Caffyns has praised its employees' response to the COVID-19 crisis as “outstanding” as it revealed the mitigation measures taken by the business in a trading update published this morning (May 27).
The AM100 retail group took the opportunity to thank those who remained active throughout the lockdown period to ensure that it had been “able to restart the business quickly and effectively”.
As part of cost-saving measures designed to mitigate against the impact of the COVID-19 crisis, Caffyns revealed that around 80% of employees were furloughed in April, while the annual salary ceiling of £37,500 was implemented for all active employees, including the executive directors and the chairman, for the month of April.
“The non-executive directors of the company also agreed a significant reduction to their fees” today’s statement, issued via the London Stock Exchange, said.
It added: “These salary reductions for employees are being unwound in stages, with most non-furloughed employees returning to 80% of their contractual salary from May 1 with the exception of the full-time executive directors who moved to 50% of their contractual salary from May 1.”
Back in November, Caffyns' revealed 2019 half-year pre-tax profits had plunged 92% from the same period in 2018 as it battled Volkswagen and Audi supply problems and “a difficult economic and political background”.
The franchised dealer group’s revenues for the period also fell to £100m (H1 2018: £106m) during the preiod, which yielded profits before tax of £56,000, down from £704,000. Operating profit fell from £1.36m to £836,000.
At the time, chief executive Simon Caffyn said: “Whilst disappointing, the results should be read against a difficult economic and political background. This was compounded by supply problems for new cars.
“These supply issues have however improved, and we remain cautiously optimistic about the future outlook."
In today's trading update Caffyns said that the impact of the COVID-19 coronavirus had had a "significant adverse impact" on the final trading days of the company's financial year to March 31, 2020, which would be detailed in its annual financial results on July 17.
However, it added that trading in the period until the beginning of March 2020 had been broadly in-line with the board's expectations and, subject to the finalisation of certain audit review procedures which can only be completed once trading has recommenced, the board "still expects to report an underlying profit".
During the lockdown, Caffyns said that three of its aftersales operations had remained open to provide essential support for key workers.
Caffyns asserted that it had been able to retain a “very strong balance sheet” during its 2020 financial year, which included significant tangible fixed assets with an unaudited book value of £47 million.
However, it said that given the level of Government support of which the company has taken advantage and in order to conserve cash resources, the board had decided that it will not recommend a final dividend in relation to the year ended March 31, 2020.
Caffyns’ unaudited net bank borrowings at March 31, 2020, were £16m, with available but undrawn facilities in excess of a further £10m.
The statement said: “The Board is confident that the Company has sufficient liquidity to effectively manage its exit from the lockdown restrictions and to capitalise on the trading opportunities which are expected to arise as markets return to more normal levels of activity.”