Caffyns has increased profit before tax from £1.45m to £1.52 million for its preliminary results for the year ended March 31, 2013.

Underlying profit before tax over the period increased from £564,000 to £1.22m. The group closed three underperforming businesses and sold another four.

Caffyns represents Audi, Land Rover, Seat, Skoda, Vauxhall, Volvo and Volkswagen. It is also an authorised reparier for Jaguar.

Simon Caffyn, Caffyns chief executive said: “We are pleased to have improved our underlying trading profits after a period of restructuring.

“We continue to invest the proceeds from the sale of properties and closed operations into larger business opportunities in stronger markets to deliver higher returns on capital.

“Fewer, bigger sites will enable us to deliver performance improvement.

“Our improved profitability in the second half of last year has continued into the current financial year."

Like for like new car sales increased over the period by 18.5% and underlying revenue also increased by 10.6%. Caffyns said the group’s premium and premium-volume franchises continue to perform well and new car margins remained firm, with new car gross profits ahead of expectations.

Used car unit sales in the year were up 2.3% on a like for like basis with the second half up 12% on a like for like basis.

The business saw a 2.4% reduction in service revenues due to a reduction in new car registrations impacting on the 0-5 year old servicing market.

Caffyns has completed expansion work on its VW site in Brighton and work on a new VW site in Worhting started in May with an expected completion early in 2014. The anticipated cost of the development at £4.75m will be partially offset by the sale of the existing site occupied by VW in Goring.

The group has also expanded its VW site in Haywards Heath. The Seat franchise has also been added to its Tunbridge Wells dealership alongside its Skoda business.

Caffyns sold its loss-making Ford and Volvo business in Brighton in July 2012 and it also closed its Ford dealership in Alton in September 2012.

Caffyns acquired a freehold property next to its Land Rover dealership in Lewes in February this year to expand its aftersales activities. Redevelopment work has also started on a redundant bodyshop building in Ashford to create more workshop and showroom space for the Skoda franchise there.

Caffyns announced in July 2011 that it would cease representation of the Vauxhall franchise in Ashford and Tunbridge Wells, but has now decided to retain the Vauxhall franchise in Ashford following “considerably improved performance there”.

Caffyn said: “We have seen signs of an improvement in consumer confidence with the new car market up 8.9% in the UK in the four months to April 2013.

“However, the market in Europe remains weak and this could affect the levels of manufacturer support available to the UK market. We remain strategically well placed with resilient premium franchises to take advantage of any improvement in economic conditions.”