Listed car dealer Caffyns has this morning announced revenues up 8.9% to £210 million and underlying profit before tax up 14% to £2.47m for the year to March 31, 2015.
Profit before tax rose to £11.44m from £1.57m last year.
New unit sales were up by 6.6% on a like for like basis in the period, while total UK new car registrations rose by 7.5%. Within this, the private and small business sector in which Caffyns operates rose by 4.9%.
As the company celebrates its 150th year, chief executive Simon Caffyn said there had been “some pressure on new car margins, particularly in the first three months of 2015 but, despite this, new car gross profits were up on last year”.
Used car unit sales were up 4.3% on a like for like basis building on an improvement of 17.5% last year. Used car margins and gross profits both improved, he said.
And like for like service sales increase 8.9%. Overall aftersales were up 5.7%. Our parts sales grew at 2.7% like for like.
Underlying earnings per share for the year were 78.1p (2014: 75.5p). Basic earnings per share were 335.5p (2014: 51.0p).
Caffyn said in the results’ statement: “Our strategy to focus on representing premium and premium-volume franchises is proving successful.
“We continue to invest the proceeds from the sale of properties and closed operations by acquiring additional land to grow our existing businesses.
“Relocation of our Worthing Audi business to a larger site will allow it to expand its trading performance. We are concentrating on larger business opportunities in stronger markets to deliver higher returns on capital from fewer but bigger sites.
“We are also more effective in being able to deliver performance improvement, although we remain dependent on the key months of September and March.
“Our focus on improving operational processes has seen an encouraging increase in used car sales and in aftersales. Our success in increasing our new and used sales coupled with our improved aftersales retention programmes will enable us to further enhance profitability.
“Having recently opened an all new Volkswagen facility in Worthing and completed the updating of other key dealerships, we are well placed for expansion.
“At Land Rover Lewes we have increased the site capacity for the growing potential of the business and relocated the aftersales facility to the same site as our showroom.
“This has delivered enhanced efficiencies which, together with strong new and used car sales, have resulted in improved profits.
All our franchises are on two year rolling contracts, apart from Land Rover which operates a five year fixed term contract.
“This comes up for renewal in May 2016 and we are currently in discussion with Jaguar Land Rover concerning our territory.
“The economic growth in the UK remains encouraging and manufacturers continue to support our market with strong finance led offers, particularly on new personal contract plans as well as, increasingly, on used car plans.
“Though growth in the private and small business sector has slowed in 2015, and new car margins are slightly reduced, consumer confidence appears to be remaining steady.
“As the availability of two to three year old used cars has improved, we plan to further increase our used car sales from our larger display areas. The increase we have already seen in the size of our overall customer base, has positively affected the aftersales business and we expect this to grow further.
“Our improved profitability combined with our excellent franchise representation in larger and more efficient premises leaves us well placed to take advantage of these improved economic conditions.”
He said the profit improvement came despite disruption from further redevelopment work at a number of Caffyns’ sites.
In Ashford the showroom and used car areas of the Vauxhall dealership were refurbished to the new corporate standards which affected trading through to June 2014. And in October 2014 it re-opened the old Skoda showroom in Ashford as a used car centre. The total cost was £0.3m.
Caffyns relocated its Volkswagen business in Worthing to a new 15 car showroom and 12 bay workshop at the beginning of April 2014. It is trading at a “substantially increased level”.
In August 2014 it completed the refurbishment and expansion of the showroom and used car display at its Eastbourne Audi dealership, costing £0.9m.
In September 2014 the group completed the construction of a Seat dealership in Tunbridge Wells alongside the refurbished Skoda dealership (£0.8m).
Having acquired the adjoining land and secured improved access to the front of the site at the Eastbourne Volkswagen business in December 2013, Caffyns intends to build a new 12 car showroom with increased used car display and greater workshop capacity. Redevelopment is due to start this summer at an expected total cost of £2.7m.
The redevelopment and expansion of the Land Rover facility in Lewes was also completed at a cost of £0.4m.
During the year, Caffyns sold three surplus freehold sites.
Following the grant of a planning approval for a mixed development of a vacant site in Lewes, contracts for sale were exchanged in September 2014 and the proceeds of £858,000 received in November. The contract for the sale of Caffyn’s vacant freehold site in Hailsham became unconditional and the proceeds of £1.6m were received in December 2014. Contracts for the sale of an investment property in Uckfield were exchanged in March 2015 and the proceeds of £950,000 received on April 1, 2015.
“We now have an excellent property portfolio, but more importantly we have a very high level of professionalism and ability amongst our people.
“As always I am proud of and grateful for the loyalty, hard work and positive approach shown by all employees throughout the company which of course is responsible for this success,” Caffyn said.
Caffyns' results highlights
- Underlying profit before tax up 14% to £2,472,000 (2014: £2,166,000)
- Net non-underlying credit before tax of £8,966,000 (2014: charge of £600,000) principally due to change to defined benefit pension scheme
- Profit before tax up to £11,438,000 (2014: £1,566,000)
- Like for like new car unit sales up 6.6% against 4.9% in its market sector
- Like for like used car unit sales up 4.3% on top of a 17.5% increase last year
- Net cash generated by operating activities of £3.04m (2014: £5.37m)
- Underlying earnings per share of 78.1p (2014: 75.5p)
- Basic earnings per share increased to 335.5p (2014: 51.0p)
- Recommended dividend per ordinary share for year increased by 12.5% to 20.25p
- Shareholders' equity at 31 March 2015 £24.5m (2014: £17.9m)
- Property portfolio revalued at March 31, 2015 - £8.49m surplus
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