is collectively responsible for the long-term success
of the Company and for ensuring the Company operates to
a governance standard which serves the best interests of
the Company. The Board sets the strategy of the Company
and its individual trading businesses and ensures that the
Company has in place the financial and human resources it
needs to meet its objectives. There is a written schedule of
matters reserved for Board decision, summarised below:
Schedule of matters reserved for
decision by the Board
• Business strategy
• Approval of significant capital projects and investments
• Principal terms of agreements for the Company’s principal
banking facilities
• Annual business plan and budget monitoring
• Risk management strategy and internal control and
governance arrangements
• Approval of acquisitions and divestments
• Changes to management and control structure
• Significant changes to accounting policies or practices
• Financial reporting to shareholders
• Dividend policy
• Health and safety policy
• Changes in employee share incentives
• Reviewing the overall corporate governance arrangements
• Appointments to the Board and its committees
• Policies relating to directors’ remuneration and service
• Prosecution, defence or settlement of material litigation
• Any alterations to the share capital of the Company
• Approval of all circulars and announcements to
shareholders
• Major changes to the Company’s pension schemes
• Insurance cover including directors’ and officers’ liability
insurance and indemnification of directors
The Chairman takes responsibility for ensuring that the
directors receive accurate, timely and clear information.
Monthly financial information is provided to the directors.
Regular and ad hoc reports and presentations are circulated,
with all Board and Committee papers being issued in advance
of meetings by the Company Secretary. In addition to formal
Board meetings, the Chairman maintains regular contact
with the Chief Executive and other directors to discuss
specific issues. In furtherance of their duties, the directors
have full access to the Company Secretary and may take
independent professional advice at the Company’s expense.
The Board believes that, given the experience and skills of
its directors, the identification of training needs is best left to
the individual’s discretion. If any particular development need
is identified through the Board’s formal appraisal process or
by an individual director, the Company makes the necessary
resources available.
As part of their role, the non-executive directors
constructively challenge and help develop proposals on
strategy. The non-executive directors scrutinise management’s
performance in meeting agreed goals and objectives and
monitor the reporting of performance. They satisfy themselves
on the integrity of financial information and that financial
controls and systems of risk management are robust and
defensible. They determine appropriate levels of remuneration
of executive directors and have a prime role in appointing
and, where necessary, removing executive directors, and in
succession planning. Non-executives formally meet without
the executives at least once a year.
Operating within prescribed delegated authority, such as
capital expenditure limits, the operational running of the
Company and its businesses is carried out by the executive
directors, led by the Chief Executive.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Chairman’s Statement on Corporate Governance
(continued)
The Board delegates certain of its duties to its Audit,
Nomination and Remuneration Committees, each of which
operates within prescribed terms of reference. These are set
out on the Company’s website. The responsibilities of the
Board’s committees are set out on pages 15 and 16 of this
Report and in the Directors’ Remuneration Report.
The Board has evaluated the performance of its committees
for the year under review. The Chairman and the respective
committee chairmen take responsibility for carrying out any
actions recommended as a result of that evaluation.
Performance evaluation
The Board has established a procedure to evaluate its own
performance, its committees and individual directors. The
directors complete detailed questionnaires and debate the
matters arising at Board meetings.
Individual director evaluation has shown that each director
(including those seeking re-election at the Annual General
Meeting in 2019) continues to demonstrate commitment
to the role. The non-executive directors, led by the senior
independent director, have carried out a performance
evaluation of the Chairman after taking account of the views
of the executive directors. The Chairman has reviewed the
performance of the non-executive directors and the Chief
Executive. The Chief Executive has reviewed the other
executive directors. The Board intends to carry out further
performance evaluations but will keep under review the
method and frequency.
The latest Board evaluation process concluded that the Board
and its committees were operating effectively, with clear
demarcation of the respective responsibilities of individual
directors and Board committees. The Board is satisfied that all
directors are each able to devote the amount of time required
to attend to the Company’s affairs and his or her duties as
a Board member. The Chairman discusses the training and
development needs of each director.
Board composition and
independence
As at 31 May 2019 the Board comprises three executive
directors and three non-executive directors, one of whom is
the Chairman. Mr R C Wright is the non-executive Chairman
and Mr S G M Caffyn is the Chief Executive. The Chairman
leads the Board and the Chief Executive manages the
Company and implements the strategy and policies adopted
by the Board. There is a clear division of responsibility
between the role of the non-executive Chairman and Chief
Executive and this is recorded in a written statement and is
reviewed and agreed annually by the Board. The Chairman
is responsible for leadership of the Board and ensuring its
effectiveness for all aspects of its role.
The Company maintains appropriate directors’ and officers’
insurance in respect of legal action against its directors.
Directors’ conflicts of interest
Conflicts of interest can include situations where a director has
an interest that directly or indirectly conflicts, or may possibly
conflict, with the interests of the Company. The Board
operates a formal system for directors to declare at all Board
meetings all conflicts of interest. The non-conflicted directors
must act in the way they consider, in good faith, would be
most likely to promote the success of the Company.
Balance and challenge
The non-executive directors complement the skills and
experience of the executive directors, providing the requisite
degree of judgement and scrutiny to the decision-making
process at Board and committee level. Mr N T Gourlay is the
senior independent director.
The Board maintains and regularly reviews a register of all
interests, offices and appointments which are material to
be considered in the assessment of the independence of
directors and has concluded that there are not, in relation
to any director, any relationships or circumstances regarded
by the Company as affecting their exercising independent
judgement.
Re-election of directors
In accordance with the Company’s Articles of Association, all
directors seek re-election by rotation at least once in every
three years. Having served for a period in excess of nine
years, Mr N W Hollingworth seeks re-election annually.
Meetings and attendance
There were nine meetings of the Board in the year under
review with Mr N W Hollingworth unable to attend one of the
meetings. All other directors attended all meetings.
Nomination Committee
Our Nomination Committee comprises two non-executive
directors, the non-executive Chairman and the Chief
Executive. The members are:
R C Wright (Chairman)
N W Hollingworth
N T Gourlay
S G M Caffyn
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Caffyns plc Annual Report and Accounts 2019
Chairman’s Statement on Corporate Governance
(continued)
The Nomination Committee is responsible for leading the
process for appointments to the Board and meets at least
once a year. The Committee is chaired by Mr R C Wright.
The Company Secretary or alternate also attends meetings
in her capacity as secretary of the Committee. Where the
matters discussed relate to the Chairman, such as in the case
of selection and appointment of the Company Chairman,
the senior independent director chairs the Committee. New
directors receive a full, formal and tailored induction on joining
the Board.
The principal responsibilities of the Committee are as follows:
• regularly reviews the structure, size and composition of the
Board and makes recommendations to the Board regarding
any adjustments deemed appropriate;
• prepares the description of the role and capabilities required
for a particular Board appointment and it may retain
appropriate executive search consultants to assist in this
process;
• identifies, and nominates for the approval of the Board,
candidates to fill Board vacancies as and when they arise;
• satisfies itself, with regard to succession planning, that
processes are in place regarding both Board and senior
appointments; and
• undertakes an annual performance evaluation to ensure that
all members of the Board have devoted sufficient time to
their duties.
The Committee met three times during the year. Mr N W
Hollingworth was unable to attend one of the meetings.
All other members eligible to attend were present at all the
meetings.
Audit and Risk Committee
Our Audit and Risk Committee comprises two non-executive
directors and the Chairman. The members are:
N T Gourlay (Chairman)
N W Hollingworth
R C Wright
The Committee is chaired by Mr N T Gourlay. The Company
Secretary or alternate also attends meetings in her capacity as
Secretary of the Committee. The Chairman of the Committee
is considered by the Board as having recent and relevant
financial experience. The Board also remains satisfied that
the Committee as a whole has competence relevant to the
sectors in which the Company operates. The Audit and Risk
Committee meets at least three times a year. The meetings
are attended by invitation, by the Executive Directors, the
head of the internal audit function and representatives of the
Company’s external auditor, at the Chairman’s discretion.
The Committee’s meetings in quarters one and three coincide
with the Company’s reporting timetable for its audited
financial statements and unaudited interim condensed
financial statements respectively. During these meetings, the
Committee:
• reviews the drafts of the financial statements and preliminary
and interim results announcements;
• reviews all published accounts (including interim reports)
and post-audit findings before their presentation to the
Board, focusing in particular on accounting policies,
compliance, management judgement and estimates;
and considers the reports of the external auditor on the
unaudited interim condensed financial statements and the
full year audited financial statements.
At its second meeting, the Committee reviews the external
audit plan.
The Committee’s third meeting is primarily concerned with:
• reviewing the Company’s systems of control and their
effectiveness;
• significant corporate governance issues, such as those
relating to the regulation of financial services;
• reviewing the external auditor’s performance;
• reviewing the risk register;
• recommending to the Board the reappointment, or not, of
the external auditor; and
• reviewing the effectiveness and independence of the
external auditor, including monitoring the level of audit and
non-audit fees.
The Committee met three times in the year under review and
all meetings were attended by all directors eligible to attend.
It has reviewed the effectiveness of the Company’s system of
internal control and financial risk management during the year
ended 31 March 2019, including the review of the Company’s
risk register, and including consideration of reports from
both the internal and external auditors. The Audit and Risk
Committee has reported the results of its work to the Board
and the Board has considered these reports when reviewing
the effectiveness of the Company’s system of internal
control, which forms part of the Board’s high-level risk review
performed during the year. The effectiveness of the internal
audit function is also monitored.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Chairman’s Statement on Corporate Governance
(continued)
The Committee provides advice to the Board on whether the
annual report is fair, balanced and provides the necessary
information shareholders require to assess the Company’s
performance, business model and strategy. In doing so, the
following issues have been addressed specifically:
• Inventory valuation – the value of new and used vehicles as
well as the provision for slow-moving and obsolete inventory
can have a significant influence on the inventory valuation in
the financial statements. The Committee has considered the
Company’s procedures and controls, which are satisfactory,
to reduce the risk of misstatement in relation to inventory
valuation.
• Review of key strategic risks – the Committee Chairman
conducts an annual review of key strategic risks and
undertakes site visits in order to ensure that the review
includes a detailed understanding of the business. The review
highlights the key risks based on a combination of likelihood
and impact and then also considers what appropriate
mitigating factors should be implemented (highlights from this
work are included in the Strategic Report).
• Revenue recognition – the accuracy of cut-off procedures
around the year-end date is recognised as important
for ensuring that revenue is recognised in the correct
accounting period. The Committee has considered the
procedures and controls in respect of revenue recognition,
particularly in relation to the implementation in the period of
IFRS 15 Revenue from Contracts with Customers, and has
been satisfied that they are satisfactory.
• Review of poorly performing dealerships – as part of both
the interim and year-end review process, consideration
is given to potential impairments of property, plant and
equipment, investment property and goodwill relating to
poorly performing locations and any related impairments
are provided for. Management then follow up with detailed
action plans to either improve dealership performance or
seek an exit solution. The Committee also reviews progress
in these plans at the following review. As part of the external
audit, the Committee fully discussed with the external
auditor the identification of cash generating units (“CGUs”)
for the purposes of impairment testing. The Committee
considered the external auditor’s technical challenges
concerning the basis on which CGUs had been identified
in the previous year, and concurred with those challenges
which resulted in further impairment charges and a higher
level of associated disclosures. The Committee is satisfied
that no material impairments are required in addition to
those made in the year.
• Going concern – the Finance Director provides an
assessment of the Company’s ability to continue to trade on
a going concern basis for at least the next twelve months.
Forecasts are based on financial plans agreed with the
Board (budgets or forecasts), the Company’s most recent
trading results, and include a range of possible downside
scenarios. The assumptions that underpin the assessments
are considered and discussed in detail when the Committee
meets. The conclusion of that review is included in the
Directors’ Report section of this report.
16
• Pensions – the Company operates a defined benefit
pension scheme, closed to future accrual, which has an
excess of liabilities over the value of assets owned by the
scheme. The assessment of the valuation of the scheme
is based on several key assumptions which can have
a significant impact on the valuation of the deficit. The
Committee has considered the assumptions used for the
valuation of the liabilities of the scheme and is satisfied that
these are reasonable.
Anti-Bribery
During the year, as well as its routine business, the Committee
continued to monitor the suitability of the Company’s controls
designed to combat bribery so as to satisfy itself of the
adequacy of its systems and procedures for the prevention of
bribery and corruption, particularly in the light of the Bribery
Act 2010. It has reviewed and recommended the Board adopt
the Company’s Anti-Bribery policy statement.
Whistleblowing
The Committee has reviewed the arrangements for its
employees to raise, in confidence, concerns about possible
improprieties in relation to financial reporting, suspected
fraud and dishonest acts or other similar matters, commonly
known as “whistleblowing”. The Committee reviews any
such reported incidences and any improvements to internal
procedures which may be required.
Non-audit services provided by the
external auditor
Non-audit services provided by the Company’s auditor are
kept under review by the Committee. The Company’s auditor
does not provide compliance services in the field of taxation
advice.
The Committee ensures that the auditor’s objectivity and
independence are safeguarded by means of the use of
separate teams of staff and by ensuring that the level of
fees is not material to either the Company nor the auditors.
The report from Grant Thornton UK LLP confirming their
independence and objectivity was reviewed by the Chairman
of the Audit and Risk Committee and the Finance Director.
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Chairman’s Statement on Corporate Governance
(continued)
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Caffyns plc Annual Report and Accounts 2019
The level of fees paid to Grant Thornton UK LLP for non-audit
services is not regarded to conflict with auditor independence.
Fees payable to the auditors are set out in note 3 on page 61.
Effectiveness and independence of
external auditor
Grant Thornton UK LLP has been external auditor since 1964.
There are no contractual obligations that restrict the Audit and
Risk Committee’s choice of external auditor. In accordance
with the auditor independence requirements of the revised
Ethical Standard effective 11 June 2016, Grant Thornton UK
LLP’s appointment as auditor cannot be extended beyond
the year ending 31 March 2021. In the light of this length of
tenure, the Committee has instigated an audit tender process
and it is anticipated that the appointment of a replacement
external auditor will be recommended to shareholders at the
Annual General Meeting.
The Committee is also responsible for advising the Board on
the appointment of the auditor, assessing their independence
and formulating policy on the award of non-audit work.
Non-audit work is only awarded to the auditors after due
consideration of matters of objectivity, independence, costs,
quality of service and efficiency.
At the conclusion of each year’s audit, the performance of
the external auditor is reviewed by the Committee with the
executive directors covering such areas as quality of audit
team, business understanding, audit approach and process
management. Where appropriate, actions are agreed against
the points raised and subsequently monitored for progress.
Financial Reporting Council
(“FRC”)
The most recent full review of its financial statements by the
FRC was in relation to the 2014 year-end. In 2017, the FRC
carried out an audit quality inspection of Grant Thornton
UK LLP. This identified one area of concern and the auditor
modified the audit process for subsequent audits although no
adjustments were required to the 2017 financial statements.
The FRC carried out a thematic review of the 2018 accounts,
solely for the areas of pensions and taxation. No issues of
significance were identified although some suggestions for
future disclosures were made. These have been carefully
considered and, where deemed appropriate, acted upon.
Tax strategy and objective
As a responsible taxpayer, the Company is committed to
establishing, maintaining and monitoring the implementation
of an appropriate tax strategy. Our tax strategy is aligned
with our objective of paying the correct amount of tax at the
right time. Commercial transactions are therefore structured
in the most tax efficient way but without resorting to artificial
arrangements which we regard as abusive. There is an ethical
dimension to achieving this objective. The ethical dimension
reflects the need to mitigate the risk to the Company’s
reputation that would arise from a tax strategy that entails
aggressive tax planning. A copy of the Company’s tax strategy
is available from its corporate website, www.caffynsplc.co.uk.
Going Concern
The directors are satisfied that, after making enquiries, the
Company is in a sound financial position with adequate
resources to continue in operation for the foreseeable future.
In forming this view, the directors have reviewed detailed
financial trading and cash flow forecasts and other financial
information. These forecasts indicate that the Company will be
able to operate within the financing facilities that are available
to it, with sufficient margin for reasonable adverse movements
in expected trading conditions. The directors have also taken
into consideration that the Company’s banking facilities
remain available to them and are appropriate given current
and medium-term plans. Accordingly, they continue to adopt
the going concern basis in preparing the financial statements.
Further details surrounding the directors’ rationale regarding
the going concern assumption are included in Principal
Accounting Policies on page 52.
Information concerning the Company’s liquidity and financing
risks are set out on page 8 and note 18 to the financial
statements.
Viability Statement
In accordance with provision C.2.2 of the UK Corporate
Governance Code, the directors have assessed the viability
of the Company over a three-year period to 31 March
2022. The directors believe this period to be appropriate as
the Company’s strategic review considered by the Board
encompasses this period. In making their assessment the
directors have considered the Company’s current financial
position and performance, cash flow projections including
future capital expenditure, in relation to the availability of
finance and funding facilities and have considered these
factors in relation to the principal risks and uncertainties which
are included in the Report of the Directors.
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Stock Code: CFYN
Chairman’s Statement on Corporate Governance
(continued)
During the year to 31 March 2019, the Board carried out a
robust assessment of the principal risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity. The directors believe
that the Company is well placed to manage its business
risks successfully, having considered the principal risks and
uncertainties. Accordingly, the Board believes that, taking into
account the Company’s current position, and subject to the
principal risks faced by the business, the Company will be
able to continue in operation and to meet its liabilities as they
fall due for the period up to 31 March 2022.
statements (including compliance with legal and regulatory
requirements) and reports to the Board on financial issues
raised by both the internal and external audit reports. Financial
control is exercised through an organisational structure which
has clear management responsibilities with segregation of
duties, authorisation procedures and appropriate information
systems. The system of annual budgeting with monthly
reporting and comparisons to budget is a key control over the
business and in the preparation of consolidated accounts.
There is an ongoing programme of internal audit visits to
monitor financial and operational controls throughout the
Company. The executive directors receive regular reports from
the internal audit and health and safety monitoring functions
which include recommendations for improvement.
Relations with shareholders
The Board values the constructive views of its shareholders
and recognises their interest in the Company’s strategy and
performance, Board membership and quality of management.
The views of major shareholders are reported back to the
Board as appropriate. The non-executive directors have also
attended meetings with major shareholders. The principal
methods of communication with private investors are the
Interim Statement, the Annual Report and the Annual General
Meeting. Information on the Company is also included on its
corporate website at www.caffynsplc.co.uk.
The Annual General Meeting is used to communicate with
investors. The chairmen of the Audit and Risk, Remuneration
and Nomination Committees are available to answer
questions. Separate resolutions are proposed on each issue
so that they can be given proper consideration and there
is a resolution to approve the Annual Report and financial
statements. The Company counts all proxy votes and, after it
has been dealt with by a show of hands, indicates the level of
proxies lodged on each resolution.
By order of the Board
R C Wright
Chairman
31 May 2019
Risk management and
internal controls
The Board is responsible for maintaining a sound system
of internal controls, including financial, operational and
compliance controls and risk management, and reviews
the effectiveness of the system at least annually in order to
safeguard shareholders’ investment and the Company’s
assets. The system is designed to manage rather than
eliminate risk and can provide only reasonable and not
absolute assurance against material misstatement or loss.
The Board confirms that there is an ongoing process for
identifying, evaluating and managing the significant risks faced
by the Company, that has been in place for the year under
review and up to the date of approval of the Annual Report
and Accounts, and that this process is regularly reviewed by
the Board.
The Board has reviewed the effectiveness of the system of
internal control. In particular it has reviewed and updated
the process for identifying and evaluating the significant risks
affecting the business and the policies and procedures by
which these risks are managed.
Management are responsible for the identification and
evaluation of significant risks applicable to their areas of
business together with the design and operation of suitable
internal controls. These risks are assessed on a regular
basis and may be associated with a variety of internal or
external sources, including control breakdowns, disruption
in information systems, competition, natural catastrophe,
customer or supplier actions and regulatory requirements.
The process used by the Board is to review the effectiveness
of the system of internal control including a review of legal
compliance, health and safety and environmental issues on
a six-monthly basis. Insurance and risk management and
treasury issues are reviewed annually or more frequently if
necessary. In addition, the Audit and Risk Committee reviews
the scope of audits, the half yearly and annual financial
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Chairman’s Statement on Corporate Governance
Directors’ Remuneration Report
(continued)
ANNUAL STATEMENT FROM
THE CHAIRMAN OF THE
REMUNERATION COMMITTEE
Introduction
On behalf of your Board, I am pleased to present our
Directors’ Remuneration Report for the year ended
31 March 2019. This Directors’ Remuneration Report has
been prepared on behalf of the Board by the Remuneration
Committee (“the Committee”) in accordance with the
requirements of the Companies Act 2006 and the Large
and Medium-sized Companies and Groups (Accounts and
Reports) (Amendments) Regulations 2013 and is split into
two sections:
• the directors’ remuneration policy sets out the Company’s
intended policy on directors’ remuneration from 27 July
2017 which was subject to a binding shareholder vote
at the 2017 Annual General Meeting and at least every
subsequent third year after that; and
• the annual report on remuneration sets out payments and
awards made to the directors and details the link between
Company performance and remuneration for the 2019
financial year.
The information set out on pages 20 to 31 (the annual
report on remuneration) is subject to audit apart from the
performance graph and table, the change in remuneration of
the Chief Executive, the relative importance of the spend on
pay, the implementation of remuneration policy in 2018, the
considerations by the directors of matters relating to directors’
remuneration and the statement of shareholder voting at the
2018 Annual General Meeting.
Remuneration outcomes for the
2019 financial year
Annual bonus opportunities are based on the achievement
of profit before tax targets. Bonuses of 19% of eligible salary
have been awarded to the executive directors in respect of the
2019 financial year, which reflects the financial results against
target of the Company for the year.
Key remuneration decisions for the
coming 2020 financial year
The base salaries for the executive directors were increased
by 2.0% with effect from 1 April 2019. Salaries for all
employees were increased by an overall average of 2.0%
with effect from 1 April 2019
Conclusion
The directors’ remuneration policy which follows this
annual statement sets out the Committee’s principles
on remuneration for the future and the annual report on
remuneration provides details of remuneration for the year
ended 31 March 2019.
The Committee will continue to be mindful of shareholder
views and interests, and we believe that our directors’
remuneration policy continues to be aligned with the
achievement of the Company’s business objectives.
By order of the Board
N W Hollingworth
Chairman of the Remuneration Committee
31 May 2019
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Directors’ Remuneration Report (continued)
REMUNERATION POLICY
The policy of the Committee is to ensure that the Executive Directors are fairly rewarded for their individual contributions to the
Company’s overall performance and to provide a competitive remuneration package to executive directors to attract, retain and
motivate individuals of the calibre required to ensure that the Company is managed successfully in the interests of shareholders.
In addition, the Committee’s policy is that a substantial proportion of the remuneration of the executive directors should be
performance related.
The Company’s current directors’ remuneration policy is voted on every three years and was last approved by shareholders
on 27 July 2017 at the Annual General Meeting and became effective from that date. The full policy was disclosed in the
2018 Annual Report which is available on the Caffyns plc website located at www.caffynsplc.co.uk.
Future policy table
The main elements of the remuneration package of Executive Directors are set out below:
Purpose and link
to strategy
Base Salary
Provide competitive
remuneration that
will attract and retain
high-calibre executive
directors to deliver
strategy.
Benefits
Provide market
competitive benefits
consistent with role.
Operation
Maximum
potential value
Performance metrics
The Committee considers individual
salaries at the appropriate Committee
meeting each year taking due account
of the factors noted in the operation of
the salary policy.
Not applicable.
Reviewed annually effective
from 1 April to reflect role,
responsibility and performance
of the individual and the
Company, and to take account
of rates of pay for comparable
roles in similar companies. Paid
in 12 equal monthly instalments
during the year. When selecting
comparators, the Committee
has regard to the Company’s
revenue, market worth and
business sector.
Currently these consist of
provision of company cars,
health insurance, business
related subscriptions and
the opportunity to join any
Company savings related share
option scheme (“SAYE”).
Executive directors
were awarded 2.0%
increase from 1 April
2019. There is no
prescribed maximum
increase. Annual
rate set out in the
annual report on
remuneration for the
current year and the
following year.
The cost of providing
benefits varies from
time to time and is
borne wholly by the
Company except
for health insurance
where the Company
contributes half of the
cost.
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Purpose and link
to strategy
Annual Bonus
Incentivises
achievement of
business objectives by
providing a reward for
performance against
annual targets.
Long-term incentives
Alignment of interests
with shareholders by
providing long-term
incentives delivered in
the form of shares.
Pension
Attract and retain
executive directors
for the long term by
providing funding for
retirement.
Operation
Maximum
potential value
Performance metrics
Paid in cash after the end of
the financial year to which it
relates.
Up to 100% of salary.
Targets based on the underlying profit
before tax of the Company.
The Committee sets threshold and
maximum targets on an annual basis.
In general:
• a percentage of the maximum bonus
is payable for hitting the threshold
target;
• 100% of the maximum bonus is
payable for meeting or exceeding the
maximum target.
A sliding scale operates between
threshold and maximum performance
and no bonus is payable where
performance is below the threshold.
Payment of any bonus is subject to the
overriding discretion of the Committee.
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Directors are able to apply for
maximum entitlement under
the rules of any Company
SAYE scheme.
See page 28 for
details.
Not applicable.
3% of base salary plus
bonus.
Not applicable.
Executive directors are eligible
to join the Company’s staff
pension scheme on the same
terms as staff generally. In
accordance with the rules of
the Company pension scheme,
applicable to all members
of the scheme, bonuses are
pensionable. As a result of the
changes in pensions’ legislation
effective from 6 April 2006,
during the year the Company
has paid a salary supplement
to the executive directors in lieu
of the employers’ contribution
to the Company’s pension
scheme.
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Directors’ Remuneration Report (continued)
Notes to the policy table
Performance conditions
The Committee selected the performance conditions as they are central to the Company’s strategy and are the key metrics
used by the executive directors to oversee the operation of the business. The performance targets for the annual bonus are
determined annually by the Committee.
The performance target for the annual bonus is based on underlying profit before tax as outlined on page 25. The Committee is
of the opinion that this performance target is commercially sensitive for the Company and that it would therefore be detrimental
to the Company to disclose details of the target in advance. The targets will be disclosed after the end of the financial year in
the annual report on remuneration.
Changes from policy operating in the year ended 31 March 2019
There were no changes to policy arising in the year.
Differences from remuneration policy for all employees
All employees of the Company are entitled to base salary and benefits. The opportunity to earn a bonus is made available to a
high proportion of employees. The maximum opportunity available is based on the seniority and responsibility of the role.
Statement of consideration of employment conditions of employees
elsewhere in the Company
The Committee receives reports on an annual basis on the level of pay rises awarded across the Company and takes these
into account when determining salary increases for executive directors. In addition, the Committee receives reports on the
structure of remuneration for senior management in the tier below the executive directors and uses this information to ensure a
consistency of approach for its most senior managers.
The Committee does not specifically invite employees to comment on the directors’ remuneration policy, but it does take note
of any comments made by employees.
Statement of consideration of shareholder views
The Board considers shareholder feedback received in relation to the Annual General Meeting each year and any action is built
into the Committee’s business for the ensuing period. This, and any additional feedback received from shareholders from time
to time, is considered by the Committee and as part of the Company’s annual review of remuneration policy.
Approach to recruitment remuneration
The Committee’s approach to recruitment remuneration is to offer a market competitive remuneration package sufficient to
attract high calibre candidates who are appropriate to the role but without paying any more than is necessary.
Any new executive director’s regular remuneration package would include the same elements and be in line with the policy table
set out earlier in the directors’ remuneration policy, including the same limits on performance related remuneration.
Where an internal candidate is promoted to the Board the original grant terms and conditions of any bonus or share
awards made before that promotion would continue to apply, as would their membership of any of the Company’s pension
arrangements.
Reasonable relocation and other similar expenses may be paid if appropriate.
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Directors’ service contracts, notice periods and termination payments
Provision
Policy
Details
Contractual
provisions on a
change of control
of the Company
12 months by executive director
and the Company.
Executive directors may
be required to work
during the notice period.
12 months by
executive director
and the Company.
Notice periods
in executive
directors’
service
contracts.
Compensation
for loss
of office.
No more than twelve months’
basic salary, bonus and benefits
(including Company pension
contributions).
None.
None except
for the Chief
Executive.
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Other provisions
in specific service
contracts
S G M Caffyn may
give six months’
notice but is entitled
to two years’ notice
from the Company
and an unreduced
early retirement
pension.
M Warren may give
six months’ notice
and is entitled to six
months’ notice from
the Company.
Termination payment
to S G M Caffyn
following a change
of control comprises
cash amount equal
to two years’ basic
salary, bonus and
benefits (including
Company pension
contributions).
None.
None.
None.
Treatment of
annual bonus
on termination.
Bonuses which have already
been declared are payable in
full. In the event of termination
by the Company (except for
cause) a prorated bonus to the
end of the notice period is also
payable.
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Directors’ Remuneration Report (continued)
Provision
Policy
Details
Treatment of
unvested
SAYE options.
Exercise of
discretion.
Good leavers may exercise their
options within six months of
cessation (one year for death).
Options of leavers for fraud,
dishonesty or misconduct
lapse. Options of other leavers
may be exercised within six
months of cessation, but only
to the extent that they would
ordinarily become vested during
that time. There is no discretion
to treat any such leaver as a
“good leaver”.
Intended only to be relied upon
to provide flexibility in unusual
circumstances.
Outside
appointments.
Non-executive
directors.
Subject to approval.
Appointed for three-year terms.
Other than death, good
leaver circumstances
comprise: injury,
disability, redundancy,
retirement or transfer
of employing business
outside the Company.
The number of options
that can be exercised
is reduced pro rata to
reflect the proportion of
the vesting period before
cessation.
The Committee’s
determination would
consider the particular
circumstances of the
executive director’s
departure and the recent
performance of the
Company.
Board approval must be
sought.
Compensation of six
months’ fees payable if
required to stand down.
Other provisions
in specific service
contracts
Not applicable.
Contractual
provisions on a
change of control
of the Company
The number of
options that can
be exercised is
reduced pro rata
to reflect the
proportion of the
vesting period
before cessation.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Having served for
more than nine years,
N W Hollingworth
is appointed for a
twelve-month term.
In the event of the negotiation of a compromise or settlement agreement between the Company and the departing director,
the Committee may make payments it considers reasonable in settlement of potential legal claims. Such payments may also
include reasonable reimbursement of professional fees in connection with such agreements.
The Committee may also include the reimbursement of repatriation costs or fees for professional or outplacement advice in the
termination package, if it considers it reasonable to do so. It may also allow the continuation of benefits for a limited period.
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Service contracts
Executive directors are appointed under rolling service contracts, whereas non-executive directors each have a fixed-term
appointment of three years, renewable upon expiry at the Company’s discretion. Having served for more than nine years,
Mr N W Hollingworth continues to be appointed for a period of one year. When considering the reappointment of a non-
executive director, the Board reviews his attendance at, and participation in, meetings and his overall performance, and also
takes into account the balance of skills and experience of the Board as a whole.
Director
R C Wright
N W Hollingworth
N T Gourlay
* Commencement of current renewal contract.
Commencement*
27 July 2018
1 February 2018
26 September 2016
Expiry
26 July 2021
31 July 2019
25 September 2019
Unexpired term at
31 March 2019
(months)
28
4
6
Copies of directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office.
Fees from external directorships
None of the executive directors holds office as a non-executive director of other companies other than in a voluntary or
honorary (that is, unpaid) capacity. Accordingly, the Company does not have a formal policy on whether an executive director
may or may not keep fees gained from holding an external non-executive directorship. This would be decided on a case-by-
case basis.
Total remuneration opportunity for the year ending 31 March 2020
The chart below illustrates the remuneration that would be paid to each of the executive directors under three different
performance scenarios: (i) Below threshold; (ii) On Target; and (iii) Outperformance.
The elements of remuneration have been categorised into two components; (i) Fixed and (ii) Annual variable (annual bonus
awards).
S G M Caffyn
M Warren
Outperformance
50%
50%
£580,000
Outperformance
50%
50%
£298,000
Target
80%
20%
£362,000
Target
80%
20%
£186,000
Below threshold
100%
£290,000
Below threshold
100%
£149,000
0
100
200
300
£’000
Fixed
Annual Bonus
400
500
600
0
50
100
150
200
250
300
350
£’000
Fixed
Annual Bonus
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Outperformance
50%
50%
£94,000
Target
80%
20%
£59,000
Below threshold
100%
£47,000
0
10
20
30
40
50
£’000
Fixed
Annual Bonus
60
70
80
90
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Directors’ Remuneration Report (continued)
Each element of remuneration is defined in the table below:
Element
Fixed
Annual bonus
Description
Base salary
Annual bonus awards
The on-target scenario assumes that for the annual bonus, underlying profit before tax is in line with budget.
Non-executive directors’ (“NEDs”) fee policy
The policy for the remuneration of the non-executive directors is as set out below. Non-executive directors are not entitled to a
bonus, they cannot participate in the Company’s SAYE schemes and they are not eligible for pension arrangements.
Purpose and link
to strategy
Operation
Maximum potential value
Performance metrics
Non-executive director fees
To attract NEDs who
have a broad range
of experience and
skills to oversee the
implementation of our
strategy.
NED fees are determined by
the Board within the limits
set out in the Articles of
Association and are paid in
12 equal, monthly instalments
during the year.
None.
Reviewed annually to reflect
the role, responsibility and
performance of the individual
and the Company. Annual
rate set out in the annual
report on remuneration for
the current year and the
following year. No prescribed
maximum annual increase.
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Caffyns plc Annual Report and Accounts 2019
ANNUAL REPORT ON REMUNERATION
Save for the performance graph and table, the change in the remuneration of the Chief Executive, the relative importance of
the spend on pay, the implementation of remuneration policy for 2020, the consideration by the directors of matters relating to
directors’ remuneration and the statement of shareholder voting at the 2018 Annual General Meeting, the information set out in
this part of the Directors’ Remuneration Report is subject to audit.
Single total figure of remuneration for 2019
The following table shows a single total figure of remuneration in respect of qualifying services for the 2019 financial year for
each director, together with comparative figures for 2018. The information provided in this part of the Directors’ Remuneration
Report is subject to audit.
Salary and fees
£’000
Taxable
benefits
£’000
Annual bonus
£’000
In lieu of pension
contributions
£’000
Total
£’000
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Executive directors
S G M Caffyn
M Warren
S J Caffyn
Total
Non-executive directors
R C Wright
N W Hollingworth
N T Gourlay
Total
Aggregate
directors’
emoluments
284
145
46
475
65
29
29
123
278
143
45
466
64
29
29
122
17
14
4
35
–
–
–
–
16
8
3
27
–
–
–
–
54
28
9
91
–
–
–
–
598
588
35
27
91
–
–
–
–
–
–
–
–
–
9
4
1
14
–
–
–
–
8
4
1
13
–
–
–
–
364
191
60
615
65
29
29
123
302
155
49
506
64
29
29
122
14
13
738
628
Annual bonus
Bonuses are earned by reference to the financial year and paid in May or June following the end of the financial year. The
bonuses accruing to the executive directors in respect of the year ended 31 March 2019 are based on the underlying profit
before tax as shown below:
Threshold
Target Maximum
Bonus value as % of salary
Actual
performance
S G M
Caffyn
Max Actual
M Warren
Max Actual
S J Caffyn
Max Actual
Underlying profit
before tax*
Bonus receivable
£1.32m £1.68m
25%
15%
£3.00m
100%
£1.45m 100%
19% 100%
19% 100%
19%
£54,040
£27,630
19%
£8,772
* The underlying profit before tax is after taking account of the cost of such bonus including employer’s NI and contributions in lieu of pension contributions.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Directors’ Remuneration Report (continued)
Pension entitlements and cash allowances
One executive director, the Company Secretary, is a deferred member of the Company’s closed defined benefit pension
scheme (“the DB Scheme”) at 31 March 2019 (2018: one). The ultimate pension of the Company Secretary will be provided by
the DB Scheme, which provides a pension of a maximum of two-thirds of final salary in respect of benefits accrued up to
31 March 2006. With effect from 1 April 2006, the accrued benefits of this director will be on a “career average” basis and
based upon earnings in each financial year. The DB Scheme closed to future accrual with effect from 1 April 2010.
The Company Secretary, who is a member of the DB Scheme, is eligible for a pension at normal retirement age of 65. Pensions
for the Company Secretary for service since 1 April 2010 has been provided on a contributory basis through the Company’s
defined-contribution pension scheme. The value of share options or other benefits does not form part of pensionable salary.
The pension scheme provides for the payment of benefits on death or disability. The following pension benefits accrued to
directors from the Company:
S J Caffyn
Normal
Retirement
date
12 December 2033
Total annual
accrued pension
at 31 March 2019
£’000
35
Total annual
accrued pension
at 31 March 2018
£’000
34
The total annual accrued pension excludes transferred-in benefits.
Normal retirement age for members of the defined benefit pension scheme is 65. On early retirement before age 65, accrued
pension is discounted by 5% per annum (2018: 5%) simple, except where the Company consents to early retirement between
60 and 65, and then no discount would be applied. Pensions paid increase in line with price indexation which may be limited.
On death, a one-half spouse’s pension is due. Children’s allowances to a maximum, including spouse’s pension, of 100% of the
executive’s pension may be payable. Allowance is made in transfer value payments for discretionary benefits.
In the year to 31 March 2019, none of the executive directors were members of the Company’s defined-contribution Scheme
(2018: none).
The non-executive directors are not members of the Company’s pension scheme.
Statement of directors’ shareholdings
The directors’ shareholdings as at 31 March 2019 are summarised within the Report of the Directors.
All employee share scheme
Details of share options held by executive directors under the SAYE Scheme 2017 (see note 23) are as follows:
Scheme
Date of
Grant
Expiry
Date
ShareSave 12/07/2017 01/09/2020 28/02/2021
ShareSave 12/07/2017 01/09/2020 28/02/2021
Earliest
Exercise
Date
Exercise
Price
£
3.99
3.99
Number at
1 April
2018
1,434
1,434
Granted
in year
–
–
Number at
31 March
2019
1,434
1,434
S G M Caffyn
M Warren
The market value of the shares at the date of grant was £4.75 giving a face value of the awards for each director of £1,090.
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Caffyns plc Annual Report and Accounts 2019
Performance graph and table
The chart below shows the Company’s eight-year annual Total Shareholder Return (“TSR”) performance against the FTSE
Small-Cap Total Return Index, which is considered an appropriate comparison to other public companies of a similar size.
Total shareholder return – 31 March 2011 to 31 March 2019
250.0
200.0
150.0
100.0
50.0
0.0
1
1
-
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FTSE Small Cap TSR
Caffyns TSR
The table below sets out the total remuneration delivered to the Chief Executive over each of the last six years, valued using the
same methodology as applied to the single total figure of remuneration.
Years ended 31 March
Total single figure £’000
Annual bonus % of maximum opportunity
2014
534
100.0%
2015
389
38.9%
2016
410
42.7%
2017
388
30.5%
2018
302
–
2019
364
18.5%
Chief Executive : S G M Caffyn
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Directors’ Remuneration Report (continued)
Change in remuneration of Chief Executive
The base salary of the Chief Executive increased between 31 March 2018 and 31 March 2019 by 2%, the same percentage
increase compared with the average change for the Company’s Branch Managers and Regional Directors. Neither the Chief
Executive nor the comparator group received any changes to their employment benefits during the year. The Chief Executive
received a bonus of £54,000 for the year which compared to a nil bonus in the prior year when the Company’s result did not
exceed the threshold set under the bonus scheme. The bonuses for the comparator group increased by 59% compared to the
prior year.
The comparator group comprises Regional Directors and Branch Managers and has been selected on the basis that these
managers have direct senior operational management responsibilities.
Relative importance of spend on pay
The table below sets out the total spend on pay in two years to 31 March 2019 compared with other disbursements from profit
(i.e. the distributions to shareholders). These were the most significant outgoings for the Company in the last financial year.
Spend on staff pay (including directors)
Profit distributed by way of dividend
Spend in
2019
£’000
13,723
606
Spend in
2018
£’000
13,141
606
Increase
%
4%
0%
If the proposed final dividend for the year ended 31 March 2019 is approved at the forthcoming Annual General Meeting, the
total dividend payable in respect of the year to 31 March 2019 will be unchanged at £606,000 (2018: £606,000).
Implementation of remuneration policy 2019/20
The annual salaries and fees to be paid to directors in 2019/20 are set out in the table below, together with any increases
expressed as a percentage.
S G M Caffyn
M Warren
S J Caffyn
R C Wright
N W Hollingworth
N T Gourlay
2020 salary/
fees
£’000
290
149
47
67
30
30
2019 salary/
fees
£’000
284
146
46
65
29
29
Increase/
(decrease)
%
2%
2%
2%
2%
2%
2%
The basis for determining annual bonus payments for the 2020 financial year is set out in the future policy table in the directors’
remuneration report on pages 20 to 21. The profit targets are considered commercially sensitive because of the information that
it provides to the Company’s competitors and consequently these will only be disclosed after the end of the financial year, in the
2020 annual report of remuneration.
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Consideration by the directors of matters relating to directors’ remuneration
The Committee
The Committee is responsible for reviewing and recommending the framework and policy for remuneration of the executive
directors and of senior management. The Committee’s terms of reference are available on the Company’s website. The
members of the Committee during the financial year were Mr N W Hollingworth (Chairman), Mr R C Wright and Mr N T Gourlay.
Mr N W Hollingworth was independent until the expiry of his nine-year period of service in January 2017. Mr N T Gourlay was
an independent non-executive director throughout the year. The Committee met four times during the year and all members
were present.
The primary role of the Committee is to set the directors’ remuneration policy and accordingly to:
• review, recommend and monitor the level and structure of remuneration for the executive directors and other senior
executives;
• approve the remuneration package for the executive directors;
• determine the balance between base pay and performance-related elements of the package to align executive directors’
interests with those of shareholders; and
• approve annual incentive payments for executive directors.
Summary of activity during the year ended 31 March 2019
During the year the Committee conducted its annual review of all aspects of the remuneration packages of the executive
directors to ensure that they continue to reward and motivate achievement of medium and long-term objectives, and to align
their interests with those of shareholders. Accordingly, the Committee’s activities during the year included:
• reviewing the basic salaries of the executive directors;
• reviewing the basic salary of the Chairman;
• setting annual performance targets in line with the Company’s plan for the 2019 financial year and determining the amounts
that may potentially be payable.
Statement of voting at 2018 Annual General Meeting
At the last Annual General Meeting, votes on the Directors’ Remuneration Report were cast as follows:
Votes for
2,649,737
%
99.86
Votes Against
3,643
%
0.14
Abstentions
0
%
0.00
A shareholder vote on the directors’ remuneration policy is required at least every third year and was last voted on at the 2017
Annual General Meeting. Votes at that meeting on the Directors’ Remuneration policy were cast as follows:
Votes for
2,894,212
%
99.81
Votes Against
1,971
%
0.07
Abstentions
3,513
%
0.12
By order of the Board
N W Hollingworth
Chairman of the Remuneration Committee
31 May 2019
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Report of the Directors
The directors present their report and financial statements for
the year ended 31 March 2019.
a number of privately held companies including Chairman of
Thames River Moorings Limited.
Results and dividends
The results of the Company for the year are set out in the
financial statements on pages 46 to 50. An interim dividend of
7.5p per share was paid to shareholders on 7 January 2019.
The Board is recommending a final dividend of 15.0 pence
per share (2018: 15.0 pence) making a total of 22.5 pence
per share (2018: 22.5 pence). Total ordinary dividends paid in
the year amounted to £606,000. Dividends paid in the year to
preference shareholders were £72,000 (2018: £72,000) as set
out in note 10 to the financial statements.
Future developments of the Company are set out in the
Operational and Business Review on pages 2 to 6.
Financial risk management
Consideration of principal risks and uncertainties is included
on pages 8 and 9 of the Strategic Report including the
management of financial risks. These are also outlined further
in note 18.
Directors
The directors who served during the year, all of whom remain
in office at 31 March 2019 are set out below:
Mr R C Wright PG Dip FIMI FCIM was appointed Chairman
on 26 July 2012. He joined the Board as a non-executive
director and Chairman-elect on 1 November 2011. He has
previously held senior executive roles with the Ford Motor
Company including Director, European Operations at Jaguar
Cars Limited, Director of Sales, Ford Motor Company Limited
and President/Managing Director of Ford Belgium NV. He was
Chairman of API Group plc from 2001 until 31 October 2014
and sat on the advisory board of Warwick Business School,
University of Warwick, for several years from 2002 onwards.
He is the former Chair of the Board of National Savings and
Investments, part of HM Treasury. He is currently an advisor to
Mr N W Hollingworth BSc joined the Board as a non-
executive director on 1 March 2008. He graduated from
Birmingham University in 1973 having read chemistry. From
2005 to 2016 he was Group Chief Executive of Austin Reed
Group Limited, formerly Austin Reed plc which de-listed
from the London Stock Exchange in January 2007, having
previously held senior management roles within Arcadia Group
plc, Etam plc and The Burton Group plc. He is currently an
advisor to a number of privately held companies.
Mr N T Gourlay BSc FCA, a Chartered Accountant, joined
the Board as a non-executive director on 26 September
2013. He spent more than 20 years with the BAT plc group of
companies, leaving in 2001. In 2003 Mr Gourlay co-founded
Animos LLP, a business consultancy of which he remains a
partner.
Mr S G M Caffyn MA FIMI joined the Board on 16 July 1992
and was appointed Chief Executive on 1 May 1998. He
graduated from Cambridge in 1983 having read engineering,
and subsequently worked for Andersen Consulting. He joined
the Company in 1990.
Mr M Warren BSc ACA was appointed to the Board on
31 May 2016 and assumed the role of Finance Director with
effect from 31 July 2016. He is a Chartered Accountant who
previously spent more than 21 years with H.R. Owen Plc,
the motor dealership operator, of which the eight years until
April 2015 were as Finance Director. He graduated from
Southampton in 1986 having read civil engineering, and
subsequently worked for PricewaterhouseCoopers.
Miss S J Caffyn BSc FCIPD AICSA FIMI has over 25 years’
Human Resource experience across several different sectors.
She joined the Board on 28 April 2003 as Human Resources
Director, having previously been Group Personnel Manager
and Company Secretary. A Chartered Company Secretary,
she has governance experience from several not-for-profit
organisations.
Interests in shares
The interests of the directors and their families in the shares of the Company are as follows:
As at 31 March 2019
7%
Pref
–
200
–
–
–
–
11%
Pref
–
1,600
–
1,655
–
–
Ord
7,500
51,988
5,000
39,232
2,500
4,893
As at 31 March 2018
7%
Pref
–
200
–
–
–
–
11%
Pref
–
1,600
–
1,655
–
–
Ord
5,312
51,988
5,000
39,232
2,500
3,000
R C Wright
S G M Caffyn
M Warren
S J Caffyn
N W Hollingworth
N T Gourlay
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Caffyns plc Annual Report and Accounts 2019
Mr S G M Caffyn and Miss S J Caffyn are directors of Caffyn
Family Holdings Limited which owns all the 2,000,000 6%
Cumulative Second Preference Shares which have full voting
rights except in relation to matters which under the Listing
Rules (as amended from time to time) are required to be voted
on only by Premium listed securities (being the Ordinary shares).
The market price of the Company’s Ordinary Shares at
31 March 2019 was £3.95 and the range of market prices
during the year was £3.51 to £4.49.
Appointment and replacement of
the Company’s directors
The rules for the appointment and replacement of the
Company’s directors are detailed in the Company’s Articles of
Association. Directors are appointed by ordinary resolution at
a general meeting by shareholders entitled to vote or by the
Board either to fill a vacancy or as an addition to the existing
Board. The appointment of non-executive directors is on the
recommendation of the Nomination Committee; the procedure
is detailed in the Chairman’s Statement on Corporate
Governance on page 14.
Directors’ indemnity and insurance
The Company’s Articles of Association permit the Board to
grant the directors indemnities in relation to their duties as
directors in respect of liabilities incurred by them in connection
with any negligence, default, breach of duty or breach of trust
in relation to the Company. In line with market practice, each
director has the benefit of a deed of indemnity. The Company
has also purchased insurance cover for the directors against
liabilities arising in relation to the Company, as permitted by
the Companies Act 2006. This insurance does not cover
fraudulent activity.
Compensation for loss of office
In the event of an executive director’s employment with the
Company being terminated, Mr S G M Caffyn is entitled to
receive from the Company a sum equivalent to twice his
annual emoluments which applied immediately before his
termination. Miss S J Caffyn is entitled to receive from the
Company a sum equivalent to her annual emoluments which
applied immediately before her termination and Mr M Warren
is entitled to receive from the Company a sum equivalent to
six months’ emoluments which applied immediately before
his termination. Emoluments include a proportion of the
available bonus which the expired part of the measured period
for bonus bears to the whole of such measurement period.
The executive directors’ service contracts commenced from
the date of their appointment to the Board.
In the event of the Chairman’s or a non-executive director’s
employment with the Company being terminated, they are
entitled to receive from the Company a sum equivalent to six
months’ fees.
Employees
Employees are encouraged to discuss with management
any matters which they are concerned about and factors
affecting the Company. In addition, the Board takes account of
employees’ interests when making decisions. Suggestions from
employees aimed at improving the Company’s performance are
welcomed. The Company has an HR Director, Miss S J Caffyn.
Further information on employees is set out in the Strategic
Report on page 10.
Share capital
As at 31 March 2019, the issued share capital of the
Company comprised Ordinary Shares of 50p each and three
classes of preference share namely 7% Cumulative First
Preference Shares of £1 each, 11% Cumulative Preference
Shares of £1 each and 6% Cumulative Second Preference
Shares of 10p each. Details of the share capital of the
Company are set out in note 22 to the financial statements.
The rights and obligations attaching to the Company’s
shares are set out below and in the Company’s Articles
of Association, copies of which can be obtained from
Companies House or by writing to the Company Secretary.
Rights and obligations attaching
to shares
Subject to applicable statutes and other shareholders’ rights,
shares may be issued with such rights and restrictions as the
Company may by ordinary resolution decide.
Holders of Ordinary Shares are entitled to attend and
speak at general meetings of the Company, to appoint one
or more proxies (and, if they are corporations, corporate
representatives). Holders of Ordinary Shares are entitled to
receive a dividend if one is declared and receive a copy of the
Company’s annual report and accounts.
Holders of Cumulative First Preference Shares are entitled
in priority to any payment of dividend on any other class of
shares, to a fixed cumulative preferential dividend at the rate
of 7% per annum.
Subject to the rights of the holders of Cumulative First
Preference Shares, holders of 6% Cumulative Second
Preference Shares of 10p each are entitled in priority to any
payment of dividend on any other class of shares to a fixed
cumulative preferential dividend at the rate of 6% per annum.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Report of the Directors (continued)
Report of the Directors
Subject to the rights of the holders of Cumulative First Preference Shares and 6% Cumulative Second Preference Shares of
10p, holders of 11% Cumulative Preference Shares of £1 each are entitled in priority to any payment of dividend on any other
class of shares to a fixed cumulative preferential dividend at the rate of 11% per annum. The percentage of the total share
capital represented by each class as at 31 March 2019 was as follows:
Authorised
500,000 7% Cumulative First Preference Shares of £1 each
1,250,000 11% Cumulative Preference Shares of £1 each
3,000,000 6% Cumulative Second Preference Shares of 10p each
4,000,000 Ordinary Shares of 50p each
Allotted, called up and fully paid
170,732 7% Cumulative First Preference Shares of £1 each
441,401 11% Cumulative Preference Shares of £1 each
2,000,000 6% Cumulative Second Preference Shares of 10p each
Total preference shares recognised as a financial liability
2,879,298 Ordinary Shares of 50p each
£’000
500
1,250
300
2,000
4,050
171
441
200
812
1,439
2,251
%
12.35
30.86
7.41
49.38
100.00
7.58
19.60
8.88
36.06
63.94
100.00
Voting rights, restrictions on voting
rights and deadlines for voting rights
Shareholders (other than any who, under the provisions of the
Articles of Association or the terms of the shares they hold,
are not entitled to receive such notices from the Company)
have the right to receive notice of, and attend, and to vote at
all general meetings of the Company. The Company’s auditor
has similar rights except that they may not vote. A resolution
put to the vote at any general meeting is to be decided on
a show of hands unless (before or on the declaration of the
result of the show of hands or on the withdrawal of any other
demand for a poll) a poll is properly demanded.
Every member present in person at a general meeting has,
on the calling of a poll, one vote for every Ordinary Share of
50p nominal amount of share capital of which he is the holder
and one vote for every 6% Cumulative Second Preference
Share of 10p nominal amount of share capital of which he
is the holder. In the case of joint holders of a share, the vote
of the member whose name stands first in the register of
members is accepted to the exclusion of any vote tendered
by any other joint holder. Unless the Board decides otherwise,
a shareholder may not vote at any general or class meeting or
exercise any rights in relation to meetings while any amount of
money relating to his shares remains outstanding.
A member is entitled to appoint a proxy to exercise all or any
of their rights to attend and speak and vote on their behalf
at a general meeting. Further details regarding voting at the
Annual General Meeting can be found in the notes to the
Notice of the Annual General Meeting. To be effective, paper
proxy appointments and voting instructions must be received
by the Company’s registrars no later than 48 hours before a
general meeting.
There are no restrictions on the transfer of Ordinary Shares
in the Company other than certain restrictions which may
be imposed pursuant to the Articles of Association of the
Company, certain restrictions which may from time to time be
imposed by laws and regulations (for example in relation to
insider dealing), restrictions pursuant to the Company’s share
dealing code whereby directors and certain employees of the
Company require prior approval to deal in Company’s shares,
and where a person has been served with a disclosure notice
and has failed to provide the Company with information
concerning the interests in those shares.
The Company is not aware of any arrangements or agreements
between shareholders that may result in restrictions on the
transfer of Ordinary Shares or on voting rights.
Sharesave scheme
The Company encourages employee share ownership
through the provision of periodic Save As You Earn schemes,
administered by the Yorkshire Building Society. A scheme was
launched in July 2017 with share options for 127,969 Ordinary
shares being subscribed to which are exercisable upon expiry
of the three-year savings contract at a pre-determined price
of £3.99 per share. At 31 March 2019, the number of share
options outstanding was 106,330. The scheme matures in
September 2020.
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Caffyns plc Annual Report and Accounts 2019
Significant direct or indirect shareholdings
At 30 May 2019, the directors are aware of the following interests in 3% or more of the nominal value of the Ordinary Share
capital (excluding treasury shares):
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Shares
304,750
133,750
128,349
125,570
108,336
107,409
104,804
103,495
90,000
88,267
%
11.31
4.96
4.76
4.66
4.02
3.98
3.89
3.84
3.34
3.27
Auditor
Grant Thornton UK LLP has been the external auditor
since 1964. In accordance with the auditor independence
requirements of the revised Ethical Standard effective 11 June
2016, Grant Thornton UK LLP’s appointment as auditor would
not be able to be extended beyond the year ending 31 March
2021. In the light of this length of tenure, the Committee
instigated an audit tender process following the year-end
and it is anticipated that the appointment of a replacement
external auditor will be recommended to shareholders at the
Annual General Meeting.
By order of the Board
S J Caffyn
Company Secretary
31 May 2019
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Maland Pension Fund (Pershing Nom Ltd RKCLT)
Charles Stanley
HSBC Republic Bank Suisse SA
Caffyns Pension Fund
A P Caffyn
A W Caffyn/Mrs B Lees
K E Caffyn
M I Caffyn
Armstrong Investments (Nortrust Nominees)
GAM Exempt UK Opportunities Fund
Greenhouse gas emissions
Information on greenhouse gas emissions is set out in the
Strategic Report on page 11.
Business at the
Annual General Meeting
As well as dealing with formal business, the Company takes
the opportunity afforded at the Annual General Meeting to
provide up-to-date information about the Company’s trading
position and to invite and answer questions from shareholders
on its policies and business. At the Annual General Meeting,
a separate resolution is proposed for each substantive matter.
The Company’s Annual Report and financial statements are
posted to shareholders, together with the Notice of Annual
General Meeting summarising the business proposed, giving
the requisite period of notice.
Property
The Company last valued its portfolio of freehold premises
as at 31 March 2019. The valuation was carried out by
CBRE Limited, Chartered Surveyors, based on existing use
value. The excess of the valuation over net book value as
at 31 March 2019 was £11.2 million (2018: £10.3 million).
In accordance with the Company’s accounting policies, this
surplus has not been incorporated into the accounts.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Directors’ Responsibilities
Directors’ Responsibilities
Statement
The directors are responsible for preparing the Strategic
Report, the Annual Report, the Remuneration Report and the
financial statements in accordance with applicable law and
regulations.
The directors are responsible for preparing the annual report in
accordance with applicable law and regulations. Having taken
advice from the Audit Committee, the directors consider the
annual report and the financial statements, taken as a whole,
provides the information necessary to assess the Company’s
performance, business model and strategy and is fair,
balanced and understandable.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
To the best of our knowledge:
• the Group financial statements, prepared in accordance
with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
profit or loss of the Company and the undertakings included
in the consolidation taken as a whole; and
• the annual report, including the strategic report, includes
a fair review of the development and performance of
the business and the position of the Company and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties that they face.
Approved by order of the Board
S G M Caffyn
Chief Executive
31 May 2019
M Warren
Finance Director
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
are required to prepare the financial statements of Caffyns plc
and its subsidiaries (“the Group”) and have elected to prepare
the parent Company financial statements in accordance
with International Financial Reporting Standards (IFRSs) as
adopted by the European Union. Under company law the
directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs and profit or loss of the Company and Group for that
period. In preparing these financial statements, the directors
are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether applicable IFRSs have been followed, subject
to any material departures disclosed and explained in the
financial statements;
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
and the Remuneration report comply with the Companies
Act 2006 and Article 4 of the IAS Regulation. They are also
responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors confirm that:
• so far as each director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
• the directors have taken all the steps that they ought to
have taken as directors in order to make themselves aware
of any relevant audit information and to establish that the
auditors are aware of that information.
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Caffyns plc Annual Report and Accounts 2019
Report of the Independent Auditor
Independent auditor’s report to the members of Caffyns plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Caffyns plc (the “parent Company” or the “Company”) and its subsidiaries (the
“Group”) for the year ended 31 March 2019, which comprise the Group and Company Income Statement, the Group and
Company Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group
and Company Statement of Changes in Equity, the Group and Company Cash Flow Statement, the Principal Accounting
Policies and notes to the financial statements. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
• give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 March 2019 and of the
Group’s and the parent Company’s loss for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the financial
statements” section of our report. We are independent of the Group and the parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require
us to report to you whether we have anything material to add or draw attention to:
• the disclosures in the annual report set out on pages 8 and 9 that describe the principal risks and explain how they are being
managed or mitigated;
• the directors’ confirmation, set out on page 18 of the annual report that they have carried out a robust assessment of the
principal risks facing the Group, including those that would threaten its business model, future performance, solvency or
liquidity;
• the directors’ statement, set out on page 17 of the financial statements about whether the directors considered it appropriate
to adopt the going concern basis of accounting in preparing the financial statements and the directors’ identification of any
material uncertainties to the Group’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
• whether the directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule
9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or
• the directors’ explanation, set out on pages 17 and 18 of the annual report as to how they have assessed the prospects of
the Group, over what period they have done so and why they consider that period to be appropriate, and their statement
as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Report of the Independent Auditor (continued)
Overview of our audit approach
• Overall materiality: £125,000.
• Key audit matters were identified as:
− revenue recognition and cut-off;
− impairment of non-current assets; and
− valuation of defined benefit pension scheme liability.
• We performed full scope audit procedures on the financial statements of the
operating company, Caffyns plc, and on the financial information of the three
dormant subsidiary undertakings, all located in the United Kingdom.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matter
– Group and Company
How the matter was addressed in the audit
– Group and Company
Revenue recognition and cut-off
Under ISA (UK) 240 “The auditor’s responsibilities relating
to fraud in an audit of financial statements”, there is a
presumed risk that revenue may be misstated because
management could be under pressure to achieve
planned levels of sales at the year end and given the high
value of transactions around the year-end. We identified
this risk in relation to vehicle sales.
We therefore identified revenue recognition and cut-off as
a significant risk, which was one of the most significant
assessed risks of material misstatement.
Our audit work included, but was not restricted to:
• an assessment of whether the Group’s revenue recognition
policies in place complied with International Financial Reporting
Standard (IFRS) 15 “Revenue from Contracts with Customers”
and ensuring its consistent application;
• transactional testing of a sample of revenues, to determine
whether the revenue recognised was valid and had occurred
and is recognised in accordance with the accounting policies.
We verified that the vehicle had left the Group’s premises prior to
revenue being recognised as this is when control of the vehicle
passes to the customer;
• testing a sample of vehicle sales transactions near year-end to
determine whether the sale had been recorded in the correct
period. This included verification to source documentation
pertaining to the validity and date of the sale; and
• agreeing manufacturer income directly to manufacturer
statements and subsequent receipts
The Group’s accounting policy on revenue recognition is shown
under Principal Accounting Policies and related disclosures are
included in note 1 to the financial statements.
Key observations
Our audit work did not identify any material misstatements
concerning recognition of revenue, including the cut-off of vehicles
sales.
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Key Audit Matter
– Group and Company
How the matter was addressed in the audit
– Group and Company
Impairment of non-current assets
As at 31 March 2019 the carrying amount of the
net assets of the Group was more than its market
capitalisation.
Under International Accounting Standard (IAS) 36
“Impairment of Assets” the above represents an
indication that the Group’s assets may be impaired.
Therefore, the directors are required to determine
whether the carrying value of the Group’s assets, which
includes the Group’s property, plant and equipment,
investment property and goodwill, is impaired.
IAS 36 requires assets to be tested for impairment
by comparing the asset’s carrying amount with its
recoverable amount, with the recoverable amount
being the higher of fair value less costs to sell and
value in use. IAS 36 also requires assets to be tested
for impairment individually, and where individual assets
cannot generate cash inflows independently, IAS 36
requires the impairment tests to be conducted at the
cash generating unit (“CGU”) level. A CGU is defined as
the smallest group of assets which can generate cash
inflows independently from other assets or CGUs.
To determine a fair value the directors obtained a
third-party valuation of the Group’s freehold premises
(including the freehold land and property recognised as
part of property, plant and equipment, as well as the
freehold property recognised as investment property).
Where necessary, the directors estimated the fair value
of other property, plant and equipment assets, and
estimated the likely selling costs.
There is judgement in assessing the ability of assets
to generate cash inflows largely independent of
other assets and therefore also in the identification
of appropriate CGUs. The assumptions involved in
determining fair value less costs to sell and those
involved in determining value in use can be highly
judgemental and can impact the impairment review.
We therefore identified impairment of non-current
assets as a significant risk, which was one of the most
significant assessed risks of material misstatement.
Our audit work included, but was not restricted to:
• an assessment of whether the Group’s accounting policies for
impairment of assets complied with IAS 36 and ensuring its
consistent application;
• obtaining management’s assessment of relevant cash generating
units (CGUs) used in the impairment calculation and comparing
those to our understanding of the business units and operating
structure of the Group. We performed arithmetical checks to
management’s model to ensure their accuracy;
• agreeing property valuations used for the purposes of impairment
testing to the impairment workings prepared by the Group, and
verifying the expertise of the third party used;
• assessing and challenging the appropriateness of inputs and
valuation methodologies used by management’s expert and their
inherent assumptions by use of an external valuation specialist as
an auditor’s expert;
• assessment of the valuation of properties with lower headroom
based upon our knowledge of the market by use of our expert;
and
• performing sensitivity analysis of management’s assumptions
on the fair values and selling costs, projected cash inflows,
discount rates and growth rates used in the impairment
calculation and challenging these through consideration of the
impact of alternative assumptions and comparison against past
experiences.
The Group’s accounting policy on impairment of property is shown
under Principal Accounting Policies and related disclosures are
included in notes 11, 12 and 13 to the financial statements.
Key observations
Our audit work identified that the previous assessment of the
definition of CGUs was not in compliance with IAS 36. This did
not result in a prior year adjustment; however, it did result in
a further impairment in the current year of £595,000 giving a
total impairment for the year of £945,000. Our audit work has
not identified any further material impairment or any material
misstatement concerning impairment of non-current assets
as at 31 March 2019.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Report of the Independent Auditor (continued)
Key Audit Matter
– Group and Company
How the matter was addressed in the audit
– Group and Company
Valuation of defined benefit pension scheme
obligation
The Group has a pension deficit on the statement of
financial position of £8.6m (2018: £9.5m).
The pension scheme is accounted for under IAS 19
‘‘Employee Benefits’’. The process to measure the
amount of the pension liability, including the appropriate
timing of recognition, involves significant judgement
as the valuation is subject to complex actuarial
assumptions.
We therefore identified the valuation of the defined
benefit pension scheme liability as a significant risk,
which was one of the most significant assessed risks of
material misstatement.
Our audit work included, but was not restricted to:
• an assessment of whether the Group’s accounting policy for
the defined benefit pension scheme complied with IAS 19 and
ensuring its consistent application;
• challenging the appropriateness of the actuarial valuation
methodologies and their inherent assumptions such as market
data, discount rates, growth rates and mortality rates by use of
our internal experts;
• assessing the accuracy of the underlying data utilised by the
actuary in the actuarial valuation, such as membership data;
• agreeing asset values to third party statements received from
the investment manager; and
• assessing the composition of fund assets for hard to value
investments or assets for which fair value cannot be determined
by using observable measures or which may have required
specialised valuation.
The Group’s accounting policy on defined benefit pension
scheme is shown under Principal Accounting Policies and
related disclosures are included in note 20 to the financial
statements. The Audit and Risk Committee identified pensions
and their valuation as an issue in its report on page 16, where the
Committee also described the action that it has taken to address
this issue.
Key observations
Our audit work has not identified any material misstatement of the
valuation of the defined benefit pension scheme liability.
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Caffyns plc Annual Report and Accounts 2019
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature,
timing and extent of our audit work and in evaluating the results of that work.
Materiality was determined as follows:
Materiality measure
Group and Company
Financial statements as
a whole
Performance materiality
used to drive the extent
of our testing
Specific materiality
Communication of
misstatements to
the audit and risk
committee
£125,000 – Our determination of materiality was based on consideration of a number of benchmarks
which we believe to be of importance to the users of the financial statements, most notably the
underlying profit before tax. This benchmark is considered particularly important due to the significant
level of user focus on this figure in assessing the Group’s future prospects and in assessing the
controllable aspects of the Group’s performance during the year. The level of materiality was not
determined by the application of a specific measurement percentage to any single particular
benchmark we considered; rather the appropriate amount of materiality was determined to be
£125,000 based on a review of the financial statements, and this amount was evaluated for
appropriateness by reference to a range of key benchmarks.
The level of materiality for the current year is the same as the level that we determined for the year
ended 31 March 2018.
75% of financial statement materiality.
We determined a lower level of specific materiality for certain areas such as directors’ remuneration
and related party transactions.
£6,250 and misstatements below that threshold that, in our view, warrant reporting on qualitative
grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential
uncorrected misstatements.
Overall materiality – Group and Company
25%
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Tolerance for potential uncorrected misstatements
Performance materiality
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Report of the Independent Auditor (continued)
An overview of the scope of our audit
Our audit approach was based on a thorough understanding
of the Group’s business and is risk based, and in particular
included:
In identifying and assessing risks of material misstatement in
respect of fraud, including irregularities and non-compliance
with laws and regulations, our procedures included the
following:
• We obtained an understanding of the legal and regulatory
frameworks applicable to the Group and Company and
industry in which they operate. We determined that the
following laws and regulations were most significant: IFRS,
Companies Act 2006, UK Corporate governance code, and
taxation laws.
• We understood how the Group and Company are
complying with those legal and regulatory frameworks by,
making enquiries to the management, internal auditors,
those responsible for legal and compliance procedures and
the Company Secretary. We corroborated our enquiries
through our review of board minutes and papers provided
to the Audit Committee.
• We assessed the susceptibility of the Group’s and
Company’s financial statements to material misstatement,
including how fraud might occur. Audit procedures
performed by the engagement team included:
− identifying and assessing the design effectiveness of
controls management has in place to prevent and detect
fraud;
− understanding how those charged with governance
considered and addressed the potential for override of
controls or other inappropriate influence over the financial
reporting process;
− challenging assumptions and judgements made by
management in its significant accounting estimates; and
− identifying and testing journal entries, in particular
any journal entries posted with unusual account
combinations.
• undertaking an interim visit in March 2019 to evaluate the
Group’s internal control environment, including IT systems
and controls;
• at this visit, we performed an evaluation of the design
effectiveness of controls over key financial statement risks
identified as part of our audit risk assessment process,
assessed the work undertaken by the internal audit function
on controls relevant to our risk assessment, obtained
an understanding of the accounts production process,
addressed critical accounting matters and performed
certain transactional procedures for the first nine months of
the year in advance of the year-end;
• at the final audit visit, we undertook substantive testing
on significant classes of transactions, account balances,
and disclosures, the extent of which was based on various
factors such as our overall assessment of the control
environment, the effectiveness of controls over individual
systems and the management of specific risks; and
• the scope of the current year audit has remained consistent
with the scope of that of the prior year and we performed
full scope audit procedures on the financial statements of
the operating Company Caffyns plc and on the financial
information of the three dormant subsidiary undertakings.
Explanation as to what extent the audit
was considered capable of detecting
irregularities, including fraud
The objectives of our audit are to identify and assess the risks
of material misstatement of the financial statements due to
fraud or error; to obtain sufficient appropriate audit evidence
regarding the assessed risks of material misstatement due
to fraud or error; and to respond appropriately to those risks.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that material misstatements in the financial
statements may not be detected, even though the audit is
properly planned and performed in accordance with the
ISAs (UK).
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Caffyns plc Annual Report and Accounts 2019
Other information
The directors are responsible for the other information.
The other information comprises the information included in
the annual report, other than the financial statements and
our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to
our responsibility to specifically address the following items
in the other information and to report as uncorrected material
misstatements of the other information where we conclude
that those items meet the following conditions:
• Fair, balanced and understandable set out on page 36 –
the statement given by the directors that they consider
the annual report and financial statements taken as a
whole is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group’s performance, business model and strategy, is
materially inconsistent with our knowledge obtained in the
audit; or
• Audit and Risk Committee reporting set out on pages 15
and 16 – the section describing the work of the audit and
risk committee does not appropriately address matters
communicated by us to the audit and risk committee; or
• Directors’ statement of compliance with the UK Corporate
Governance Code set out on page 13 – the parts of the
directors’ statement required under the Listing Rules relating
to the Company’s compliance with the UK Corporate
Governance Code containing provisions specified for review
by the auditor in accordance with Listing Rule 9.8.10R(2) do
not properly disclose a departure from a relevant provision
of the UK Corporate Governance Code.
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Our opinions on other matters prescribed by the Companies Act 2006
are unmodified
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with
the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial
statements are prepared is consistent with the financial statements and those reports have been prepared in accordance
with applicable legal requirements;
• the information about internal control and risk management systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules
sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and has
been prepared in accordance with applicable legal requirements; and
• information about the Company’s corporate governance code and practices and about its administrative, management
and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Report of the Independent Auditor (continued)
Matters on which we are required to
report under the Companies Act 2006
In the light of the knowledge and understanding of the Group
and the parent Company and its environment obtained
in the course of the audit, we have not identified material
misstatements in:
• the Strategic Report or the Report of the Directors; or
• the information about internal control and risk management
systems in relation to financial reporting processes and
about share capital structures, given in compliance with
rules 7.2.5 and 7.2.6 of the FCA Rules
Matters on which we are required
to report by exception
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent Company financial statements and the part of
the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit; or
• a corporate governance statement has not been prepared
by the parent Company.
Responsibilities of directors for the
financial statements
As explained more fully in the directors’ responsibilities
statement set out on page 36, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and the parent
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 Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Other matters which we are
required to address
We were appointed by the Audit and Risk Committee in 1964
to audit the financial statements for the year ending 31 March
1964 and subsequent financial periods.
The period of total uninterrupted engagement including
previous renewals and reappointments of the firm is 55 years,
covering the years ending 31 March 1964 to 31 March 2019.
The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group or the parent
Company and we remain independent of the Group and the
parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to the
Audit and Risk Committee.
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Caffyns plc Annual Report and Accounts 2019
Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the Company’s members those matters
we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other
than the Company and the Company’s members, as a body,
for our audit work, for this report, or for the opinions we have
formed.
Christian Heeger BSc FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Gatwick
31 May 2019
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Income Statement
for the year ended 31 March 2019
Group and Company
Revenue
Cost of sales
Gross profit
Operating expenses
Distribution costs
Administration expenses
Operating profit before other income
Other income (net)
Operating profit
Operating profit before non-underlying items
Non-underlying items within operating profit
Operating profit
Finance expense
Finance expense on pension scheme
Net finance expense
(Loss)/profit before taxation
Profit before tax and non-underlying items
Non-underlying items within operating profit
Non-underlying items within finance expense on pension scheme
(Loss)/profit before taxation
Taxation
(Loss)/profit for the year
(Deficit)/earnings per share
Basic
Diluted
Underlying earnings per share
Basic
Diluted
Note
1
2019
£’000
209,246
(183,317)
25,929
Restated
2018
£’000
215,868
(191,638)
24,230
(15,913)
(9,843)
173
802
975
2,626
(1,651)
975
(1,181)
(222)
(1,403)
(428)
1,445
(1,651)
(222)
(428)
(138)
(566)
(21.0)p
(21.0)p
35.3p
35.3p
(15,601)
(6,951)
1,678
624
2,302
2,325
(23)
2,302
(935)
(202)
(1,137)
1,165
1,390
(23)
(202)
1,165
(135)
1,030
38.2p
38.1p
45.6p
45.5p
4
2
3
6
7
2
2
8
9
9
9
9
The Revenue and Cost of sales for the Company and the Group for the prior year has been restated. This restatement arose
as a result of commissions received from finance companies, which previously were incorrectly treated as a reduction to Cost
of sales. These commissions are now reported as revenue and the prior year amounts have been reclassified accordingly.
The reclassification had no impact on Gross profit.
See accompanying notes to the financial statements.
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Caffyns plc Annual Report and Accounts 2019
Statement of Comprehensive Income
for the year ended 31 March 2019
Group and Company
(Loss)/profit for the year
Items that will never be reclassified to profit and loss:
Remeasurement of net defined benefit liability
Deferred tax on remeasurement
Total other comprehensive expense, net of taxation
Total comprehensive income for the year
See accompanying notes to the financial statements.
Note
20
21
2019
£’000
(566)
1,510
(257)
1,253
687
2018
£’000
1,030
(1,048)
178
(870)
160
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Statements of Financial Position
at 31 March 2019
Note
12
13
11
21
14
15
16
17
19
17
22
21
20
22
Non-current assets
Property, plant and equipment
Investment properties
Goodwill
Deferred tax asset
Investment in subsidiary
undertakings
Current assets
Inventories
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Total assets
Current liabilities
Interest bearing overdrafts,
loans and borrowings
Trade and other payables
Current tax payable
Net current assets
Non-current liabilities
Interest bearing loans and
borrowings
Preference shares
Deferred tax liability
Retirement benefit obligations
Total liabilities
Net assets
Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Non-distributable reserve
Retained earnings
Total equity attributable to
shareholders of Caffyns plc
Group
2019
£’000
39,225
8,169
286
–
–
47,680
34,468
8,796
–
3,908
47,172
94,852
4,875
39,886
103
44,864
2,308
12,625
812
–
8,576
22,013
66,877
27,975
1,439
272
707
1,724
23,833
Group
2018
£’000
40,064
6,893
286
112
–
47,355
30,398
10,191
60
3,375
44,024
91,379
3,875
35,782
–
39,657
4,367
13,500
812
–
9,497
23,809
63,466
27,913
1,439
272
707
1,724
23,771
Restated
Group
2017
£’000
Company
2019
£’000
Company
2018
£’000
Restated
Company
2017
£’000
35,623
6,986
286
–
–
42,895
29,904
7,838
–
2,321
40,063
82,958
500
34,179
197
34,876
5,187
10,375
812
15
8,554
19,756
54,632
28,326
1,439
272
707
1,724
24,184
39,225
8,169
286
–
250
47,930
34,468
8,796
–
3,908
47,172
95,102
4,875
40,136
103
45,114
2,058
12,625
812
–
8,576
22,013
67,127
27,975
1,439
272
707
1,724
23,833
40,064
6,893
286
112
250
47,605
30,398
10,191
60
3,375
44,024
91,629
3,875
36,032
–
39,907
4,117
13,500
812
–
9,497
23,809
63,716
27,913
1,439
272
707
1,724
23,771
35,623
6,986
286
–
250
43,145
29,904
7,838
–
2,321
40,063
83,208
500
34,429
197
35,126
4,937
10,375
812
15
8,554
19,756
54,882
28,326
1,439
272
707
1,724
24,184
27,975
27,913
28,326
27,975
27,913
28,326
The financial statements were approved by the board of directors and authorised for issue on 31 May 2019 and were signed on
its behalf by:
R C Wright
Chairman
31 May 2019
M Warren
Director
See accompanying notes to the financial statements.
Company number: 105664
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Caffyns plc Annual Report and Accounts 2019
Statement of Changes in Equity
for the year ended 31 March 2019
Group and Company
At 1 April 2018, as previously stated
Correction to deferred tax liability
Change in accounting policy
At 1 April 2018, restated
Total comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners:
Dividends
Share-based payment
At 31 March 2019
Share
capital
£’000
1,439
–
–
1,439
–
–
–
–
–
1,439
Share
premium
£’000
272
–
–
272
Capital
redemption
reserve
£’000
707
–
–
707
–
–
–
–
–
272
–
–
–
–
–
707
Non-
distributable
reserve
£’000
1,724
–
–
1,724
–
–
–
–
–
1,724
Retained
earnings
£’000
22,981
790
(75)
23,696
Total
£’000
27,123
790
(75)
27,838
(566)
1,253
(566)
1,253
687
687
(606)
56
23,833
(606)
56
27,975
The correction to the opening deferred tax liability is detailed in note 21 Deferred Tax.
The application of IFRS 15 led to an adjustment to the opening retained earnings of a reduction of £75,000.
for the year ended 31 March 2018
Group and Company
At 1 April 2017
Correction to deferred tax liability
At 1 April 2017, restated
Total comprehensive income
Profit for the year
Other comprehensive expense
Total comprehensive income
for the year
Transactions with owners:
Dividends
Share-based payment
At 31 March 2018
Share
capital
£’000
1,439
–
1,439
–
–
–
–
–
1,439
Share
premium
£’000
272
–
272
Capital
redemption
reserve
£’000
707
–
707
Non-
distributable
reserve
£’000
1,724
–
1,724
Retained
earnings
£’000
23,394
790
24,184
Total
£’000
27,536
790
28,326
–
–
–
–
–
272
–
–
–
–
–
707
–
–
–
1,030
(870)
1,030
(870)
160
160
–
–
1,724
(606)
33
23,771
(606)
33
27,913
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Cash Flow Statement
for the year ended 31 March 2019
Group and Company
Net cash inflow from operating activities
Investing activities
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment and investment property
Net cash outflow from investing activities
Financing activities
Secured loans repaid
Secured loans received
Dividends paid
Net cash (outflow)/inflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents
Bank overdraft
Net cash and cash equivalents
See accompanying notes to the financial statements.
Note
24
2019
£’000
3,759
10
(2,755)
(2,745)
(875)
–
(606)
(1,481)
(467)
375
(92)
2019
£’000
3,908
(4,000)
(92)
2018
£’000
662
43
(5,545)
(5,502)
(8,000)
11,500
(606)
2,894
(1,946)
2,321
375
2018
£’000
3,375
(3,000)
375
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Caffyns plc Annual Report and Accounts 2019
Principal Accounting Policies
Basis of preparation and statement of
compliance
The financial statements have been prepared in accordance
with International Financial Reporting Standards as adopted
by the EU (“IFRSs”), International Financial Reporting
Interpretations Committee (“IFRIC”) and those parts of the
Companies Act 2006 applicable to companies reporting
under IFRS.
The financial statements have been prepared on the historical
cost basis. The principal accounting policies adopted are
set out below. The preparation of financial statements in
conformity with IFRSs requires the use of estimates and
assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the
reporting year. Although these estimates are based upon
management’s best knowledge of the amount, events
or actions, actual results may ultimately differ from those
estimates.
The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision
and future periods if the revision affects both current and
future periods.
Judgements made by the directors in the application of
accounting policies that have significant effect on the financial
statements and estimates with a significant risk of material
adjustment in the next year are discussed in note 30.
New and revised standards
The Group adopted IFRS 9 “Financial Instruments” and
IFRS 15 “Revenue from Contracts with Customers” with
effect from 1 April 2018.
IFRS 9 “Financial Instruments” introduced extensive changes
to IAS 39’s guidance on the classification and measurement
of financial assets and introduced a new ‘‘expected credit
loss’’ model for the impairment of financial assets. IFRS 9
also provided new guidance on the application of hedge
accounting. The impairment model required recognition for
any expected credit losses rather than being restricted to only
those that have been incurred. No significant changes arose
to receivable balances through adopting IFRS 9.
IFRS 15 “Revenue from Contracts with Customers” presented
new requirements for the recognition of revenue, replacing
IAS 18 ‘‘Revenue’’, IAS 11 ‘‘Construction Contracts’’, and
several revenue-related interpretations. The new standard
established a control-based revenue recognition model and
provided additional guidance in many areas not covered in
detail under existing IFRSs, including how to account for
arrangement with multiple performance obligations, variable
pricing, customer refund rights, supplier repurchase options,
and other common complexities. The Company chose to
implement the new standard through the recognition of the
cumulative effect of the retrospective application of the new
standard as at the beginning of the period of initial application
on 1 April 2018, with no restatement of comparative periods.
The core principle of IFRS 15 is that an entity should
recognise its revenue at the point in which the transfer of
promised goods or services to customers is passed in
exchange for consideration that the entity expects to receive
in exchange for those goods and services.
A full impact assessment of the standard was undertaken,
and it was determined that revenue recognition remained
consistent with the previous accounting policy with the
exception of the income generated through commissions
earned through the sale of finance agreements to purchase
vehicles.
The Company recognises finance commission income upon
the sale of finance policies sold to customers to facilitate their
vehicle purchase. In this instance, the Company is acting
as an agent for various finance houses and the income is
recognised when the customer receives the product. An
adjustment is made to the transaction price to constrain the
variable amount of consideration associated with finance
commissions, in order to ensure that revenue is recognised
only to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will
not occur when the uncertainty associated with the variable
consideration is subsequently resolved. This adjustment to
constrain variable consideration represents a difference in the
Group’s accounting policy under IFRS 15 as compared to its
previous revenue recognition policy under IAS 18. The impact
of adopting and implementing IFRS 15 did not have a material
effect on the Company’s revenue recognition.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Principal Accounting Policies (continued)
Standards, amendments and interpretations to
existing standards that are not yet effective and
have not been adopted early by the Group
At the date of authorisation of these financial statements,
certain new standards, and amendments to existing
standards have been published by the IASB that are not yet
effective and, in some cases, have not yet been adopted by
the EU:
• IFRS 16 “Leases”;
• IFRS 17 “Insurance contracts”;
• IFRS 2 (amendments) “Classification and measurement of
share-based payment transactions”;
• IFRS 4 (amendments) applying IFRS 9 “Financial
instruments” with IFRS 4 “Insurance contracts”;
• IAS 40 (amendments) “Transfers of investment property”;
• IFRS 10 and IAS 28 (amendments) “Sale or contribution
of assets between an investor and its associate or joint
venture”; and
• IFRIC 23 “Uncertainty over income tax treatments”.
IFRS 16, which is replacing IAS 17 and three related
Interpretations, becomes effective for accounting periods
beginning on or after 1 January 2019. The new Standard
will therefore be implemented by the Company in its next
financial year ending 31 March 2020. The new Standard
has completed the IASB’s long-running project to overhaul
lease accounting and requires leases to be recorded on
the statement of financial position in the form of a right-
of-use asset and a lease liability. The right-of-use asset is
initially measured at cost less accumulated depreciation and
impairment losses, adjusted for any remeasurement of the
lease liability. The lease liability is initially measured at present
value of the future lease payments that are not paid at that
date. This value is adjusted for interest and lease payments,
as well as the impact of any lease modifications.
The Company predominantly owns the freeholds of the
properties from which it operates but, at the date of
implementation of the Standard, had two properties subject to
operating leases where it operates as a lessee. Upon adopting
IFRS 16, these leases are expected to be recognised as right-
of-use assets with a corresponding lease liability. The directors
have completed an assessment and anticipate that the value
of assets, and liabilities, in the Statement of Financial Position
will increase by £2.0 million as a result of implementing the
Standard. The Company intends to implement the Standard
by adjusting the opening position at 1 April 2019 for the
cumulative catch-up position. The directors do not expect the
implementation of the Standard to have a significant impact
on the Company future reported earnings.
Going concern
The financial statements have been prepared on a going
concern basis which the directors consider appropriate for the
reasons set out below.
The Company 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 the year-end, the medium-term banking
facilities included a term loan with an outstanding balance of
£7.1 million and a revolving credit facility of £7.5 million from
HSBC, its primary bankers, both facilities being renewable in
March 2023, and a short-term overdraft facility of £3.5 million
which is renewed annually in August. The Company also has
a 10-year term loan from VW Bank with a balance outstanding
at 31 March 2018 of £2.4 million which is repayable to
November 2023 and a short-term overdraft facility of
£7.0 million which is renewed annually in August. In the
opinion of the directors, there is a reasonable expectation
that all facilities will be renewed at their scheduled expiry
dates. The term loan and revolving credit facilities provided by
HSBC include certain covenant tests which were passed at
31 March 2019. The failure of a covenant test would render
these facilities repayable on demand at the option of the
lenders.
The directors have undertaken a detailed review of trading and
cash flow forecasts for a period in excess of one year from the
date of this Annual Report which projects that the facility limits
are not exceeded over the duration of the forecasts. These
forecasts have made assumptions in respect of future trading
conditions, particularly volumes and margins of new and used
car sales, aftersales and operational improvements together
with the timing of capital expenditure. The forecasts take
into account these factors to an extent which the directors
consider to be reasonable, based on the information that is
available to them at the time of approval of these financial
statements. These forecasts indicate that the Company will be
able to operate within the financing facilities that are available
to it and meet the covenant tests with sufficient margin
for reasonable adverse movements in expected trading
conditions.
Information concerning the Company’s liquidity and financing
risk are set out on page 8 and note 18 to the financial
statements.
The directors have a reasonable expectation that the
Company has adequate resources to continue in operational
existence for the foreseeable future. For those reasons, they
continue to adopt the going concern basis in preparing this
Annual Report.
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Caffyns plc Annual Report and Accounts 2019
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries made up to
31 March each year. All subsidiaries are currently dormant, so
the income, expenses and cash flows are the same for the
Group and the Company.
The results of businesses and subsidiaries acquired or
disposed of during the year are included in the Consolidated
Income Statement using the acquisition method from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies
used into line with those used by the Group.
All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Acquisitions
On acquisition, the assets and liabilities and contingent
liabilities of a subsidiary are measured at their fair values at
the date of acquisition. Any excess of the cost of acquisition
over the fair values of the identifiable net assets acquired is
recognised as goodwill, which is allocated to Cash Generating
Units (“CGUs”). Any deficiency of the cost of acquisition
below the fair values of the identifiable net assets acquired
(i.e. discount on acquisition) is credited to profit or loss in the
period of acquisition.
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the net identifiable assets acquired,
and is tested annually for impairment. Any impairment is
recognised immediately in the income statement and is not
subsequently reversed. Gains and losses on subsequent
disposal of the assets acquired include any related goodwill.
Goodwill arising on acquisitions before the date of transition
to IFRS has been retained at the previous UK GAAP amounts
subject to being tested for impairment at that date and
annually thereafter.
Revenue recognition
The Company has adopted IFRS 15 ‘‘Revenue from Contracts
with Customers’’, which came into effect on 1 April 2018 and
replaced IAS 18 ‘‘Revenue’’. The Group’s previously stated
revenue recognition policy, which outlined the Company’s
compliance with IAS 18, and was applied during the year
ended 31 March 2018, was as follows:
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable
for goods and services provided in the normal course of
business, net of discounts, VAT and other sales-related taxes.
Sales of motor vehicles, parts and accessories are recognised
when the significant risks and rewards of ownership have
been transferred to the buyer. In general, this occurs when
vehicles or parts are delivered to the customer and title has
passed. Servicing sales are recognised on completion of the
agreed work.
Bonuses receivable from manufacturers, which are principally
based on meeting volume objectives, are recognised in the
Income Statement when the relevant objectives have been
satisfied. Commission income from the sale of finance-related
products is recognised at the point of sale of the associated
goods.
The Group’s revised revenue recognition policy, effective for
the year ended 31 March 2019 is as follows:
Revenue generated from a contract for the sale of goods is
recognised on delivery when all promises have been fulfilled
to the customer such as the supply of a specific vehicle. If
the customer has added various accessory products to their
order, the Company’s promise is fulfilled by supplying this onto
the vehicle when they take delivery of the vehicle. Where the
Company acts as an agent on behalf of a principal in relation
to the sale of a new car, the associated income is recognised
within revenue in the period in which the product is sold.
Finance commissions are earned from the Finance House that
is providing a finance arrangement to a consumer buying the
vehicle. In this regard, the Company’s customer is considered
to be the Finance House, rather than the end user of the
vehicle. Income derived from such commissions is recognised
within revenue on completion of the arranging of the various
products (i.e. at the point at which control passes to the
customer).
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Principal Accounting Policies (continued)
For servicing work, the Company is promising to complete
the work in accordance to the contract (or job card). This
obligation is satisfied when the customer takes collection
of their vehicle on completion of the work. If a customer
takes out a service plan, the Group has a future obligation
to complete agreed work over a set period of time – these
obligations are only completed in full once the service plan
has expired. The obligation of supplying vehicle parts to
customers is also satisfied when the customer takes delivery
of the goods. Where the Company sells a service plan
alongside a motor vehicle, the service element is distinct from
the vehicle sale and is subject to a fixed and determinable
transaction price. Each individual service included within the
service plan is considered distinct and revenue is recognised
at a point in time when the services have been carried out.
Supplier income
The Company receives income from brand partners and other
suppliers. These are generally based on achieving certain
objectives such as specific sales volumes and maintaining
agreed operational standards. This supplier income received
is recognised as a deduction from cost of sales at the point
when it is reasonably certain that the targets have been
achieved for the relevant period and when income can
be measured reliably based on the terms of each relevant
supplier agreement. Supplier income that has been earned
but not invoiced at the balance sheet date is recognised in
other receivables.
Manufacturer bonuses are recognised as income to gross
margin but not within revenue
Non-underlying items
Non-underlying items are those items that are unusual
because of their size, nature or incidence. Management
consider 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 are
also 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
closed to future accrual is presented as a non-underlying item
due to the inability of management to influence the underlying
assumptions from which the charge is derived.
All other activities are treated as underlying.
Leasing
Lessee
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases.
Rentals payable under operating leases are charged to
income on a straight-line basis over the terms of the relevant
lease.
Lessor
The Company leases certain properties under operating
leases. Substantially all the risks and rewards of ownership
are retained by the Company and the assets are stated at
historical cost less depreciation. Provision for depreciation
of all property, plant and equipment is made in equal annual
instalments over their estimated useful lives.
Borrowing costs
All borrowing costs are recognised in the Income Statement
in the period in which they are incurred unless the borrowing
costs are directly attributable to the acquisition, construction
or production of a qualifying asset, in which case they are
capitalised.
Retirement benefit costs
The Company operates the “Caffyns Pension Scheme”
which is a defined benefit pension scheme. The defined
benefit scheme defines the amount of pension benefit that
an employee will receive on retirement, dependent on one or
more factors including age, years of service and salary. The
scheme is closed to new members and to future accrual.
Under IAS 19 (Revised), the defined benefit deficit is
included on the Statement of Financial Position. Liabilities
are calculated based on the current yields on high-quality
corporate bonds and on market conditions. Surpluses are
only included to the extent that they are recoverable through
reduced contributions in the future or through refunds from
the scheme.
Remeasurement arising from experience adjustments and
changes in actuarial assumptions are charged or credited,
net of deferred tax, each year to reserves and shown in the
Statement of Comprehensive Income.
An interest expense or income is calculated on the defined
benefit liability or asset respectively by applying the discount
rate to the net defined benefit liability or asset.
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The Company also provides pension arrangements for
employees under defined contribution schemes. Contributions
for these schemes are charged to the Income Statement in
the year in which they are payable.
Share-based employee compensation
The Company operates an equity settled share-based
compensation plan for all employees through the Company’s
SAYE scheme. All employee services received in exchange for
the grant of any share-based compensation are measured at
their fair values. These are indirectly determined by reference
to the share option awarded. Their fair value is appraised at
the grant date. The vesting period from the date of grant is
three years.
All share-based compensation is ultimately recognised as
an expense in the Income Statement with a corresponding
credit to the ‘‘other reserve’’, net of deferred tax where
applicable. If vesting periods or other vesting conditions apply,
the expense is allocated over the vesting period, based on
the best available estimate of the number of share options
expected to vest. Service and performance vesting conditions
are included in assumptions about the number of options that
are expected to become exercisable. Non-vesting conditions
such as the employee’s requirement to continue to save under
the SAYE scheme, are considered when determining the fair
value of the award. Estimates are subsequently revised if there
is any indication that the number of share options expected
to vest differs from previous estimates. No adjustment to
expense recognised in prior periods is made if fewer share
options ultimately are exercised than originally estimated.
Failure by the employee to meet a non-vesting condition is
treated as a cancellation.
Fair value is measured by use of the Black-Scholes model.
The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
Taxation
The tax expense represents the sum of the tax currently
payable and deferred tax. Tax balances are not discounted.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Income Statement because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.
The liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the end of
year accounting date.
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit and is
accounted for using the liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it
is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than
in a business combination) of other assets and liabilities
in a transaction that affects neither the tax profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at
each financial year-end date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset
is realised. Deferred tax is charged or credited in the Income
Statement, except when it relates to items charged or
credited within other comprehensive income, in which case
the deferred tax is also dealt with in other comprehensive
income. The tax base of an item considers its intended
method of recovery by either sale or use.
Property, plant and equipment
Land and buildings used in the business are stated in the
Statement of Financial Position at cost, or deemed cost, being
the open market value at 31 March 1995, for those properties
acquired before that date.
Depreciation on buildings is charged to the Income
Statement. On the subsequent sale of a property, the
attributable surplus remaining in the non-distributable reserve
is transferred directly to accumulated profits.
Properties in the course of construction are carried at
cost, less any recognised impairment loss. Cost includes
professional fees and attributable borrowing costs.
Depreciation of these assets, on the same basis as other
property assets, commences when the assets are ready for
their intended use.
Properties are regarded as purchased or sold on the
date on which contracts for the purchase or sale become
unconditional. The gain or loss arising on the disposal of
an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is
recognised in the Income Statement.
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Principal Accounting Policies (continued)
If the recoverable amount of an asset or CGU is estimated to
be less than its carrying amount, the carrying amount of the
asset (CGU) is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately,
unless the relevant asset is carried at a revalued amount,
in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (CGU) is increased to the revised
estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been
recognised for the asset (CGU) in prior years. A reversal of
an impairment loss is recognised as income immediately,
unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a
revaluation increase.
For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows from other groups of assets. Management have
determined that the CGUs are the individual dealerships for
each franchise.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost represents the purchase price plus any additional
costs incurred.
Vehicle inventories includes service vehicles. Consignment
vehicles are regarded as being effectively under the control of
the Company and are included within inventories on the
Statement of Financial Position as the Company has
substantially all the significant risks and rewards of ownership
even though legal title may not yet have passed. The
corresponding liability is included in trade and other payables.
Parts inventories, in accordance with normal industry practice,
are valued based on cost and are written down to net
realisable value by providing for obsolescence on a time and
inventory-based formula approach.
Net realisable value represents the estimated selling price less
all estimated costs to completion and costs to be incurred in
marketing and selling.
Other assets are stated at cost less accumulated depreciation
and any recognised impairment loss.
Depreciation is charged so as to write off the cost less
residual values of assets, other than land and properties
under construction, over their estimated useful lives using the
straight-line method, on the following basis:
Freehold buildings
Leasehold buildings
Plant and machinery, fixtures and fittings
– 50 years
– Period of lease
– 3 to 10 years
The leasehold land is accounted for as an operating lease.
The residual value of all assets, depreciation methods and
useful economic lives, if significant, are reassessed annually.
Investment property
Investment property, which is property held to earn rentals
and/or capital appreciation, is stated at cost less accumulated
depreciation and impairment. Rental income from investment
property is recognised on a straight-line basis over the term
of the lease. Depreciation is charged to write off the cost less
residual values of investment properties over their estimated
useful lives using the straight-line method over 50 years.
Any transfers from Property, Plant and Equipment are made at
cost less accumulated depreciation.
Impairment
a.
Impairment of goodwill
Goodwill is tested annually for impairment. If an
impairment provision is made, it cannot subsequently be
reversed.
b.
Impairment of property, plant and equipment
At each financial year-end date, the Company reviews
the carrying amounts of its property, plant and equipment
to determine whether there is any indication that
those assets have suffered an impairment loss. If such
indication exists, the recoverable amount of the asset is
estimated to determine the extent of the impairment loss
(if any). Where the asset does not generate cash inflows
that are independent from other assets, the Company
estimates the recoverable amount of the Cash Generating
Unit (“CGU”) to which the asset belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash inflows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash inflows
have not been adjusted.
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Trade and other receivables
Trade receivables do not carry any interest and are stated at
their fair value on initial recognition as reduced by appropriate
allowances for estimated irrecoverable amounts and
subsequently carried at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and on
demand deposits. In the Cash Flow Statement, cash and
cash equivalents are shown net of bank overdrafts. Bank
overdrafts are shown within interest bearing borrowings in
current liabilities on the Statement of Financial Position.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are included at cost,
less amounts written off if the investment is determined to be
impaired and are included in the parent Company’s separate
financial statements.
Interest-bearing borrowings
Interest-bearing bank loans and overdrafts are recorded at
their fair value on initial recognition (normally the proceeds
received less transaction costs that are directly attributable
to the financial liability) and subsequently at amortised
cost under the effective interest method. Finance charges,
including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accruals basis to
the profit and loss account using the effective interest method
and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which they
arise.
In the case of a debt renegotiation where the existing and
new terms are substantially different, the exchange shall be
accounted for as an extinguishment of the original financing
liability and the fair value of the new financial liability is
recognised in profit or loss. Any costs or fees incurred in
the refinancing are recognised as part of the gain or loss on
extinguishment. If an exchange is not accounted for as an
extinguishment, any fees or costs incurred adjust the carrying
amount of the liability and are amortised over the remaining
term of the modified liability.
Trade and other payables
Trade payables are not interest bearing and are stated at their
fair value on initial recognition and subsequently carried at
amortised cost.
Manufacturer funding facilities are utilised up to a maximum
of the lower of the total value of used car inventory and
the facility limit. The utilisation is recorded at fair value with
associated interest charged to the Income Statement.
Equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Share premium includes any premium received on the sale of
shares. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any income
tax benefits.
Capital redemption reserve comprises the nominal value of
Ordinary and Preference Share capital purchased by the
Company in prior years and cancelled.
The ‘‘Non-distributable reserve’’ within equity is a revaluation
reserve which comprises gains and losses due to the
revaluation of property, plant and equipment prior to 1995.
Retained earnings includes all current and prior period
retained profits.
Where any company in the Group purchases the Company’s
equity share capital (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of
income taxes), is deducted from equity attributable to the
Company’s equity holders until the shares are cancelled,
reissued or disposed of. Where such shares are subsequently
sold or reissued any consideration received, net of any directly
attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the
Company’s equity holders.
Preference shares
All the preference shares are accounted for as non-current
liabilities, as they have the attributes of debt. Preference
dividends are accounted for as finance charges within interest
payable.
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Principal Accounting Policies (continued)
Discontinued operations
A discontinued operation is a component of the Company
that represents a major line of business operations that has
been disposed of, has been abandoned or meets the criteria
to be classified as held for sale in accordance with IFRS 5.
Discontinued operations are presented on the income
statement as a separate line and are shown net of tax.
Financial instruments
Recognition, initial measurement and re-recognition
Financial assets and financial liabilities are recognised when
the Company becomes a party to the contractual provisions
of the financial instrument and are measured initially at fair
value adjusted for transaction costs, except for those carried
at fair value through profit or loss which are measured initially
at fair value. Subsequent measurement of financial assets and
financial liabilities is described below.
Financial assets are derecognised when the contractual rights
to the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred.
Financial liabilities are derecognised when the obligation
specified in the contract is discharged, cancelled or expires.
The only types of financial assets held by the Group are
financial assets at amortised cost.
Financial assets at amortised cost
Financial assets at amortised cost are non-derivative financial
assets with fixed or determinable payments that are not
quoted in an active market. After initial recognition, these
are measured at amortised cost using the effective interest
method, less provision for impairment. Discounting is omitted
where the effect of discounting is immaterial. The Company’s
cash and cash equivalents, trade and most other receivables
fall into this category of financial instruments.
The Group applies the IFRS 9 simplified approach to
measuring expected credit losses which uses a lifetime
expected loss allowance for all receivables. The expected
loss rates are based on the payment profile of sales
over 36 months before 31 March 2019, or 1 April 2018
respectively, and the corresponding historical credit losses
expected in this period. The Company also considers future
expected credit losses due to circumstances in addition to
historical loss rates.
On that basis no loss allowance was identified as at 31 March
2019 or 1 April 2018.
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Notes to the Financial Statements
for the year ended 31 March 2019
1. General information
Caffyns plc is a company incorporated in England and Wales under the Companies Act 2006. The address of the
registered office is given on page 12. Its revenue is attributable to the sole activity of operating as a motor retailer in the
south-east of the United Kingdom and comprises revenue from:
Sale of goods
Rendering of services
2019
£’000
197,888
11,358
209,246
Restated
2018
£’000
204,902
10,966
215,868
Sales of motor vehicles, parts and aftersales services
The Group’s full revenue recognition policy is set out in the section on ‘‘Principal Accounting Policies’’ under the heading
‘‘Revenue recognition’’. The Group generates revenue through the sale of new and used motor vehicles (together
comprising ‘‘Sale of goods’’ as shown above), and through the provision of aftersales services in the form of vehicle
servicing, maintenance and repairs and introducing customers to finance companies (together comprising ‘‘Rendering of
services’’ as shown above).
The Group recognises revenue from the sale of new and used motor vehicles when a customer takes possession of the
vehicle, at which point they have an obligation to pay in full and as such control is considered to transfer at this point.
The Group typically receives cash equal to the invoice amount for most direct retail sales to consumers at the time
the consumer takes possession of the vehicle. When the consumer has taken out a finance agreement to purchase
the vehicle, the Group receives payment from the finance company at the time the consumer takes possession of the
vehicle. Payment terms on sales to corporate customers typically range from seven to ten days. The Group recognises
revenue from the provision of aftersales services when the service has been completed, at which point customers have
an obligation to pay in full. The Group typically receives cash equal to the invoice amount for most direct retail sales to
consumers at the time the service has been completed. Payment terms on sales to corporate customers typically range
from 30 to 60 days.
All revenue recognised in the income statement is from contracts with customers and no other revenue has been
recognised. No impaired losses have been recognised on any receivables or contract assets arising from a contract with a
customer.
Due to the nature of the Group’s contractual relationship with customers and the nature of the services provided there are
no timing differences between revenue recognised in the income statement and trade receivables being recognised in the
statement of financial position.
There have been no significant judgements regarding the timing of transactions or the associated transaction price.
The transaction price is set out in individual contractual agreements and there is a range of prices based on the types of
goods and services offered. There are no variable pricing considerations.
Contract liabilities
Where the Group receives an amount of consideration in advance of completion of performance obligations under a
contract with a customer, the value of the advance consideration is initially recognised as a contact liability in liabilities.
Revenue is subsequently recognised as the performance obligations are completed over the period of the contract
(i.e. as control is passed to the customer). Contract liabilities are presented within trade and other payables in the
Consolidated Balance Sheet and disclosed in note 19 ‘‘Trade and other payables’’.
Contract costs
The Group applies the practical expedient in paragraph 94 of IFRS 15 and recognises the incremental costs of obtaining
contracts as an expense when incurred if the amortisation period of the assets that the Group otherwise would have
recognised is one year or less.
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Notes to the Financial Statements
for the year ended 31 March 2019
1. General information (continued)
Transaction price allocation to remaining performance obligations
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining
performance obligations that have original expected durations of one year or less.
Segmental reporting
Based upon the management information reported to the chief operating decision maker, the Chief Executive, in the
opinion of the directors, the Company has one reportable segment. The Company physically operates and is managed
from individual dealership sites although strategic and investment decisions are made based on dealership groupings or
market territories. The Company’s individual dealerships represent a range of manufacturers but are considered to have
similar economic characteristics, such as margin structures, and offer similar products and services to a similar customer
base. As such, the results of each dealership have been aggregated to form one reportable segment. There are no major
customers amounting to 10% or more of revenue. All revenue and non-current assets derive from, or are based in, the
United Kingdom.
2. Non-underlying items
Net (loss)/profit on disposal of property, plant and equipment
Other income, net
Within operating expenses:
Service cost on pension scheme
VAT claim recovery, net of compliance costs
VAT compliance costs
Liquidation distribution received
Equalisation of Guaranteed Minimum Pensions
Property impairments
Property lease dilapidations
Non-underlying items within operating profit
Net finance expense on pension scheme
Non-underlying items within net finance income
Total non-underlying items before taxation
Taxation credit on non-underlying items
Total non-underlying items after taxation
2019
£’000
(6)
(6)
(27)
315
(164)
27
(851)
(945)
–
(1,645)
(1,651)
(222)
(222)
(1,873)
356
(1,517)
2018
£’000
31
31
(34)
–
(80)
–
–
–
60
(54)
(23)
(202)
(202)
(225)
26
(199)
The following amounts have been presented as non-underlying items in these financial statements:
The Company recovered a sum of £334,000 in the year in respect of a VAT claim submitted to HMRC for VAT incorrectly
accounted for on dealer contributions towards vehicle sales between 2012 and 2017. Net of costs of recovery, a credit of
£315,000 has been recognised to profit.
In the period year, the Company received a periodic VAT inspection from HM Revenue & Customs which identified certain
items of non-compliance with relevant legislation. A sum of £20,000 was settled in that prior period and a further provision
of £60,000 was also taken in the prior year against profits to allow for items still to be resolved. In the current year, a further
sum of £164,000 has been charged to cover all items resolved but not settled at the year end.
The Company received a distribution of £27,000 in the year from the liquidators of MG Rover Group Limited.
A legal precedent was set during the year regarding the issue of equalisation of Guaranteed Minimum Pensions relating
to the members of the Company’s defined-benefit pension scheme. Accordingly, a charge of £851,000 has been taken
against profits as a non-underlying item as the best estimate of the cost of equalising pension entitlements between men
and women.
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2. Non-underlying items (continued)
The Company has impaired the carrying value of two freehold properties by a total of £945,000 in the year following advice
from its independent valuer, CBRE Limited (see notes 12 and 13).
In the year ended 31 March 2017, the Company notified to its landlord its intention to exercise a break clause of its
lease for a site in Tonbridge and made a provision of £149,000 for remedial work on the property and professional fees
associated with the break in those financial statement. In the prior year, in June 2017, the Company duly exercised the
break clause and negotiated a total cost for the remedial work on the property of £80,000 with a further £9,000 incurred in
associated professional fees in the year. The remaining provision held of £60,000 was credited to operating expenses as a
non-underlying item.
3. Operating profit
Operating profit has been arrived at after charging/(crediting):
Employee benefit expense (see note 5)
Net rental income
Depreciation of property, plant, equipment and investment property
– owned assets
Impairments of property, plant, equipment
Net loss/(profit) on disposal of property, plant and equipment
Operating lease rentals payable – land and buildings
Operating lease rentals receivable – land and buildings
Operating profit has been arrived at after charging:
Auditor’s remuneration
– Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
– Fees payable to the Company’s auditor and its associates for other services:
– other services pursuant to legislation – review of interim financial statements
– in respect of the audit of the Caffyns plc Occupational Pension Scheme
2019
£’000
16,366
(523)
1,356
945
6
500
(708)
2018
£’000
14,824
(593)
1,185
–
(31)
496
(789)
2019
£’000
2018
£’000
76
12
11
99
74
12
11
97
A description of the work of the Audit and Risk Committee is set out in the Chairman’s Statement on Corporate
Governance on page 15 and includes an explanation of how auditor objectivity and independence is safeguarded when
non-audit services are provided by the auditor.
The Company refers to underlying profit and underlying EBITDA as being key alternative performance measures when
considering the results for the year. This is reconciled from the Company’s result for the year as follows:
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(Loss)/profit for the year
Tax charge (note 8)
(Loss)/profit before tax
Add back: Net finance expense (notes 6 and 7)
Add back: Non-underlying items within operating profit (note 2)
Add back: Depreciation charged on property, plant and equipment
and investment properties (notes 11 and 12)
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA)
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2019
£’000
(566)
138
(428)
1,403
1,651
1,356
3,982
2018
£’000
1,030
135
1,165
1,137
23
1,185
3,510
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Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
4. Other income
Rent receivable
Compensation claim received
(Loss)/profit on disposal of tangible fixed assets
Other income
2019
£’000
523
285
(6)
802
2018
£’000
593
–
31
624
During the year, the Company agreed a settlement of £300,000 regarding a claim for trading losses caused by disruption
from alterations and repairs required to one of its freehold premises. After allowing for professional fees and costs, a credit
of £285,000 was included in Other Income in the period.
5. Employee benefit expense
The average number of people (full-time equivalents) employed in the following areas was:
Sales
Aftersales
Administration
Employee benefit expense during the year including directors amounted to:
Wages and salaries
Social security costs
Redundancy costs
Contributions to defined contribution plans
Cost of equalisation of Guaranteed Minimum Pensions (see notes 2 and 20)
Other pension costs (see note 20)
Directors’ emoluments were:
Salaries and short-term employee benefits
2019
Number
130
208
83
421
2019
£’000
13,723
1,336
1
206
851
249
16,366
2019
£’000
738
Details of the directors’ remuneration are provided in the Directors’ Remuneration Report on pages 19 to 31.
Key management compensation
Salaries and short-term employee benefits
Key management personnel include the directors and other key operational staff.
2019
£’000
1,221
2018
Number
124
204
85
413
2018
£’000
13,141
1,290
11
146
–
236
14,824
2018
£’000
628
2018
£’000
1,158
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6. Finance expense
Interest payable on bank borrowings
Vehicle stocking plan interest
Financing costs amortised
Preference dividends (see note 10)
Finance expense
2019
£’000
356
648
105
72
1,181
2018
£’000
186
591
86
72
935
Interest payable on bank borrowings is after capitalising interest on additions to freehold properties of £55,000 at a rate of
2.6% (2018: £127,000; rate: 2.5%) (see note 12).
7. Finance expense on pension scheme
Defined benefit pension scheme net finance expense (see note 20)
8. Tax
Current tax
UK corporation tax
Adjustments recognised in the period for current tax of prior periods
Total charge
Deferred tax (see note 21)
Origination and reversal of temporary differences
Adjustments recognised in the period for deferred tax of prior periods
Total credit/(charge)
Total tax charged in the Income Statement
The tax credit/(charge) arises as follows:
On normal trading
On Non-underlying items (see note 2)
The charge for the year can be reconciled to the profit per the Income Statement as follows:
(Loss)/profit before tax
Tax at the UK corporation tax rate of 19% (2018: 19%)
Tax effect of expenses that are not deductible in determining taxable profit
Difference between accounts profits and taxable profits on capital asset disposals
Other differences related primarily to the revaluation of the pension scheme and
from property impairments
Movement in rolled over and held over gains
Impairment of Advanced Corporation Tax asset
Adjustment to tax charge in respect of prior periods
Tax charge for the year
2019
£’000
222
2019
£’000
(261)
(22)
(283)
21
124
145
(138)
2019
£’000
(494)
356
(138)
2019
£’000
(428)
81
(12)
(1)
(173)
166
(301)
102
(138)
2018
£’000
202
2018
£’000
(227)
143
(84)
1
(52)
(51)
(135)
2018
£’000
(161)
26
(135)
2018
£’000
1,165
(221)
(25)
(2)
(76)
98
–
91
(135)
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Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
8. Tax (continued)
The “Adjustments to the current year tax charge in respect of prior periods”, as presented in the table above, relates to the
tax treatment of the fixed asset additions for the Company’s development at Angering. In the prior year, the current year
tax charge assumed 25% of the Angmering site costs would be qualifying for capital allowances, but the difference in the
accounting and tax base cost was not taken into account when calculating the deferred tax. This resulted in a deferred
tax adjustment of £124,000 which has been shown in these financial statements within the current year tax credit, as an
adjustment recognised in the period for deferred tax of prior periods.
The total tax charge for the year is made up as follows:
Total current tax charge
Deferred tax charge
Credited/(charged) in Income Statement
(Charged)/credited against other comprehensive income
Total deferred tax (charge)/credit
Total tax (charge)/credit for the year
2019
£’000
(283)
145
(257)
(112)
(395)
2018
£’000
(84)
(51)
178
127
43
Factors affecting the future tax charge
The Company has unrelieved advance corporation tax of £1.14 million (2018: £1.14 million) which is available to be utilised
against future mainstream corporation tax liabilities and is accounted for in deferred tax (see note 21).
The tax charge is impacted by the effect of non-deductible expenses including the impairment of property, plant and
equipment, the charge for the equalisation of Guaranteed Minimum Pensions of members of the defined-benefit pension
scheme and non-qualifying depreciation.
Prior year adjustment to deferred tax liability
The Company identified errors in both its calculation and methodology of its potential deferred tax liability on held-over
gains from property disposals and from accelerated capital allowances in prior accounting periods which had resulted
in an overstatement of its deferred tax liability by £790,000 as at 1 April 2017. A prior year adjustment to the previously
stated values has been made in these Financial Statements to correct this error. The error impacted the deferred tax
liability balance at 1 April 2017 and 31 March 2018 by the same amount. As a result, there is no impact on the income
statement for the year ended 31 March 2018.
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9. 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:
(Loss)/profit before tax
Adjustments:
Non-underlying items (note 2)
Underlying profit/(loss) before tax
Taxation (note 8)
Underlying earnings/(deficit)
Underlying earnings/(deficit) per share (pence)
Diluted earnings/(deficit) per share (pence)
Underlying earnings after tax
Underlying earnings per share
Underlying diluted earnings per share
Non-underlying losses after tax
Losses per share
Diluted losses per share
Total (deficit)/earnings
(Deficit)/earnings per share (pence)
Diluted (deficit)/earnings per share (pence)
Underlying
2019
£’000
(428)
1,873
1,445
(493)
952
35.3p
35.3p
2018
£’000
1,165
225
1,390
(161)
1,229
45.6p
45.5p
Basic
2019
£’000
(428)
–
(428)
(138)
(566)
(21.0)p
(21.0)p
2019
£’000
952
35.3p
35.3p
(1,517)
(56.3)p
(56.3)p
(566)
(21.0)p
(21.0)p
2018
£’000
1,165
–
1,165
(135)
1,030
38.2p
38.1p
2018
£’000
1,229
45.6p
45.5p
(199)
(7.4)p
(7.4)p
1,030
38.2p
38.1p
The number of fully paid ordinary shares in circulation at the year-end was 2,694,790 (2018: 2,694,790). The weighted
average shares in issue for the purposes of the earnings per share calculation were 2,694,790 (2018: 2,694,790).
The shares granted under the Company’s SAYE scheme have not been treated as dilutive as the market price at 31 March
2019 of £3.95 was less than the option price of £3.99.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
10. Dividends
Preference
7% Cumulative First Preference
11% Cumulative Preference
6% Cumulative Second Preference
Included in finance expense (see note 6)
Ordinary
Interim dividend paid in respect of the current year of 7.5p (2018: 7.5p)
Final dividend paid in respect of the March 2018 year end of 15.0p (2017: 15.0p)
2019
£’000
2018
£’000
12
48
12
72
202
404
606
12
48
12
72
202
404
606
Proposed
In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2019 of 15.0 pence
per share which will absorb £404,000 of shareholders’ funds (2018: 15.0 pence per share absorbing £404,000). The
proposed final dividend is subject to approval by shareholders at the forthcoming Annual General Meeting and has not
been included as a liability in these financial statements.
11. Goodwill
Cost
At 1 April 2018 and 31 March 2019
Provision for impairment
At 1 April 2018 and 31 March 2019
Carrying amounts allocated to cash generating units:
Volkswagen, Brighton
Audi, Eastbourne
At 31 March 2019
2019
£’000
2018
£’000
481
195
200
86
286
481
195
200
86
286
For the purposes of the annual impairment testing, goodwill is allocated to a cash generating unit (“CGU”). Each GCU
is allocated against the lowest level within the entity at which the 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 within 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 2019 and 2018.
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 the 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.
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11. Goodwill (continued)
Period of specific projected cash flows (Volkswagen, Brighton)
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 2019 to 31 March 2024. These projections are based on the
most recent budget which has been approved by the Board: the budget for the year ending 31 March 2020. They 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 external sources if 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 -5% (2018: 1%) to 70% (2018: 70%) have been used to forecast cash flows for a further four
years beyond budget, through to 31 March 2024. These growth rates reflect the products and markets in which the CGU
operates. Growth rates are internal forecasts based on both internal and external market information.
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 is 12.4% (2018: 12.4%)
Terminal growth rate
The cash flows after the forecast period are extrapolated into the future over the useful economic life of the CGU using a
steady or declining growth rate that it 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 applied
in the value in use calculations to arrive at a terminal value is 0.5% (2018: 0.5%). Terminal growth rates are based on
management’s estimate of future long-term average growth rates.
Conclusion
At 31 March 2019 no impairment charge in respect of goodwill was identified (2018: 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.
Basis of assessing cash generating units
In the prior year, the Group incorrectly based its impairment tests on cash generating units at a more aggregated level.
This was based on an inappropriate interpretation of the requirements set out in IAS 36 ‘‘Impairment of assets’’, specifically
in respect of the requirements to aggregate individual assets into CGUs at the lowest level at which cash inflows can be
generated independently, where individual assets cannot generate cash inflows. In correcting their approach in the current
period, the directors revisited the impairment tests undertaken in the prior year to assess whether an impairment charge
would have arisen, had the correct basis of CGU assessment been applied in preparing the financial statements for the
year ended 31 March 2018. The result of this exercise was that no impairment charge had arisen at 31 March 2018.
The methodology applied and the key assumptions used in the impairment test as at 31 March 2018 are consistent with
those disclosed in note 11, note 12 and note 13 in relation to Goodwill, Property, plant and equipment, and Investment
properties, respectively.
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Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
12. Property, plant and equipment
Group and Company
Cost or deemed cost
At 1 April 2017
Additions at cost
Disposals
At 31 March 2018
Cost or deemed cost
At 1 April 2018
Additions at cost
Transfer to Investment Properties
Transfers
Disposals
At 31 March 2019
Accumulated depreciation
At 1 April 2017
Charge for the year
Disposals
At 31 March 2018
Accumulated depreciation
At 1 April 2018
Depreciation charge for the year
Impairments for the year
Transfer to Investment Properties
Disposals
At 31 March 2019
Net book amount
31 March 2019
31 March 2018
31 March 2017
Freehold
property
£’000
Assets under
construction
£’000
Leasehold
property
£’000
Fixtures &
fittings
£’000
Plant &
machinery
£’000
36,199
1,218
(7)
37,410
37,410
–
(2,098)
5,436
–
40,748
3,709
472
(1)
4,180
4,180
544
545
(314)
–
4,955
35,793
33,230
32,490
–
3,869
–
3,869
3,869
1,567
–
(5,436)
–
–
–
–
–
–
–
–
–
–
–
–
–
3,869
–
690
–
–
690
690
–
–
–
–
690
322
62
–
384
384
61
–
–
–
445
245
306
368
4,800
106
(30)
4,876
4,876
635
–
–
(707)
4,804
3,149
353
(29)
3,473
3,473
391
–
–
(696)
3,168
1,636
1,403
1,651
5,308
352
(65)
5,595
5,595
553
–
–
(62)
6,086
4,194
205
(60)
4,339
4,339
252
–
–
(56)
4,535
1,551
1,256
1,114
Total
£’000
46,997
5,545
(102)
52,440
52,440
2,755
(2,098)
–
(769)
52,328
11,374
1,092
(90)
12,376
12,376
1,248
545
(314)
(752)
13,103
39,225
40,064
35,623
Short-term leasehold property for both the Company and the Group comprises £245,000 at net book value in the
Statement of Financial Position (2018: £306,000).
Additions to freehold property includes interest capitalised of £55,000 (2018: £127,000) (see note 6).
Depreciation and impairment charges of £1,793,000 (2018: £1,092,000) in respect of Property, plant and equipment is
recognised within administration expenses within the Income Statement.
In assessing the Company’s CGUs for impairment, the directors base their assessment of the recoverable amount on the
higher of fair value less selling costs and value in use. During the year, owing to a decline in the market value of the fixed
assets at one freehold property, the fair value less selling costs of those assets declined by £545,000 to £7,963,000, and
an impairment charge of £545,000 was recognised in the Income Statement, as part of Administration Expenses.
The fair value measurement of the CGU in its entirety is categorised as a Level 3 within the hierarchy set out in International
Financial Reporting Standard 13 ‘Fair Value Measurement’. The following are key assumptions on which the directors
based their determination of fair value less costs of disposal in respect of that CGU:
• Market value of buildings per square foot: £299
• Market value of site per acre: £2,187,000
• Costs of disposal: 1.5% of fair value
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12. Property, Plant and equipment (continued)
Valuations
The freehold properties were revalued externally at 31 March 1995 by Herring Baker Harris, Chartered Surveyors, at open
market value for existing use (which is close to the then fair value). Freehold properties acquired since that date and the
other assets listed above are stated at cost in accordance with IAS 16.
Freehold property is included as follows:
Valuation – March 1995, less depreciation
At cost, less depreciation
Deemed cost, less depreciation at the year-end
At historic cost
Group and Company
2019
£’000
2,937
41,025
43,962
45,458
2018
£’000
3,006
37,117
40,123
38,047
The Company valued its portfolio of freehold premises as at 31 March 2019. 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 2019 of those sites valued was £11.2 million (2018: £10.3 million). In
accordance with the Company’s accounting policies, this surplus has not been incorporated into the accounts.
Depreciation is being charged on the deemed cost of freehold buildings of £42,800,000 (2018: £37,364,000). The balance
relates to freehold land, which is not depreciated.
13. Investment properties
Group and Company
Cost
At 1 April 2018
Transferred from Property, plant and equipment
At 31 March 2019
Accumulated depreciation
At 1 April 2018
Transferred from Property, plant and equipment
Depreciation charge for the year
Impairments for the year
At 31 March 2019
Net book amount:
At 31 March 2019
2019
£’000
7,552
2,098
9,650
659
314
108
400
1,481
8,169
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The Company owns a freehold property which is leased out to another motor retail group, and accordingly accounts
for the property as an investment property. This investment property represents the only asset included in that CGU. In
assessing this property for impairment, the directors based their assessment of the recoverable amount on fair value less
selling costs. During the year, owing to a decline in the market value of the investment property, the fair value less selling
costs of that property declined by £400,000 to £5,269,000, and an impairment charge of £400,000 was recognised in the
Income Statement, as part of Administration Expenses.
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Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
13. Investment properties (continued)
The fair value measurement of the above CGU in its entirety is categorised as a Level 3 within the hierarchy set out in
International Financial Reporting Standard 13 ‘Fair Value Measurement’. The valuation technique that has been used to
measure the fair value less costs of disposal is consistent with that applied in respect of the Company’s freehold property
portfolio and is set out in note 12. The following are key assumptions on which the directors based their determination of
fair value less costs of disposal in respect of that CGU:
• Market value of buildings per square foot: £211
• Market value of site per acre: £2,670,000
•
Initial and reversionary yields: 6.74% and 7.0% respectively
• Costs of disposal: 1.5% of fair value
14. Investments in subsidiary undertakings
The Company owns the whole of the issued ordinary share capital of Caffyns Wessex Limited, Caffyns Properties Limited
and Fasthaven Limited, all of which are now dormant. The amount at which the investments are stated is equivalent to the
net assets of the subsidiaries. All subsidiary undertakings are registered in England and Wales.
Cost
At 31 March 2019 and at 31 March 2018
Provision
At 31 March 2019 and at 31 March 2018
Net book amounts
At 31 March 2019 and at 31 March 2018
15. Inventories
Group and Company
Vehicles
Vehicles on consignment
Oil, spare parts and materials
Work in progress
Company
£’000
476
226
250
2018
£’000
20,352
9,094
944
8
30,398
2019
£’000
21,903
11,502
1,058
5
34,468
Inventories recognised as an expense during the year
Inventories stated at fair value less costs to sell
Carrying value of inventories subject to retention of title clauses
176,594
957
20,789
185,206
854
18,688
All vehicle stocks held under consignment stocking agreements 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. Stocks are held on consignment for a maximum consignment period
of 365 days. Interest is payable in certain cases for part of the consignment period, at various rates linked to the
Finance House Base Rate.
During the year £43,000 was recognised in respect of the write down of vehicle parts inventories due to general
obsolescence (2018: £16,000).
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16. Trade and other receivables
Group and Company
Trade receivables
Allowance for doubtful debts
Other receivables
At 31 March 2019
All amounts are due within one year.
2019
£’000
7,517
(2)
7,515
1,281
8,796
2018
£’000
9,024
(4)
9,020
1,171
10,191
The Company makes an impairment provision for all debts that are considered unlikely to be collected. At 31 March 2019
trade receivables are shown net of an allowance for impairment of £2,000 (2018: £4,000). The charge recognised during
the year was £4,000 (2018: £4,000).
Trade receivables have been classified as loans and receivables under IAS 39.
Not impaired:
Neither past due nor impaired
Past due up to 3 months but not impaired
At 31 March 2019
The movement in the allowance for impairment during the year was:
At 1 April 2018
Impairment recognised in Income Statement
Utilisation
At 31 March 2019
All amounts are due within one year.
2019
£’000
7,465
50
7,515
2019
£’000
4
2
(4)
2
2018
£’000
8,990
30
9,020
2018
£’000
5
4
(5)
4
Credit risk
The Company’s principal financial assets are bank balances and cash, trade receivables, which represent the Company’s
maximum exposure to credit risk in relation to financial assets.
The Company’s credit risk is primarily attributable to its trade receivables which are due on the earlier of the presentation
of the invoice or the expiry of a credit term. The amounts presented in the statement of financial position are net of
allowances for doubtful receivables, estimated by the Company’s management based on prior experience and their
assessment of the current economic environment. Consequently, the directors consider that the carrying amount of trade
and other receivables approximates their fair value.
Before granting any new customer credit terms the Company uses external credit agencies to assess the new customer’s
credit quality and defines credit limits by customer. These credit limits and creditworthiness are regularly reviewed. The
concentration of credit risk is limited due to the customer base being large and unrelated. The Company has no customer
that represents more than 5% of the total balance of trade receivables.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
17. Interest bearing loans and borrowings
Group and Company
Current liabilities
Secured bank loans and overdrafts
Non-current liabilities
Secured bank loans
2019
£’000
2018
£’000
4,875
3,875
12,625
13,500
Note 18 sets out the maturity profile of non-current liabilities.
The directors estimate that there is no material difference between the fair value of the Company’s borrowings and their
book value.
The loan and overdraft facilities provided to the Company of £27.5 million (2018: £28.4 million) are secured by a general
debenture and fixed charges over certain freehold properties.
18. Financial instruments
The Group utilises financial instruments such as bank loans and overdrafts and new and used vehicle stocking loans to
finance its operations and to manage the interest rate and liquidity risks that arise from those operations and from its
sources of finance. The disclosures below apply to the Group and the Company unless otherwise noted.
Group
Fair value of financial assets and liabilities
Primary financial instruments held or issued to
finance the Group’s operations:
Long-term bank borrowings (note 17)
Bank overdraft (note 17)
Other short-term bank borrowings (note 17)
Trade and other payables (note 19)
Trade and other receivables (note 16)
Cash and cash equivalents
Preference share capital (note 22)
2019
Carrying
value &
fair value
£’000
2018
Carrying
value &
fair value
£’000
Classification
Financial liability measured at amortised cost
Financial liability measured at amortised cost
Financial liability measured at amortised cost
Financial liability measured at amortised cost
Financial asset at amortised cost
Financial asset at amortised cost
Financial liability measured at amortised cost
(12,625)
(4,000)
(875)
(38,139)
8,796
3,908
(812)
(13,500)
(3,000)
(875)
(34,093)
10,191
3,375
(812)
The amounts noted in the above table are the same for the Company apart from:
Trade and other payables (note 19)
Financial liability measured at amortised cost
(38,549)
(34,858)
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18. Financial instruments (continued)
As discussed within the section on Principal Accounting Policies on page 51, the Group adopted IFRS 9 with effect from
1 April 2018. The impact of applying IFRS 9 was not significant and did not result in a change to the Company’s previously
stated results and the measurement requirements of IFRS 9 did not result in a change to the carrying amounts of any
financial assets or liabilities as previously stated.
IFRS 9 has introduced new classification requirements in respect of financial instruments, replacing the classification
requirements of IAS 39. This change has affected the classification of financial assets in the current year in that Trade
and other receivables balances, previously classified as ‘‘Loans and receivables’’ in accordance with the requirements of
IAS 39, are now classified as ‘‘Financial assets at amortised cost’’ in accordance with the requirements of IFRS 9.
There has been no change to the classification of financial liabilities arising from the adoption of IFRS 9.
Financial risk management
The Group is exposed to the following risks from its use of financial instruments:
a. Funding and liquidity risk – the risk that the Group will not be able to meet its obligations as they fall due.
b. Credit risk – the risk of financial loss to the Group on the failure of a customer or counterparty to meets its obligations
as they fall due.
c. Market risk – the risk that changes in market prices, such as interest rates, have on the Group’s financial performance.
The Group manages credit and liquidity risk by particularly focusing on working capital management. The Group’s
quantitative exposure to these risks is explained throughout these financial statements while the Group’s objectives and
management of these risks is set out below.
Capital management
The Group views its financial capital resources as primarily comprising share capital, bank loans and overdrafts, vehicle
stocking credit lines and operating cash flow.
The Board’s policy is to maintain a strong capital base to maintain market confidence and safeguard the Group’s ability to
continue as a going concern while maximising the return on capital to the Group’s shareholders. The Group monitors its
capital through closely monitoring and reviewing its cash flows. The capital of the Group is £28.0 million and comprises
share capital, share premium, retained earnings and minor reserve accounts: the capital redemption reserve, the non-
distributable reserve and the other reserve. In order to maintain or adjust the capital structure, the Group may adjust
the level of dividends paid to holders of Ordinary Shares, return capital to shareholders, issue new shares or sell assets
to reduce debt. The Group’s ratio of net bank loans and overdrafts to equity was 49% at 31 March 2019 (2018: 52%).
Capital requirements imposed externally by the Group’s bankers are that bank borrowings should not exceed 70% of the
current open-market value of the Group’s freehold properties which are subject to a fixed charge. The underlying pre-tax
return as a proportion of equity for the year was 5.2% (2018: 5.0%).
The Company has occasionally repurchased its own shares in the market and cancelled them to promote growth
in earnings per share. There is no predetermined plan for doing this although the Company has permission from
shareholders to buy back up to 15% of its equity at any one time. The Company may also purchase its own shares to
satisfy share incentives issued to employees and these shares are then held as treasury shares.
Treasury policy and procedures
The Company’s activities expose it primarily to the financial risks of changes in interest rates. There are no fixed rate
borrowings other than preference shares.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
18. Financial instruments (continued)
Funding and liquidity risk management
The Group finances its operations through a mixture of retained profits and borrowings from banks, vehicle stocking credit
lines and operating cash flow. The Group’s policy is to maintain a balance between committed and uncommitted facilities
and between term loans and overdrafts. Facilities are maintained at levels in excess of planned requirements and at
31 March 2019 the Group had undrawn floating rate borrowing facilities of £13.9 million (2018: £13.5 million) represented
by overdrafts which would be repayable on demand, in respect of which all conditions precedent had been met. The
Group is not exposed to foreign currency risk.
Interest rate management
The objective of the Group’s interest rate policy is to minimise interest costs while protecting the Group from adverse
movements in interest rates. Borrowings at variable rates expose the Group to cash flow interest rate risk whereas
borrowings at fixed rates expose the Group to fair value interest rate risk. The Group does not currently hedge any interest
rate risk.
Interest rate risk sensitivity analysis
As all of the Group’s borrowings and vehicle stocking credit lines are floating rate instruments, they therefore have a
sensitivity to changes in market rates of interest. The effect of a 100 basis points change in interest rates for floating rate
instruments outstanding at the period end, on the assumption that the instruments at the period end were outstanding for
the entire period, would change interest charges by £215,000 (2018: £203,000) before tax relief.
Credit risk management
The Group’s receivables are all denominated in sterling. The Group is exposed to credit risk primarily in respect of its trade
receivables and financial assets. Trade receivables are stated net of provision for estimated impairment losses. Exposure
to credit risk in respect of trade receivables is mitigated by the Group’s policy of only granting credit to certain customers
after an appropriate evaluation of credit risk. Credit risk arises in respect of amounts due from manufacturers in relation to
bonuses and warranty receivables. This risk is mitigated by the range of manufacturers dealt with, the Group’s procedures
in effecting timely collection of amounts due, and management’s belief that it does not expect any manufacturer to fail
to meet its obligations. Finance assets comprise cash balances. The counterparties are major banks and management
do not expect any counterparty to fail to meet its obligations. The maximum exposure to credit risk is represented by the
carrying amount of the financial asset in the Statement of Financial Position.
These objectives, policies and strategies are consistent with those applied in the previous year.
Cash and cash equivalents
Bank balances and cash equivalents
2019
Carrying value
& fair value
£’000
3,908
2018
Carrying value
& fair value
£’000
3,375
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18. Financial instruments (continued)
All borrowings are denominated in sterling. The effective interest rates for all borrowings are based on bank base rates.
Information regarding classification of balances and interest and the range of interest rates applied in the year to 31 March
2019 is set out in the following table:
Current: within one year or on demand
Term loan
Term loan
Trade and other payables
Not repayable within one year
Term loan
Term loan
Revolving credit facility
Preference share capital
* Finance House Base Rate.
† London Interbank Offered Rate.
Carrying value
& fair value
£’000
Classification
Interest
classification
Interest rate
range
500
375
38,139
Amortised cost
Amortised cost
Amortised cost
Floating
Floating
–
FHBR* + 1.75%
LIBOR† + 1.75%
–
Carrying value
& fair value
£’000
Classification
Interest
classification
Interest rate
range
1,875
6,750
4,000
812
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Floating
Floating
Floating
Fixed
FHBR* + 1.75%
LIBOR† + 1.75%
LIBOR† + 1.80%
7% to 11%
The maturity of non-current borrowings is as follows:
Between one and two years
Between two and five years
Over five years
2019
£’000
875
2,500
10,062
13,437
2018
£’000
875
2,625
10,812
14,312
Maturities include amounts drawn under revolving credit facilities which can be drawn in whole or part at any time
and will continue until 2023. The maturities above therefore represent the final repayment dates for these facilities as
at 31 March 2023. If the amounts drawn at the year-end were redrawn at the Group’s usual practice of three-monthly
drawings, the total cash outflows, assuming interest rates remain at the same rates as at the year-end, are estimated on
an undiscounted basis as follows:
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6 –12 months
More than 12 months
Contractual cash flows
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£’000
53
53
4,317
4,423
2018
£’000
50
50
4,402
4,502
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
18. Financial instruments (continued)
In the prior year, in March 2018, a new bank term loan of £7.5 million at a rate of interest of 1.75% above LIBOR was
agreed with HSBC and fully drawn down. The loan has a five-year term and is repayable over 20 years. The proceeds from
the new term loan were used to settle the existing revolving-credit facility that was due to expire in September 2018, which
was then cancelled. At the same date, a replacement revolving credit facility of £7.5 million was agreed at a rate of interest
of 1.80% above LIBOR and is due to expire in March 2023. The balance drawn as at 31 March 2019 was £4.0 million
(2018: £4.0 million).
The Company also has £10.5 million of combined overdraft facilities (£13.0 million during peak periods) from HSBC and
VW Bank and these annual facilities are next due for renewal in August 2019. The directors have every expectation that
these facilities will be renewed based on the current discussions with the bank. The two overdrafts are at a rate of interest
of 1.75% above bank base rate and 2.64% above FHBR.
The existing bank term loan from VW Bank carries a rate of interest of 1.75% above FHBR. The facilities are subject to
covenants tested half-yearly with respect to debt/freehold property and interest cover. No reduction in facilities is expected
to apply consequent to the trading results for the year ended 31 March 2018. The Group has granted security by way of a
general debenture over its assets and a fixed charge over certain freehold property. The total value of those assets at
31 March 2019 in the statement of financial position was £74.1 million (2018: £72.7 million). The ongoing costs associated
with the bank facilities are included in finance expense (see note 6).
The preference shares in issue do not have a maturity date as they are non-redeemable.
19. Trade and other payables
Trade payables
Obligations relating to consignment stock
Manufacturer funding
Social security and other taxes
Accruals
Deferred income
Other creditors
Group total
Amounts owed to Group undertakings
Company total
2019
£’000
17,209
11,502
7,860
1,157
1,493
590
75
39,886
250
40,136
2018
£’000
17,360
9,094
6,324
1,174
1,065
515
250
35,782
250
36,032
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average
credit period taken for trade purchases is 24 days (2018: 22 days).
The Directors consider that the carrying amount of trade payables approximates to their fair value.
The obligations relating to consignment stock are all secured on the assets to which they relate. 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.
Financing for used car stock other than through bank borrowings is shown above as manufacturer funding.
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19. Trade and other payables (continued)
The movements in deferred income in the year are as follows:
At 1 April, as previously stated
Adjustment arising from the implementation of IFRS 15
At 1 April 2018, as restated
Utilisation of deferred income in the period
Income received and deferred in the period
At 31 March 2019
£’000
515
75
590
(1,216)
1,216
590
20. Retirement benefit scheme
Group and Company
Description of scheme
The Company operated a pension scheme, the Caffyns Pension Scheme (“CPS”), providing benefits based on final
pensionable pay until 31 March 2006. With effect from 1 April 2006, the scheme closed to new entrants and all members
in the final salary section were transferred to the career average section for future service and certain benefits were
reduced. Depending upon the proportion of pensionable pay purchased, the Company contribution rates varied between
4% and 15%. The scheme closed to future accrual with effect from 1 April 2010. As part of the 2014 funding valuation it
was agreed that the inflation measure used to set in deferment and in payment increases for pensions in excess of GMP
would change from RPI to CPI for members (or dependants of members) who were in service on or after 1 April 1991.
The Trustees are responsible for the operation and the governance of the Scheme, including making decisions regarding
the Scheme’s funding and investment strategy in conjunction with the Company. The assets of the CPS, administered by
Capita Employee Benefits Limited, are held separately from those of the Company, being held in separate funds by the
Trustees of the CPS. The Scheme Rules do not impose a restriction on the level of Scheme asset that may be reported
under IAS 19. The scheme has been registered with the Pensions Regulator and is subject to the scheme specific funding
requirements as outlined in UK legislation. The liabilities are determined by a qualified actuary based on triennial valuations
using the projected unit method. The most recent valuation was at 31 March 2017 with the next valuation due in March
2020.
Description of expected cash flows to and from the Scheme
As part of the 31 March 2017 funding valuation the Trustees and Company agreed a Recovery Plan with a view to
eliminating the scheme specific funding shortfall by 31 July 2028. Over the year to 31 March 2019 the Company
contributed £511,000 to fund the existing deficit of which £480,000 was in relation to deficit-reduction contributions.
Based on the Recovery Plan, over the year to 31 March 2020 the Company would be expected to contribute £490,800 in
relation to deficit-reduction contributions.
In addition, the Company is expected to make contributions towards risk benefits and to meet the cost of administrative
expenses and Pension Protection Fund levies.
The liabilities of the Scheme are based on the current value of expected benefit payment cashflows to members of the
Scheme over the next 70 to 80 years. The average duration of the liabilities is approximately 16 years.
Risks to the Scheme
The ultimate cost of the Scheme to the Company will depend upon actual future events rather than the assumptions
made. Many of the assumptions made are unlikely to be borne out in practice and as such the cost of the Scheme may
be higher (or lower) than disclosed. In general, the risk to the Company is that the assumptions underlying the disclosures,
or the calculation of contribution requirements, are not borne out in practice and the cost to the Company is higher than
expected.
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Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
20. Retirement benefit scheme (continued)
More specifically, the scheme exposes the Group to actuarial risks such as:
Interest rate risk
The present value of the defined benefit liability is calculated using a discount rate determined by reference to market
yields of corporate bonds whereas the scheme holds a mixture of investments. A decrease in market yield on high quality
corporate bonds will increase the Group’s defined benefit liability, although it is expected that this would be offset partially
by an increase in the fair value of certain of the plan assets.
Investment risk
The plan assets at 31 March 2019 are invested by an appointed fiduciary management company. The investment in
various types of asset funds is intended to reduce risk while maintaining planned returns.
Longevity risk
The Company is required to provide benefits for life for the members of the CPS. Increase in the life expectancy of the
members will increase the defined benefit liability.
Inflation risk
A significant proportion of the defined benefit liability is linked to inflation. An increase in the inflation rate will increase the
Company’s liability. A portion of the plan assets are inflation-linked debt securities which will mitigate some of the effects of
inflation.
The Company has applied IAS 19 (Revised) to this scheme and the following disclosures relate to this standard. The
Company recognises any remeasurement (actuarial gains and losses) in each period in the Statement of Comprehensive
Income.
Results of most recent actuarial valuation
The assumptions which have the most significant effect on the results of the valuation are those relating rates of mortality,
the discount rate used to reflect the present value of scheme liabilities, and the rate of inflation. The last actuarial valuation
as at 31 March 2017 showed that the market value of the CPS assets was £90.4 million and that the actuarial value of
those assets represented 87% of the value of the benefits that had accrued to employees at that date. The deficit arising
of £13.5 million compared to a deficit of £9.5 million under IAS 19 at 31 March 2017 and was due to different assumptions
being adopted for the triennial valuation. The payments agreed with the trustees of the CPS under the Recovery Plan were
for deficit-reduction cash payments to be made in the year ended 31 March 2018 of £480,000 increasing annually from
1 April 2019 by the greater of 2.25% or the increase in shareholder dividends paid until 31 July 2028.
Costs and liabilities of the CPS are based on actuarial valuations. The latest full actuarial valuations carried out at 31 March
2017 were updated to 31 March 2019 by Willis Towers Watson, qualified independent actuaries, for the requirements of
IAS 19. Details of the actuarial assumptions are as follows:
Mortality tables used: females
Mortality tables used: males
Future improvements in mortality
Discount rate
Inflation (CPI)
Pension increase for in-payment benefits (CPI max 5%)
2019
%
97% of SAPS series 2
100% of SAPS series 2
CMI2018 + 1.25%
2.25
2.20
2.25
2018
%
97% of SAPS series 2
100% of SAPS series 2
CMI2017 + 1.25%
2.40
2.10
2.15
The discount rate adopted is based upon the yields on high-quality corporate bonds of appropriate duration.
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20. Retirement benefit scheme (continued)
The sensitivities regarding the principal assumptions used to measure scheme liabilities are set out below:
Change in assumption
Impact on scheme liabilities
Assumption
Discount rate
Rate of inflation
Pension increases
Mortality
Increase / decrease by 0.1%
Increase / decrease by 0.1%
Increase / decrease by 0.1%
Increase / decrease of 1 year
The fair value of assets of the CPS on each class of assets, all of which have a quoted
market price in an active market, are:
LDI Fund
Growth Fund
Equity instruments
+/- £1.4m
+/- £1.1m
+/- £1.0m
+/- £5.0m
Market Value
2019
£’000
18,044
68,258
543
86,845
2018
£’000
18,605
66,800
578
85,983
In the prior year, the trustees appointed a fiduciary manager, SEI Investments (Europe), with the objective of improving the
performance of the assets of the CPS.
Assets of the defined benefit pension scheme (excluding cash in the Trustee bank account) at 31 March 2019 were
invested 21% (2018: 22.0%) in an LDI fund, 78% (2018: 77%) in a return enhancement growth fund and 1% (2018: 1%) in
Caffyns plc shares.
In accordance with the requirements of IAS 19, the expected return on assets is based on the discount rate noted above
of 2.25% and not the return on the underlying portfolio of investments. Consequently, the charge to the Income Statement
for the year ending 31 March 2020 is expected to be approximately £212,000.
Equity instruments include shares in Caffyns plc, which are detailed in note 22.
The assumptions used by the actuary are the best estimates based on market conditions chosen from a range of
possible actuarial assumptions which, due to the timescale covered, may not necessarily be borne out in practice. The
IAS assumptions have been updated at 31 March 2019 and differ from those used for the earlier independent statutory
actuarial valuation explained above.
Mortality assumptions
Life expectancy at age 65 (in years):
Member currently aged 65
Member currently aged 45
2019
Male
21.5
22.8
2019
Female
26.6
25.1
2018
Male
21.9
23.3
2018
Female
24.1
25.6
A liability is included in the Statement of Financial Position under non-current liabilities.
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
20. Retirement benefit scheme (continued)
Analysis of the movement in the net liability for defined benefit obligations recognised in the
Statement of Financial Position
At 1 April
Expense recognised in the Income Statement
Contributions received
Net remeasurement recognised in other comprehensive income
At 31 March
2019
£’000
(9,497)
(1,100)
511
1,510
(8,576)
2018
£’000
(8,554)
(236)
341
(1,048)
(9,497)
On 26 October 2018 the High Court issued its judgment on the Lloyds Banking Group defined-benefit pension scheme
case. The judgment requires occupational pension schemes to equalise members’ benefits to address the unequal effect
of Guaranteed Minimum Pensions. An allowance for the liabilities to increase by 0.9% has been made for the estimated
cost of Guaranteed Minimum Pension equalisation.
Total expense recognised in Income Statement
Interest cost
Interest income on scheme assets
Interest – net (see note 7)
Current service cost
At 31 March
Changes in the present value of defined benefit obligation
At 1 April
Service cost
Past service cost – plan amendments
Interest cost
Actuarial (gain)/losses – experience
– demographic assumptions
– financial assumptions
Benefits paid
At 31 March
Movement in the fair value of scheme assets
At 1 April
Interest income
Actuarial gains – financial assumptions
Contributions from the Company
Benefits paid
At 31 March
80
2019
£’000
2,240
(2,018)
222
27
249
2019
£’000
95,480
27
851
2,240
212
(2,226)
3,180
(4,343)
95,421
2019
£’000
85,983
2,018
2,676
511
(4,343)
86,845
2018
£’000
2,269
(2,067)
202
34
236
2018
£’000
98,906
34
–
2,269
1,017
170
–
(6,916)
95,480
2018
£’000
90,352
2,067
139
341
(6,916)
85,983
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20. Retirement benefit scheme (continued)
The best estimate of contributions payable by the Company in the year ending 31 March 2020 is £516,000. In addition,
the Company is expected to meet the cost of administrative expenses and Pension Protection Fund levies (see note 25(c)).
Expected benefit payments in the year to 31 March 2020 are £4.2 million.
The liabilities of the CPS are based on the current value of expected benefit payment cash flows to members of the
scheme over the next 70 to 80 years. The average duration of the liabilities is approximately 16 years.
Reconciliation of the impact of the asset ceiling
The Company has reviewed the implications of the guidance by IFRIC 14 and has concluded that it is not necessary
to make adjustments to the IAS 19 figures at 31 March 2019 as any surplus would be available to the Company
unconditionally by way of a refund assuming the gradual settlement of plan liabilities over time until all members had left
the CPS.
21. Deferred tax
Group and Company
The following are the major deferred tax assets and liabilities recognised by the Company and movements thereon during
the current and prior reporting period.
Accelerated
tax
depreciation
£’000
Unrealised
capital
gains
£’000
Retirement
benefit
obligations
£’000
Sale of
business
£’000
Short-term
temporary
differences
£’000
Recoverable
ACT
£’000
(1,334)
306
(1,028)
–
(84)
–
(1,112)
(1,112)
–
267
(83)
(1,265)
484
(781)
–
98
–
(683)
(683)
(848)
14
160
–
(928)
–
(1,357)
1,454
–
1,454
–
(19)
178
1,613
1,613
–
102
(257)
1,458
(796)
–
(796)
(52)
–
–
(848)
(848)
848
–
–
–
–
–
–
–
–
6
–
6
6
–
(16)
2
–
(8)
1,136
–
1,136
–
–
–
1,136
1,136
–
–
(301)
–
835
At 1 April 2017,
as previously stated
Prior year adjustment
At 1 April 2017,
as restated
Remeasurement
(Charge)/credit to income
Recognised in other
comprehensive income
At 31 March 2018
At 1 April 2018, as
restated
Transfer
Remeasurement
(Charge)/credit to income
Recognised in other
comprehensive income
At 31 March 2019
Total
£’000
(805)
790
(15)
(52)
1
178
112
112
–
265
(120)
(257)
–
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.
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. The value of surplus ACT is £1,136,000 (2018: £1,136,000) and
Shadow ACT is £672,000 (2017: £781,000). Given the inherent uncertainty over the timing of the utilisation of the ACT, a
partial provision was taken in the year against the carrying value and management have not recognised an overall deferred
tax asset. The carrying value of the ACT at 31 March 2019 is £835,000.
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Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
21. Deferred tax (continued)
Deferred income 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:
Deferred tax liabilities
Deferred tax assets
2019
£’000
(2,293)
2,293
–
2018
£’000
(2,643)
2,755
112
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 are no trading losses (2018: £Nil) available for use in future periods.
Prior year adjustment to deferred tax liability
The Company identified errors in both its calculation and methodology of its potential deferred tax liability on held-over
gains from property disposals and from accelerated capital allowances in prior accounting periods which had resulted
in an overstatement of its deferred tax liability by £790,000 as at 1 April 2017. A prior year adjustment to the previously
stated values has been made in these Financial Statements to correct this error. The error impacted the deferred tax
liability balance at 1 April 2017 and 31 March 2018 by the same amount, thus there is no impact on the income statement
for the year ended 31 March 2018.
22. Called up share capital
Authorised
500,000 7% Cumulative First Preference Shares of £1 each
1,250,000 11% Cumulative Preference Shares of £1 each
3,000,000 6% Cumulative Second Preference Shares of 10p each
4,000,000 Ordinary Shares of 50p each
Allotted, called up and fully paid
170,732 7% Cumulative First Preference Shares of £1 each
441,401 11% Cumulative Preference Shares of £1 each
2,000,000 6% Cumulative Second Preference Shares of 10p each
Total preference shares recognised as a financial liability (see note below)
2,879,298 Ordinary Shares of 50p each
2019
£’000
500
1,250
300
2,000
4,050
171
441
200
812
1,439
2,251
2018
£’000
500
1,250
300
2,000
4,050
171
441
200
812
1,439
2,251
At 1 April 2018, the Company held 2,879,298 Ordinary shares with 184,508 shares held in treasury. There has been no
movement in shares during the year under review or in the prior year. The treasury shares represent shares in the Company
which are held by the Company to fulfil the requirements of any Company’s SAYE scheme for eligible employees. The
market value of these shares at 31 March 2019 was £729,000 (2018: £784,000). Dividend income from, and voting rights
on, the shares held in treasury have been waived.
The 7% Cumulative First Preference shares have rights to a fixed dividend and, in the event of a winding-up, a preference
to the Ordinary shares for a capital repayment. The shares do not have voting rights.
The 11% Cumulative Preference shares have rights to a fixed dividend and, in the event of a winding-up, a preference to
the Ordinary shares for a capital repayment. The shares do not have voting rights.
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22. Called up share capital (continued)
The 6% Cumulative Second Preference shares continue to have voting rights (one vote per Second Preference share),
except in relation to matters which under the Listing Rules (as amended from time to time) are required to be voted on only
by Premium listed securities (being the Ordinary shares).
Although the Articles of Association of the Company give the directors discretion to pay the preference dividend only
if they consider there are adequate profits, such dividends are cumulative. For this reason, the directors consider that
the preference shares have the characteristic of a financial liability rather than equity, and consequently the preference
shares are included as a non-current liability. None of the preference shares have rights of conversion or rights to capital
repayment.
23. Share-based payments
SAYE scheme
Year of grant
2017
Exercise
price
£3.99
Exercise
date
2020
Number at
31 March
2018
124,489
Issued
–
Cancelled
(18,159)
Number at
31 March
2019
106,330
The fair value of the grants made under the SAYE scheme is charged to the Income Statement over the vesting period
based on the valuation derived from an adjusted Black-Scholes model.
The total expense included within operating profit relating to the share-based payments for the year was £56,000 (2018:
£33,000), with an associated tax credit to the Income Statement and Equity of £11,000 (2018: £6,000).
24. Notes to the cash flow statement
Reconciliation of net debt
(Loss)/profit before tax for the year
Adjustment for net finance expense
Adjustments for:
Depreciation of property, plant and equipment and investment properties
Impairment against property, plant and equipment and investment properties
Change in retirement benefit obligations
Loss/(profit) on disposal of property, plant and equipment
Share-based payments
Operating cash flows before movements in working capital
Increase in inventories
Decrease/(increase) in receivables
Increase in payables
Cash generated by operations
Tax paid, net of refunds
Interest paid
Net cash derived from operating activities
2019
£’000
(428)
1,403
975
1,356
945
(511)
6
56
2,827
(1,662)
1,395
2,500
5,060
(120)
(1,181)
3,759
2018
£’000
1,165
1,137
2,302
1,185
–
(341)
(31)
33
3,148
(494)
(2,353)
1,637
1,938
(341)
(935)
662
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
24. Notes to the cash flow statement
Reconciliation of net debt
At 1 April 2017
Repayment
Proceeds
At 31 March 2018
Current liabilities
Non-current liabilities
At 31 March 2018
At 1 April 2018
Repayment
At 31 March 2019
Current liabilities
Non-current liabilities
At 31 March 2019
Bank
loans
£000
3,375
(500)
7,500
10,375
875
9,500
10,375
10,375
(875)
9,500
875
8,625
9,500
Revolving
credit facility
£000
7,500
(7,500)
4,000
4,000
–
4,000
4,000
4,000
–
4,000
–
4,000
4,000
Net
debt
£000
10,875
(8,000)
11,500
14,375
875
13,500
14,375
14,375
(875)
13,500
875
12,625
13,500
In addition to the above, the Company held a bank overdraft, net of cash balance at bank as at 31 March 2019 of £92,000
(2018: cash balance of £375,000).
25. Related parties
The remuneration of the directors, who are key management personnel, is set out in note 5 for each of the categories
specified in IAS 24 Related Party Disclosures. Further information about the remuneration of individual directors is provided
in the Directors’ Remuneration Report on pages 19 to 31.
The 2,000,000 6% Cumulative Second Preference shares have full voting rights along with the Ordinary shares, except
in relation to matters which under the Listing Rules (as amended from time to time) are required to be voted on only by
Premium listed securities (being the Ordinary shares). These shares are beneficially owned by Caffyn Family Holdings
Limited (“Holdings”). Mr S G M Caffyn and Miss S J Caffyn are directors of Holdings. The whole of the issued share capital
of Holdings is held by close relatives of these directors. Holdings controls directly 42.6% of the voting rights of Caffyns
plc. The directors and shareholders of Holdings are also beneficial holders of 585,481 Ordinary shares in Caffyns plc
representing a further 12.5% of the voting rights. It is therefore considered that the Caffyn family is the ultimate controlling
party. As required under the Stock Exchange Listing Rules, the Company entered into a Relationship Agreement with
Holdings on 6 November 2014 whereby Holdings undertakes to the Company that it shall exercise its voting rights and
shall exercise all its powers to ensure (so far as it is properly able to do so) that its associates shall exercise their respective
voting rights and exercise all their respective powers to ensure (to the extent that they are able by the exercise of such
rights to procure) that:
a.
transactions and arrangements between any member of the Group and Holdings (and/or any of its associates) will be
conducted at arm’s length and on normal commercial terms;
b. neither Holdings nor any of its associates will take any action that would have the effect of preventing the Company
from complying with its obligations under the Listing Rules; and
c. neither Holdings nor any of its associates will propose or procure the proposal of a shareholder resolution which is
intended or appears to be intended to circumvent the proper application of the Listing Rules.
Directors of the Company and their immediate relatives control 15.7% of the issued Ordinary share capital of the
Company. Dividends of £24,388 (2018: £23,919) were paid to directors in the year.
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Caffyns plc Annual Report and Accounts 2019
25. Related parties (continued)
Caffyns Pension Scheme
a. Details of contributions are disclosed in note 20.
b. The Caffyns Pension Scheme held the following investments in the Company:
Shares held
125,570 (2018: 125,570) Ordinary Shares of 50p each
12,862 (2018: 12,862) 11% Cumulative Preference Shares of £1 each
Fair value
2019
£’000
496
20
516
2018
£’000
502
19
633
c. During the year to 31 March 2019 the Company paid management fees of £290,000 (2018: £251,000) on behalf of
the Caffyns Pension Scheme. These costs comprise the Pension Protection Fund levy, actuarial advice and external
administration fees.
26. Operating leases
The Group as lessee
The total future minimum lease payments payable under non-cancellable operating leases which fall due as follows:
Group and Company
Within one year
In two to five years
Beyond five years
2019
2016
Land and
buildings
£’000
494
1,497
263
2,254
Other
£’000
–
–
–
–
Land and
buildings
£’000
438
1,751
451
2,640
Other
£’000
–
–
–
–
The total minimum lease payments for land and buildings are until the next break point in the lease. All rentals are fixed
until either the termination of the lease, or in the case of land and buildings, the next break point.
The Company leases two properties comprising motor vehicle showrooms with workshop and parts retail facilities. None
of these leases include contingent rentals. One of these leases is sub-let to a third party.
The Group as lessor
The Company’s gross property rental income earned during the year from sub-letting a leased property and the direct
lease of three (2018: two) investment properties owned by the Company was £708,000 (2018: £789,000). No contingent
rents were recognised in income (2018: £nil).
At the date of the Statement of Financial Position, there were contracts for land and buildings with tenants for the following
lease payments receivable:
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Within one year
In two to five years
Beyond five years
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£’000
902
1,602
1,966
4,486
2018
£’000
681
1,596
1,071
3,348
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Caffyns plc Annual Report and Accounts 2019
Stock Code: CFYN
Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
27. Capital commitments
The Group and Company had no capital commitments at 31 March 2019 (2018: £2.3 million).
28. Operating financial commitment
The Group and Company had contingent liabilities at 31 March 2019 of £0.8 million (2018: £nil).
29. Legal contingent liability
In September 2015, Volkswagen Aktiengesellschaft announced that certain diesel vehicles manufactured by Volkswagen,
Skoda, SEAT and Audi, which contain 1.2, 1.6 and 2.0 litre EA 189 diesel engines were fitted with software which is
thought to have operated such that when the vehicles were experiencing test conditions, the characteristics of nitrogen
oxides (“NOx”) were affected. The vehicles remain safe and roadworthy.
Technical measures have been approved by the German type approval authority, the Kraftfahrt-Bundesamt (the “KBA”)
in respect of Volkswagen and Audi branded vehicles, by the UK type approval authority, the Vehicle Certification Agency
(the “VCA”) in respect of Skoda and certain SEAT branded vehicles, and by the Ministerio de Industria, Energía y Turismo
(the “MDI”) in respect of SEAT branded vehicles. The KBA and VCA have confirmed for all affected vehicles that the
implementation of the technical measures does not adversely impact fuel consumption figures, CO2 emissions figures,
engine output, maximum torque and noise emissions. The MDI is also content that the technical measures be applied to
those SEAT vehicles for which they are the relevant approval authority.
We understand that to date in the region of 870,000 affected UK vehicles have now had the technical measures applied.
Notwithstanding the above, claims on behalf of multiple claimants, arising out of or in relation to their purchase, ownership
or acquisition on finance of a Volkswagen Group vehicle affected by the NOx issue, have been brought or intimated
against a number of Volkswagen entities and dealers, including Caffyns. To date, Caffyns has been named as a Defendant
on 13 claim forms alleging fraudulent misrepresentation, breach of contract, breach of statutory duty, breach of the
Consumer Credit Act 1974 and a breach of the Consumer Protection from Unfair Trading Regulations 2008. As litigation
progresses further, there is the potential for the number of claimants bringing claims against Caffyns to increase.
On 28 October 2016, one of the claimant firms served its application for a Group Litigation Order (“GLO”). The application
for the GLO was finally heard by the Senior Master on 27–29 March 2018. At that hearing the Senior Master indicated that
she would recommend to the President of the Queen’s Bench Division that a GLO be made in the terms of the draft Order
which was before her. The President of the Queen’s Bench Division has since provided his consent to the GLO, and a
sealed copy of the final GLO is currently awaited from the Court.
On 5–6 March 2019, the first case management conference (“CMC”) took place. The Judge ordered that a trial of
preliminary issues should take place on the following issues:
(i) “Is the High Court of England and Wales bound by the finding of the competent EU type approval authority that a vehicle
contains a defeat device in circumstances where that finding could have been, but has not been, appealed by the
manufacturer; and/or is it an abuse of process for the Defendants to seek collaterally to attack the KBA’s reasoning or
conclusions by denying that the affected vehicles contain defeat devices?”; and
(ii) “Where a vehicle’s engine control unit is capable of identifying the New European Driving Cycle test and operates in
a different mode during the test by altering the rate of exhaust gas recirculation to reduce NOx emissions, does the
vehicle contain a 'defeat device' within the meaning of Article 3(10) of Regulation 715/2007/EC?”
The preliminary issues trial will take place 2 December – 13 December 2019.
At present, the litigation is in its early stages, and therefore at this stage it is too early to assess reliably the merit of any
such claim. Accordingly, no provision for liability has been made in these financial statements.
Notwithstanding the early stage of the litigation, Volkswagen has agreed to indemnify Caffyns for the reasonable legal
costs of defending the litigation and any damages and adverse legal costs that Caffyns may be liable to pay to the
claimants as a result of the litigation and the conduct of the Volkswagen Group. The possibility, therefore, of an economic
cost to Caffyns resulting from the defence of the litigation is remote.
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30. Critical accounting judgements and estimates when applying the
Company’s accounting policies
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 benefits obligation
The Company has a defined benefit pension plan. The obligations under this plan 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 according to prevailing economic conditions. Details of assumptions used are provided in note 20.
At 31 March 2019, the net liability included in the statement of financial position was £8.6 million (2018: £9.5 million).
Impairment
The carrying value of property, plant and equipment and goodwill are tested annually for impairment as described in
notes 11, 12 and 13. 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 11). As a result of this review the
directors considered it appropriate to impair the carrying value of property assets by £0.95 million (2018: £Nil) (see notes
11, 12 and 13).
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.
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. During the year, the Company partially impaired the value of the
ACT by £301,000 in order to avoid recognising an overall deferred tax asset. Therefore, at 31 March 2019, the carrying
value of surplus ACT is £835,000 (2018: £1,136,000) and shadow ACT is £672,000 (2018: £781,000). 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 2027.
Support arrangements
On occasion, the Company can be assisted in the relocation, development and support of certain of its businesses.
On receipt of these payments the Company forms a judgement whether the payment is capital in nature, in which case the
payment is deducted from the capital cost of the development in question, or revenue in nature, in which the payment is
amortised over a two-year period from the date of relocation.
During the year the Group received a contribution of £255,000 from a brand partner toward the cost of developing the
Angmering dealership. The contribution agreement was not specific as to whether the amount contributed was in respect
of the capital expenditure incurred by the Group, or in respect of other operating activities (such as marketing) which the
Group was required to undertake as part of the relocation.
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Stock Code: CFYN
Notes to the Financial Statements
for the year ended 31 March 2019
30. Critical accounting judgements and estimates when applying the Company’s
accounting policies (continued)
Consequently, the Directors needed to apply judgement in determining the appropriate accounting treatment. Having
considered all information available, including the contribution agreement and past correspondence with the brand partner,
the Directors determined it appropriate to account for the contribution as capital in nature, and deducted the amount
received from the carrying amount of the property, plant and equipment assets associated with the Angmering dealership.
The Directors considered an alternative treatment, including recognising the amount received over the rolling two-year term
of the franchise agreement. This would have resulted in an increase in profit of £96,000 during the year ended 31 March
2019 and an increase in net assets of the same amount as at 31 March 2019, with the remaining £159,000 standing to be
recognised over the remaining contractual period as follows: year ending 31 March 2020: £127,500, year ending
31 March 2021: £31,500.
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26697 Caffyns AR2019.indd 88
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caffyns.co.uk
Caffyns plc Annual Report and Accounts 2019
Five Year Review
(adjusted for discontinued operations)
Income Statement
Revenue
Underlying operating profit
Finance expense
Underlying profit before tax
Non-underlying items
Profit before tax from discontinued operations
Profit/(loss) before tax
Profit/(loss) after taxation
Basic earnings/(deficit) per ordinary share
Underlying earnings per ordinary share
Dividend per ordinary share payable in respect
of the year
2015
£’000
2016
£’000
Restated
2017
£’000
Restated
2018
£’000
172,400
2,480
(1,184)
1,296
8,966
1,176
11,438
9,255
335.5p
43.6p
186,401
2,544
(1,079)
1,465
(222)
1,392
2,635
2,487
90.1p
48.8p
212,581
2,981
(930)
2,051
(392)
4,623
6,282
5,123
186.3p
58.0p
215,868
2,325
(935)
1,390
(225)
–
1,165
1,030
38.2p
45.6p
2019
£’000
209,246
2,626
(1,181)
1,445
(1,873)
–
(428)
(566)
(21.0)p
35.3p
20.25p
21.75p
22.50p
22.50p
22.50p
These results are shown exclusive of the Land Rover business which was sold in April 2016.
As at year end
Shareholders’ funds
Property, plant and equipment*
Bank overdrafts and loans (net)
Bank overdrafts and loans/shareholders’ funds
(gearing)
Retirement benefit liability
* Includes Investment property and assets held for sale.
24,494
37,984
10,133
41%
5,388
27,180
39,385
11,156
40%
4,980
28,326
42,609
8,554
30%
8,554
27,913
46,957
14,000
50%
9,497
27,975
47,394
13,592
49%
8,576
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26697 17 June 2019 9:30 am Proof 790Our dealershipsAUDIBRIGHTON: EASTBOURNE: WORTHING: 200 Dyke Road, Brighton, BN1 5AT (01273 553061)Edward Road, Eastbourne, BN23 8AS (01323 525700)Roundstone Lane, Worthing, BN16 4BD (01903 231111)SEATTUNBRIDGE WELLS: North Farm Industrial Estate, Tunbridge Wells, TN2 3EL (01892 515700)SKODAASHFORD: TUNBRIDGE WELLS: The Boulevard, Ashford, TN24 0GA (01233 504600)North Farm Industrial Estate, Tunbridge Wells, TN2 3EL (01892 515700)VAUXHALLASHFORD: Monument Way, Orbital Park, Ashford, TN24 0HB (01233 504604)VOLKSWAGENBRIGHTON: EASTBOURNE: HAYWARDS HEATH: WORTHING: Victoria Road, Portslade, BN41 1YD (01273 425600)Lottbridge Drove, Eastbourne, BN23 6PW (01323 647141)Market Place, Haywards Heath, RH16 1DN (01444 451511)Nightingale Avenue, Worthing, BN12 6FH (01903 837878)VOLVOEASTBOURNE: Lottbridge Drove, Eastbourne, BN23 6PJ (01323 418300)MOTORSTOREASHFORD: Monument Way, Orbital Park, Ashford, TN24 0HB (01233 504624)HEAD OFFICEEASTBOURNE: Meads Road, Eastbourne, BN20 7DR (01323 730201)Caffyns plc Annual Report and Accounts 2019Stock Code: CFYN26697 Caffyns AR2019.indd 9017/06/2019 09:32:00 caffyns.co.uk
Caffyns plc Annual Report and Accounts 2019
Caffyns plc Annual Report and Accounts 2019
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26697 Caffyns AR2019.indd 6
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17/06/2019 09:31:35
26697 17 June 2019 9:30 am Proof 7Caffyns plcMeads RoadEastbourneEast SussexBN20 7DRcaffyns.co.ukCaffyns plc Annual Report 201926697 Caffyns AR2019.indd 117/06/2019 09:31:17