Caffyns plc (“Caffyns” or the “Company”)
Trading update
and
Expected dates for publication of full year results and AGM
The final trading days of the Company's financial year to 31 March 2020 were impacted materially when the Company was required to temporarily close all its car showrooms and most of its aftersales operations on 24 March 2020, following UK Government restrictions implemented to deal with the nationwide covid-19 pandemic. With our showrooms closed, only on-line and telephone sales operations were able to continue, alongside three aftersales operations which provided essential support for key workers. As would be expected, this had a significant adverse impact on the financial performance for March 2020, a key month for the Company due to the bi-annual registration plate change on the first of that month. However, as previously reported, trading in the period until the beginning of March 2020 was 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 for the year to 31 March 2020.
The Company has now re-started its aftersales operations at all its sites and in line with Government permission, will re-open showrooms from 1 June 2020. It is anticipated that such a re-opening will allow the Company and its auditors to complete all necessary audit procedures to enable the Company to announce its full year results on 17 July 2020. On that basis, the Annual General Meeting will be scheduled for 24 September 2020.
In response to the impact of covid-19, the Company has implemented numerous cost saving measures across many areas of the business, including making extensive use of the Government's Job Retention Scheme, with approximately 80% of employees furloughed in April. The number of furloughed employees has reduced in May and is expected to reduce further in June once the showrooms are able to re-open. As part of the cost savings exercise, an annual salary ceiling of £37,500 was implemented for all active employees, including the executive directors and the chairman of the Company, for the month of April. The non-executive directors of the Company also agreed a significant reduction to their fees. These salary reductions for employees are being unwound in stages, with most non-furloughed employees returning to 80% of their contractual salary from 1 May with the exception of the full-time executive directors who moved to 50% of their contractual salary from 1 May.
The response from our employees to this crisis has been outstanding and the Board would like to particularly thank those that have remained active throughout the lockdown period to ensure that we have been able to restart the business quickly and effectively. We are very focused on the health and safety of our employees and customers and the re-opening of showrooms will be undertaken in a responsible and socially distanced way.
The Company has a very strong balance sheet which includes significant tangible fixed assets (including freehold land and buildings) with an unaudited book value of £47 million at 31 March 2020. However, given the level of Government support of which the Company has taken advantage and in order to conserve cash resources, the Board has decided that it will not recommend a final dividend in relation to the year ended 31 March 2020.
The Company continues to enjoy supportive relationships with its banking partners, HSBC and Volkswagen Bank and, prior to the year-end, additional working capital facilities were approved by HSBC, providing additional headroom against our forecast cash flow requirements. Unaudited net bank borrowings at 31 March 2020 were £16 million, with available but undrawn facilities in excess of a further £10 million.
Full use has also been made of inventory stocking facilities and the Company's manufacturer partners continue to be very supportive, offering extended new vehicle funding and reduced funding costs.
As a consequence, 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.