The bad news is the problem of dealing with eight MG Rover dealerships following the carmaker’s collapse, which has cost Caffyns more than £2m. The good news is that a payout from Customs and Excise for the refund of VAT on demonstrators pitched in to the same financial year and is £3.4m.
Given that fortunate timing, the 96-year-old company has been able to lift the dividend by a confident 6.6%. The share price rose a few pence on the day of announcement. In the last five years it has quadrupled to £8 and reflects persistent rumours of a bid approach.
Caffyns has been a major ally of MG Rover and still had 21 outlets in the early Nineties. Re-franchising has been going on with increasing urgency in the Eastbourne-based group’s business area of Kent and Sussex.
Two years ago, Caffyns made £888,000 doing £35.2m of MG Rover business. Last year business worth £28.5 carried an operating loss of £305,000. The loss in the second half was £750,000.
Seaford and Ramsgate dealerships are closed. Tunbridge Wells has switched to Vauxhall with Chevrolet. Brighton is also changing to Vauxhall. Eastbourne, Uckfield and Worthing are “being re-franchised” and Lewes is to become a used car operation and remain an MGR service point.
The VAT refund for the period 1973 to 1996 was £1.5m with interest compensation of £2m. That took total group turnover up a shade to £155.7m and pre-tax profits up from £3.1m to £3.3m.
Operating profits fell more than £1m to £2.8m.
Going forward, the group is majoring in Vauxhall and with VW Group brands and is adopting dominant market area strategies for Kent and Sussex.