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Caffyns wary about results

Caffyns made no profit in the second half of the year to March 31, 2006, as it struggled to deal with the closure of MG Rover.

Operating profit before exceptionals fell from £2.47m to £1.2m year-on-year – all of it reported in the first half of the year.

Chief executive Simon Caffyn says the profit “represented a good result in the circumstances”.

It was not just MG Rover that was against him: “The new car markets in the private and business sectors in which we operate fell 14.8% in the year to December 2005 and at March was down a further 5.38%.”

Caffyn also gives a veiled warning about the future. “Some of our new franchises are already contributing positively but full potential can take three years to achieve.”

The share price barely moved on the day of announcement last week (June 3) and is hovering just below its all-time high of 950p. Five years ago, the shares traded at only 375p.

City analysts are surprised Caffyns has been revalued on a par with the rest of the sector, as it is the consolidation in the sector that has pushed shares sharply ahead.

Industry analyst Rob Golding says: “Caffyns still has a substantial family shareholding and a structure of voting preference shares, which should make it bid-proof.”

The only major dip in the share price followed a profit warning on March 14, saying results would not turnaround as quickly as expected. But the price quickly recovered.

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