Untitled

Caffyns plc

Annual Report for the year ended

31 March 2022

Caffyns plc Annual Report 2022

www.caffyns.co.uk

Caffyns plc Annual Report 2022

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Like-for-like comparisons exclude the impact of the

Lotus and MG businesses at Ashford, both of which

were opened during the year under review. All other

businesses operated for the full twelve-month period in

both years

Summary

2022

£’000

2021

£’000

Revenue 223,928 165,085

Underlying EBITDA (see note below and note 3) 7,712 5,124

Underlying profit before tax (see note below) 4,574 1,876

Profit before tax 4,385 1,424

pence pence

Underlying earnings per share (see note 9) 117.0 66.0

Earnings per share 111.3 52.4

Proposed final dividend per ordinary share 15.0 —

Dividend per ordinary share for the year 22.5 —

Note: Underlying results exclude items that have non-trading attributes due to their size, nature or incidence.

Non-underlying items for the year totalled a charge of £189,000 (2021: £452,000) and are detailed in Note 2

to these consolidated financial statements. Underlying EBITDA of £7,712,000 (2021: £5,124,000) represents

operating profit before non-underlying items of £5,690,000 (2021: £3,142,000) adding back depreciation and

amortisation of £2,022,000 (2021: £1,982,000).

Overview

• Revenue up 36% to £223.9 million

(2021: 165.1 million) due to a buoyant

used car market

• Like-for-like new car unit deliveries up

by 7%

• Like-for-like used car unit sales up by

24%

• Like-for-like aftersales revenues up by

19% to £19.2 million

• Underlying profit before tax of

£4.6 million (2021: £1.9 million)

• Final dividend of 15.0 pence per

Ordinary share (2021: nil pence per

Ordinary share)

• Net bank borrowings at 31 March

2022 as disclosed in note 21 were

£10.4 million (2021: £10.3 million)

• Property portfolio revaluation at

31 March 2022 showed a

£13.3 million surplus (2021: £12.3

million surplus) to net book value (not

recognised in these accounts)

Results at a Glance

Contents

Our Business

Results at a Glance

Operational and Business Review 02

Strategic Report 07

Governance

Board of Directors 16

Chairman’s Statement on

Corporate Governance

Directors’ Remuneration Report 23

Report of the Directors 35

Directors’ Responsibilities

Statement

Financials

Report of the Independent Auditor 41

Income Statement 48

Statement of Comprehensive

Income

Statement of Financial Position 50

Statement of Changes in Equity 51

Cash Flow Statement 52

Principal Accounting Policies 53

Notes to the Financial Statements 58

Other Information

Five-year Review 86

Revenue

(£’000)

165,085

223,928

215,868

209,246

195,787

Underlying PBT

(£’000)

1,876

4,574

1,390

1,445

251

Underlying earnings/(deficit)

per ordinary share (pence)

66.0

117.0

45.6

35.3

(4.9)

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business

Operational and Business Review

“The underlying profit before

tax of £4.6 million was a

significant improvement

on the prior year. Despite

limited new car supply,

operating profits improved

due to very buoyant trading

in used cars and our

strong focus on improving

operational effectiveness.”

Summary

The underlying profit before tax of

£4.6 million for the financial year

ended 31 March 2022 (“the year”)

was a significant improvement on the

£1.9 million recorded for the prior year.

Full year turnover increased by 36% to

£223.9 million (2021: £165.1 million),

predominantly from significantly higher

levels of car deliveries. Operating profit

improved significantly to £5.7 million

(2021: £2.9 million) due to very buoyant

trading in used cars and a strong focus

on improving operational efficiency.

Our statutory profit before tax for the year

was £4.4 million (2021: £1.4 million). Basic

earnings per share for the year were

111.3 pence (2021: 52.4 pence).

Underlying earnings per share for the year

were 117.0 pence (2021: 66.0 pence).

The Company’s defined benefit pension

scheme deficit, calculated in accordance

with the requirements of IAS 19

Pensions, reduced significantly to

£2.8 million at 31 March 2022

(2021: £9.4 million). Investment gains in

the Scheme’s investments were strong

and combined with reductions to the net

present value of the Scheme’s liabilities.

The Company also made an additional

£1.0 million cash contribution to the

pension scheme in the year to assist with

reducing the deficit position.

The Company continues to own all but

two of the freeholds of the properties

from which it operates, and this provides

the dual strengths of a strong asset base

and minimal exposure to rent reviews.

The board was able to restart the

payment of dividends during the year

with an interim dividend of 7.5 pence.

The board is proposing a final dividend

for the year of 15.0 pence (2021: nil

pence per Ordinary share).

Net bank borrowings at 31 March 2022

were £10.4 million (2021: £10.3 million),

which equated to gearing of 30%

(2021: 37%).

Covid-19

The Company started the financial year

with its car showrooms temporarily

closed and able to operate only on a

“click-and-collect” basis. However, by

mid-April 2021, we were able to fully

reopen and for the remainder of the

financial year were able to operate as

usual, albeit with certain social distancing

precautions remaining in place.

In April 2021, 88 employees, around

one-fifth of the total workforce, remained

on furlough under the Government’s

Coronavirus Job Retention Scheme, but

we were able to return those employees

to the workplace over the spring and

summer months and we ceased to

utilise the scheme from August. Grants

received in the year amounted to

£0.1 million. The business also continued

to benefit from the business rates holiday

for retail premises, which provided a

year-on-year saving of £0.8 million. This

holiday expired on 31 March 2022.

We remain grateful to the Government

for the actions that it took to protect

employment during lockdown periods

where activity levels were suppressed

and there was insufficient work to occupy

certain employees.

Whilst covid-19 infection levels remained

at elevated levels it was pleasing to

see a waning of the impact of the

covid pandemic on the business as

the year progressed. Through careful

management of the workplace, we

were able to successfully manage staff

absences and to continue to offer an

environment that our customers were

happy to visit and transact in.

Caffyns plc Annual Report 2022

“I am very grateful for

the dedication of our

employees and the effort

they applied throughout

the year to provide our

customers with a first-class

experience.”

Omni-channel retailing

Our omni-channel offering allows

customers to interact with us in a way

that suits them best, from the traditional

showroom discussion through to a

fully online sales process, and any

combination in between. We learnt a

great deal during the lockdown periods

of the pandemic and were able to

introduce new options which significantly

advanced our on-line selling capabilities.

These have been further enhanced in

the current year allowing us to provide

our customers with a full omni-channel

approach to purchasing their vehicle.

Our people

I am very grateful for the dedication of

our employees and the effort they applied

throughout the year to provide our

customers with a first-class experience.

Their response to the covid-19 pandemic

has been outstanding. We have been,

and remain, very focused on the health

and safety of our employees and

customers, ensuring that our showroom

and workshop activities are undertaken

in a responsible and socially distanced

way. As a result of the hard work and

professionalism shown by everyone

involved, we have successfully navigated

the covid pandemic to leave the business

in a strong position.

The Company has a long tradition of

investing in apprenticeship programmes.

Despite the pressures on the business,

we have kept our apprenticeship

numbers at a high level and continue

to see the benefits flow through the

business as more apprentices complete

their training and become fully qualified.

Due to our apprentice numbers, we

continue to fully utilise our Government

apprenticeship levy payments within the

stipulated time limits.

We remain firmly committed to the

long-term benefits of apprenticeships

and our recruitment programme

continues with the aim of maintaining

a healthy complement in the coming

year which will assist the Company to

continue to grow.

New and used car sales

Total UK new car registrations in the year

increased by 4% as the impacts of the

covid-19 pandemic waned. However,

the global shortage of semiconductors

throughout the year disrupted the

production of new cars and, more

recently, the conflict in Ukraine added

additional strains to supply chains, further

restricting increases in registrations.

Within the total, new car registrations in

the private and small business sector,

in which we principally operate, rose by

19%. Our own new car deliveries rose

by 7% on a like-for-like basis, which

was in line with the movement for those

manufacturers that we represent.

Our volume of used cars sales also rose,

by 24%, on a like-for-like basis. The

shortage of new car product created a

strong used car market and, together

with enhanced controls, we were able to

retain significantly enhanced unit margins.

Great efforts have been made over the

last twelve months to further enhance

and develop our omni-channel offering

for our customers and we continue to

see this providing a major opportunity

for further growth. The number of used

cars sold again exceeded the number

of new cars sold in the year. Procedures

have been strengthened to monitor and

control used car stock turn and yield and

to broaden our sources of replenishing

inventory.

The Company’s total revenues for the

year increased by £58.8 million over the

previous year, of which £56.6 million

arose from the from the sale of new and

used cars.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business

Operational and Business Review continued

“We remain focused

on generating further

improvements in used car

sales, used car finance and

service labour sales. These

three areas will be key to

achieving further increases

in profitability in the coming

years.”

Aftersales

The impact of the covid-19 pandemic

on our aftersales business reduced

during the year and we were encouraged

that our service revenues in the year

rose by 8% on a like-for-like basis. We

continue to place great emphasis on our

customer retention programmes and in

growing sales of service plans. Our parts

business also reported higher sales, up

by 25% on a like-for-like basis from the

previous year.

Operations

Our Audi businesses produced another

exceptional performance in the year,

significantly growing both their new and

used car deliveries.

The performance of our Volkswagen

businesses improved in the year,

boosted by the strength of the brand,

the excellent model range, and exciting

new products.

Our Volvo businesses also enjoyed

very strong performances in the year.

Both businesses, in Worthing and

in Eastbourne, performed very well.

The Eastbourne result was especially

commendable given the business was

heavily disrupted by building works

throughout much of the year as the site

underwent a significant refurbishment.

The brand continues to reap the benefits

of an excellent model range of cars,

which are being positively received by

customers.

In Tunbridge Wells, our combined

SEAT/Skoda business continued to

perform well and our Skoda business

in Ashford recorded an excellent result,

significantly ahead of the prior year.

Our Vauxhall business in Ashford

performed in line with our expectations in

the year.

During the year, we opened businesses

for Lotus and MG, adjacent to our

existing Vauxhall operation in Ashford.

The board was encouraged with their first

year of trading.

Trading at Caffyns Motorstore, our

used car business in Ashford, remained

subdued as the business suffered

from disruptions from building works

to accommodate the new franchises

of Lotus and MG. However, the

performance improved in the year and

we remain reassured that the concept

continues to be well received by our

customers, who particularly value the

reassurance of the Caffyns brand.

Groupwide projects

We remain focused on generating

further improvements in used car sales,

used car finance and service labour

sales. These three areas will be key to

achieving further increases in profitability

in the coming years. In addition, we

continue to make very good progress

utilising technology to enhance the

customer-buying experiences from their

first point of contact right through the

buying process, as well as improving

aftersales retention.

New brands and models

We continue to invest in enhanced

facilities to allow us to sell and service

our manufacturers’ ever-increasing

range of electric and hybrid vehicles.

During the year, we also added two

new brands to our portfolio, both based

at existing premises in Ashford. Lotus,

which is part of the Zhejiang Geely

group that also owns Volvo, and MG, a

subsidiary of SAIC, commenced trading

in July 2021. Both of these brands have

battery-powered electric products and

MG offers outstanding value for money

in this field. We will shortly be expanding

our representation with Lotus with the

opening of a new dealership for Sussex,

in Lewes.

Property

We operate primarily from freehold sites,

which provides additional stability to our

business model. As in previous years,

our freehold premises were revalued

at the balance sheet date by chartered

surveyors CBRE Limited, based on an

existing use valuation. The excess of

the valuation over net book value of our

freehold properties at 31 March 2022

was £13.3 million (2021: £12.3 million). In

accordance with our accounting policies,

this surplus has not been incorporated

into our accounts.

During the year, we incurred capital

expenditure of £2.9 million

(2021: £0.4 million). There was one major

property development project in the year,

which was the expansion and complete

refurbishment of our Volvo premises

in Eastbourne. The remaining spend

reflected a mixture of further installations

of electric charging points and

replacement spend on existing assets.

Caffyns plc Annual Report 2022

The lease to the purchaser of our former

Land Rover business in 2016, for our

freehold premises in Lewes, terminated

on 9 June 2021 and the property was

returned to us. Our current intention

is to dispose of the premises and we

expect to exchange contracts shortly.

Completion of the sale will be dependent

on the purchaser gaining an appropriate

planning consent and the board expects

this will take at least two years. Due to

the uncertainty of a successful outcome

to the planning process, the property

has continued to be shown as an

investment property on the Company’s

balance sheet.

The Company operates two of its

franchised businesses from leased

premises as well as having a leased

vehicle storage compound, which

are shown on the balance sheet as

right of use assets. During the year,

management reassessed its likely future

requirement for one of those premises

and, as a result, extended its estimate of

the duration of its stay. As a result, the

valuation of that lease increased by

£1.0 million, equal and opposite to an

increase in its lease liability.

The Company has agreed with Volvo UK

to relocate its business in Worthing to a

new-build facility, adjacent to its existing

Audi operation at Angmering. Planning

permission for the new facility is being

sought and construction is expected to

start once a planning consent is granted,

with the new facility expected to be

available to open in 2023.

Bank facilities and

borrowings

The Company’s banking facilities

with HSBC comprise a term loan,

originally of £7.5 million, repayable by

instalments over a twenty-year period

to 2038 and a revolving credit facility

of £6.0 million, both of which will next

become renewable in April 2026. HSBC

also provides an overdraft facility of

£3.5 million, renewable annually. The

Company continues to enjoy a supportive

relationship with HSBC and successfully

refinanced its borrowings in March

2022, twelve months in advance of the

scheduled review date for the facilities.

The refinancing did not affect the market

value of the Company’s borrowings.

In addition to its facilities with HSBC,

the Company also has a revolving

credit facility of £4.0 million provided by

Volkswagen Bank, renewable annually,

together with a term loan, originally of

£5.0 million, which is repayable by

instalments over the ten years to

March 2024.

The term loan and revolving credit facilities

provided by HSBC include certain

covenant tests which were comfortably

passed at the year-end on 31 March

2022. Any failure of a covenant test

would render these facilities repayable on

demand at the option of the lender.

During the year, cash generated by

operating activities was £3.4 million

(2021: £6.7 million). This reflected the

deficit-reduction payment of

£1.0 million made to the Company’s

defined-benefit pension scheme as

part of the recovery plan to the March

2020 triennial valuation, as well as

outflows associated with working capital

movements. Other significant cash

movements in the year included capital

expenditure of £2.8 million

(2021: £0.4 million) and repayment of

bank revolving credit facilities and term

loans of £2.9 million (2021: £1.7 million).

Cash balances held at 31 March 2022

were £5.7 million, a reduction of

£3.0 million from the previous year-end.

Bank borrowings, net of cash balances,

at 31 March 2022 were £10.4 million

(2021: £10.3 million) and as a proportion

of shareholders’ funds at 31 March 2022

were 30% (2021: 37%). This reduction

in gearing level reflected the strong

financial result for the year as well as

a significant narrowing of the deficit in

the Company’s defined-benefit pension

scheme. Available but undrawn facilities

with HSBC and Volkswagen Bank at 31

March 2022 were £10 million (2021: £16

million) owing to the reduction in certain

facility levels in the year, in agreement

with the Company’s bank lenders.

Taxation

The year ended 31 March 2022 resulted

in a tax charge of £1.39 million

(2021: £0.01 million). The effective tax

rate for the year was higher than the

standard rate of corporation tax in force

for the year of 19% due to the effect on

deferred tax liabilities of the scheduled

increase in the corporation tax rate

to 25% in 2023. In the prior year, the

effective tax rate was significantly lower

than the standard rate of corporation

tax in force for the year of 19% due to

the reversal of an impairment provision

against the carrying value of an

Advanced Corporation Tax (“ACT”) asset.

The Company has no current outstanding

trading losses awaiting relief (2021: £Nil).

There are also no capital losses awaiting

relief. Capital gains which remain

unrealised, where potentially taxable

gains arising from the sale of properties

and goodwill have been rolled over

into replacement assets, amount to

£7.1 million (2021: £8.3 million) which

could equate to a future potential tax

liability of £1.8 million (2021: £1.6 million).

The Company was able to utilise

£0.6 million of its ACT in the year, leaving

an amount carried forward to future

trading periods of £0.5 million

(2021: £1.1 million).

Pension scheme

The Company’s defined benefit scheme

was closed to future accrual in 2010.

The board has little control over the key

assumptions in the valuation calculations

as required by accounting standards

and the low yields of gilts and bonds

continue to have a significant impact on

the net funding position of the scheme.

At 31 March 2022, the deficit was

£2.8 million (2021: £9.4 million). The

deficit, net of deferred tax, was

£2.1 million (2021: £7.6 million).

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business

Operational and Business Review continued

The Scheme operates with a fiduciary

manager and the board, together with

the independent pension fund trustees,

continues to review options to reduce the

cost of operation and its deficit. Actions

that could further reduce the risk profile

of the assets and more closely match

the nature of the Scheme’s assets to its

liabilities continue to be considered.

The pension cost under IAS 19 is

charged as a non-underlying cost and

amounted to £0.2 million in the year

(2021: £0.2 million).

During the year, the latest formal triennial

valuation of the Scheme, effective

31 March 2020, was completed with

the valuation being formally submitted

to the Pensions Regulator in June 2021.

A recovery plan to address the Scheme

deficit identified from this triennial

valuation was agreed with the trustees

under which the annual recovery plan

payment would increase from

£0.5 million to £0.8 million, with an

additional one-off contribution of £1.0

million, which was paid in June 2021.

The recurring annual recovery plan

payment for each subsequent year will

then increase by 2.25%, until superseded

by any future new recovery plan to be

agreed between the Company and the

trustees. Therefore, the Company made

deficit reduction contributions into the

Scheme during the year of £1.8 million

(2021: £0.5 million).

Dividend

The uncertainty caused by the Covid-19

pandemic resulted in the Company

temporarily pausing its dividend

payments to shareholders. The board

is aware of the importance of dividend

payments to its shareholders and

remained committed to restarting

dividend payments once it was

appropriate to do so. The judgement

of the board was that the performance

of the business in the first half of the

year meant that it would be appropriate

to restart dividend payments and,

accordingly, the board declared an

interim dividend of 7.5 pence per

Ordinary share (2021: Nil pence per

Ordinary share). The board is also

declaring a final dividend for the year

of 15.0 pence (2021: Nil pence per

Ordinary share) which will be paid on 9

August 2022 to those shareholders on

the register at close of business on 8 July

2022, subject to shareholder approval

at the 2022 Annual General Meeting.

The Ordinary shares will be marked ex-

dividend on 7 July 2022.

Strategy

Our continuing strategy is to focus

on growing our loyal customer base

through representing premium and

premium-volume franchises, maximising

opportunities for premium used cars and

delivering an excellent after sales service.

We recognise that we operate in a rapidly

changing environment and continue to

carefully monitor the appropriateness

of this strategy. We continue to seek

opportunities to invest in the future

growth of our business.

We are concentrating on business

opportunities in stronger markets to

deliver higher returns from fewer but

bigger sites. We continue to seek to

deliver performance improvement, in

particular in our used car and aftersales

operations, and to enhance both the

purchasing and aftersales experience for

our customers.

Annual General Meeting

The Annual General Meeting will be held

on 2 August 2022. As no regulations

remain in place regarding social

distancing, it is intended that the Annual

General Meeting will be an open meeting,

to which shareholders will be invited to

attend in person.

Outlook

We have started the new financial year

with a sense of optimism, although

we are mindful of disruptions to

manufacturers’ supply chains and

dependent upon consumer confidence.

We continue to enjoy supportive

relationships with our banking partners,

HSBC and Volkswagen Bank, with

available but undrawn facilities at the

year-end in excess of £10 million. The

balance sheet is appropriately funded

and our freehold property portfolio is a

source of stability. We remain confident

in the prospects of the Company and

are ready to exploit future business

opportunities.

S G M Caffyn

Chief Executive

26 May 2022

Caffyns plc Annual Report 2022

Business model

Caffyns is one of the leading motor retail and aftersales companies in the south-east of England. The Company’s principal activities

are the sale and maintenance of motor vehicles, including the sale of tyres, oil, parts and accessories. The Operational and Business

Review, which forms part of the Strategic Report, principally covers the development and performance of the business and the

external environment and is set out on pages 2 to 6. The main Key Performance Indicators are:

Financial 2022 2021

Revenue (£ million) 223.93 165.09

Underlying EBITDA (£ million) 7.71 5.12

Profit for the year before tax (£ million) 4.39 1.42

Underlying earnings per share (pence) 117.0 66.0

Earnings per share (pence) 111.3 52.4

Bank overdrafts and loans (net of cash in hand balances) (£ million) 10.43 10.33

Gearing (%) 30.0 37.4

Note: Underlying results exclude items that have non-trading attributes due to their size, nature or incidence.

Other and non-financial 2022 2021

UK new car market – total registrations (million) 1.64 1.57

UK new car market – retail and small business sector registrations (million) 0.88 0.74

Caffyns new car unit sales (‘000) 3.95 3.60

Caffyns used car unit sales (‘000) 5.58 4.43

Caffyns aftersales revenues (excluding internal sales) (£ million) 19.26 17.03

Company employees (full-time equivalents) 402 402

Source of UK market registrations: Society of Motor Manufacturers and Traders (“SMMT”).

Business performance

New and used cars

Our new unit deliveries were up by

6.6% on a like-for-like basis. Over the

twelve-month period, total UK new car

registrations rose by 4.2% and, within

this, the private and small business

sector in which we have most exposure

to rose by 19.0%. New car registrations

to the fleet market in the year fell by

8.9%. Overall, we were satisfied with the

level of new car deliveries we achieved

for the year.

Our used unit sales increased by 24.1%

on a like-for-like basis, with very buoyant

trading. Transaction data released by

the Society of Motor Manufacturers and

Traders reported used car transactions

in the UK up 11.5% for the 2021

calendar year.

Aftersales

Over recent years, new car registration

levels have been adversely impacted

by several factors, from changes in

emissions regulations in 2018 and 2019,

the covid-19 pandemic in 2020 and 2021

and the continuing disruptions caused

to manufacturers’ production levels from

the global shortage of semiconductors.

This has acted to significantly reduce

the number of one to three-year-old

cars in circulation. Despite these factors,

aftersales revenues rose in the year by

18.6%, on a like-for-like basis, aided by

further enhancements to our aftersales

marketing and retention procedures

which continue to benefit this area of

the business.

EBITDA

EBITDA has seen a substantial increase

during the year as the business

rebounded from a covid-impacted year

and enjoyed buoyant trading across

both car sales and aftersales. However,

it should be noted that the Company

received a partial payment holiday from

business rates from the local Councils

in areas in which it operates, which

produced a saving of £0.8 million.

That payment holiday finished on

31 March 2022 so this saving will not

be available to the Company for future

financial periods.

Business strategy

The Company continues to focus on the

premium and premium-volume market

where it believes that there is greater

scope to deliver stronger sales, profits

and returns. Representation is held for a

strong portfolio of nine franchises being

Audi, LEVC, Lotus, MG, SEAT, Skoda,

Vauxhall, Volkswagen and Volvo. We

generally operate from our own freehold

properties, which we believe offers

better long-term returns and greater

flexibility. Proceeds from disposals of

properties are generally reinvested in the

property portfolio.

Strategic Report

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business

Strategic Report continued

Caffyns plc Annual Report 2022

Corporate social responsibility,

Human rights and diversity

Caffyns has a long-standing Corporate

and Social Responsibility agenda

including its approach to its employees,

the environment, and health and safety.

We are also conscious of human rights

issues within the Company and the key

area that would impact our business

would be via our supply chain. However,

our supply chain is predominantly the

major international motor manufacturers

who also take these issues very seriously.

The UK Corporate Governance Code

includes a recommendation that

boards should consider the benefits

of diversity, including gender, when

making board appointments. The board

recognises the importance of gender

balance and the important requirement

to ensure that there is an appropriate

range of experience, balance of skills

and background on the board. We

will continue to make changes to the

composition of the board irrespective of

gender or any form of discrimination so

that the best candidate is appointed.

The table below gives the total number

of our employees in each category, by

gender, at 31 March 2022.

Female Male Total

Director 1 5 6

Senior

management 1 10 11

All other

employees 102 325 427

Employees

We recognise that our people are our key

asset and are responsible for delivering

our strategy. We continue to invest in

an enhanced training and development

programme, with support from our

manufacturer partners. The positive

approach shown by our employees

throughout the Company’s businesses

has been key to our success.

Employees are encouraged to discuss

with management factors affecting the

Company and any other matters that

they are concerned about. In addition,

the board takes account of employees’

interests when making decisions. We

have a HR director who has day to day

responsibility for employee welfare.

Suggestions from employees aimed at

improving the Company’s performance

are welcomed.

Good performance from employees is

recognised every four months by their

peer group who nominate employees

for awards and formal company-wide

recognition. A significant number of

employees are remunerated partly by

profit-related bonus schemes.

We have a dedicated company intranet

which keeps employees up to date

with company developments and

activities. This platform also includes the

Company’s policies and procedures.

Long service awards were made during

the year to those staff with 25 years’

continuous service. All employment

policies remain compliant with current

legislation.

It is our policy to encourage career

development for all employees and to

help staff achieve job satisfaction and

increase their personal motivation.

We support the recruitment of disabled

people wherever possible. Priority is

given to those who become disabled

during their employment. Employment

by the Company is offered on the

basis of the person’s ability to work

and not on the basis of race, individual

characteristics or political opinion.

We have continued to recruit to our

apprenticeship programme, and we are

seeing the benefits of this investment. We

look to further recruit both apprentices

and others across the Company’s

businesses as we continue to grow.

Principal risks and uncertainties

Risk is an accepted part of doing

business and the Company has a risk

assessment process that facilitates

the identification and mitigation of risk.

While the risk factors listed below could

cause our actual future results to differ

materially from expected results, other

factors could also adversely affect the

Company and they should therefore not

be considered to be a complete set of all

potential risks and uncertainties. The risk

factors should be considered alongside

the statement on internal control and risk

management included in the Statement

on Corporate Governance on page 22

and those in note 21 to the financial

statements.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business

Principal risks Potential impact/material risk Key controls and mitigating factors

Business

conditions and

the UK economy

The profitability of the Company could be adversely affected

by a worsening of general economic conditions in the United

Kingdom, where all of its business is transacted. Other

relevant factors would include the future path of the covid-19

pandemic, interest rates, unemployment, fuel prices, inflation,

indirect taxation, the availability and cost of credit and other

factors which could affect the level of consumer confidence.

Monitoring of key macroeconomic

indicators against internal performance

leads to anticipation of, and mitigation for,

expected volatilities. The Company is not

responsible for the importation of new cars

into the UK and is not exposed to border

frictions.

Conflict in the

Ukraine

The conflict in the Ukraine has resulted in a significant spike

in the cost of energy, particularly for gas, as well as placing

additional strain on manufacturers’ parts supply chains. A

sustained increase in energy prices could have an effect

on the Company’s future cost base and profitability whilst

disrupted supply chains could adversely impact the receipt

of an adequate supply of new cars from the manufacturers

that the Company represents. Whilst currently confined to

Ukrainian territory, the future progress of the conflict is highly

unpredictable and could spread to other territories.

The Company purchases its electricity and

gas under long-term fixed priced contracts,

shielding it from short-term movements in

market prices. The Company represents

a diversified range of car manufacturers,

diluting its exposure to supply chain issues.

Vehicle

manufacturer

dependencies

Caffyns operates franchised motor dealerships. These

franchises are awarded to the Company by the vehicle

manufacturers. For ongoing business, the Company holds

franchise agreements for its dealership operations. These

agreements can be terminated by giving two years’ notice,

or less in the event of a serious unremedied breach including

continued under-performance. The Company is not aware of

any existing breaches of these agreements.

Diversifying through representing

multiple marques reduces the potential

dependency on any single manufacturer.

Revenue streams from other activities

(aftersales and used cars) prevent

over-reliance on new car sales.

Vehicle

manufacturer

marketing

programmes

Vehicle manufacturers provide a wide variety of marketing

programmes which are used to promote new vehicle sales. A

withdrawal or reduction in these programmes would have an

adverse impact on our business.

By representing multiple marques, the

Company believes that this diversity

reduces the potential impact on the

Company. In addition, the Company

continues to develop its own marketing

initiatives.

Used car prices The value of our used car inventory could decline significantly

if market prices were to quickly fall. A large proportion of our

business comprises used car sales and such declines could

have a material impact through reduced profits on sales and

write-downs in the value of inventories.

Close monitoring of the ageing of vehicle

inventories and a firm policy of inventory

management help to mitigate this risk.

Any impact is also mitigated by revenue

streams being balanced between

aftersales, new and used car sales.

Strategic Report continued

Caffyns plc Annual Report 2022

Principal risks Potential impact/material risk Key controls and mitigating factors

Transition to

electric vehicle

power-trains

Government announcements have indicated that solus petrol

and diesel power trains will no longer be permitted in new

vehicles sold after 2030. This change may result in disruption

to the supply and demand for new cars in the run up to 2030,

and to the used car market.

Ensuring that our premises are developed

to be able to adapt to the expected future

shift towards electric vehicles and that our

representation of manufacturers is broad

based to spread risk.

Aftersales

revenues

The maintenance of battery-electric propulsion systems is

expected to be less labour intensive and to require fewer

replacements parts, in comparison to an equivalent petrol or

diesel-powered engine. As a result, aftersales revenues are

likely to fall in coming years as the transition to battery-electric

vehicles accelerates.

Careful control of the cost base of

aftersales departments to ensure that

costs remain commensurate with the levels

of available revenues and more active

upselling to ensure that revenue per vehicle

is maximised.

Environmental

The transition to new battery-electric propulsion systems

will pose risks to the business from a number of sources:

additional investment required in providing an adequate

charging infrastructure; lower demand for petrol and diesel-

powered vehicles, potentially impacting on residual values;

and space constraints for when potentially faulty battery-

electric vehicles need to be quarantined, prior to repair.

Representation of multiple marques

reduces the potential dependency on any

single manufacturer. Early installation of

charging infrastructure minimises the likely

necessity of installing additional electrical

supply infrastructure.

Liquidity and

financing

Liquidity and financing risks relate to our ability to pay for

goods and services enabling us to trade. Our principal

sources of finance are from our bankers by way of committed

borrowing facilities, from manufacturers to fund the purchases

of inventories, and trade credit from our suppliers. A

withdrawal of facilities, or failure to renew them when due,

could lead to a significant reduction in the trading capability of

the Company.

We work closely with providers of finance

to help reduce this risk by managing

expectations of trading results and

utilisation of facilities. The status of our

bank facilities is set out in note 21. These

negotiated facilities provide sufficient

liquidity and funding. We do not presently

hedge against interest rate movements,

but the position is kept under regular

review.

Regulatory

compliance

The Company is subject to regulatory compliance risk which

could arise from a failure to comply fully with the laws,

regulations or codes applicable.

Non-compliance could lead to fines, cessation of certain

business activities or public reprimand.

The direction of new regulatory policy is

monitored through close contact with

relevant trade and representative bodies

and these are carefully considered when

developing strategy.

Information

systems

The Company is dependent upon certain business-critical

systems which, if interrupted for any considerable length of

time, could have a material effect on the efficient running of

our businesses.

A series of contingency plans are in place

that would enable the resumption of

operations within a short space of time,

thus mitigating the likelihood of material

loss.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business

Principal risks Potential impact/material risk Key controls and mitigating factors

Competition Caffyns competes with other franchised vehicle dealerships,

private buyers and sellers, internet-based dealers,

independent service and repair shops and manufacturers who

have entered the retail market. The sale of new and used cars,

the performance of warranty repairs, routine maintenance

business and the supply of spare parts operate in highly

competitive markets. The principal competitive factors are

price, reputation, customer service and knowledge of a

manufacturer’s brands and models. We also compete with

funders who finance customers’ car purchases directly.

We regularly monitor our competitors’

activities and seek to price our products

competitively, optimise customer service,

efficiently utilise our customer database

and fully understand our manufacturers’

brands and products.

Changes in

legislation in

relation to the

distribution and

sale of vehicles

Sales agreements are granted by manufacturers based on

standards but agreements are restricted to areas of influence

granted by manufacturers, who also determine choice of

partner, enabling them to restrict entry into the franchise or

the number of outlets any one dealer can hold. Aftersales

agreements are legislated by a Block Exemption, dictating

that aftersales businesses that meet a manufacturer’s

qualitative standards criteria have an entitlement to represent

that brand’s aftersales service and parts franchise.

By continuing to focus on providing

excellent customer facilities, excellent

customer service and by providing high-

level representation for the Company’s

manufacturer partners, current business

relationships will be maintained, providing

opportunities for selective growth.

Pension scheme Caffyns operates a defined benefit pension scheme which

was closed to new entrants in 2006 and closed to future

accrual in 2010. The scheme relies on achieving satisfactory

investment returns sufficient to meet the present value of

the accrued liabilities. Reduced investment returns or higher

liabilities due to increased mortality rates and/or continuing

record low interest rates could adversely affect the surplus

or deficit of the scheme and may result in increased cash

contributions in future.

The Company reviews the position of the

defined benefit pension scheme through

regular meetings of a Pensions sub-

committee, chaired by the Chairman of the

Audit and Risk Committee. The Company

continues to review possible options to

mitigate the risk of underlying volatility

causing an increase in the deficit.

Political

uncertainties

The United Kingdom’s departure from the European Union,

coupled with wider global developments such as the

conflict in Ukraine, means that a degree of uncertainty in the

economic outlook exists. We believe the main risks to arise

relate to consumer confidence, new car production levels,

the potential impact that sterling/euro exchange rates may

have on vehicle pricing, the possible imposition of tariffs and/

or restrictions on the imports of cars and parts into the United

Kingdom.

We continue to focus on delivering an

excellent service to new and existing

customers, giving confidence in our

operations and building a strong loyalty

base and to maintaining our close working

relationship with our nine manufacturers.

Strategic Report continued

Caffyns plc Annual Report 2022

Environment and climate

change

The Taskforce on Climate-related

Financial Disclosures (“TCFD”) has

published four “pillars” relating to

disclosures and we include in this Annual

Report certain of the recommended

disclosures, although we would note

that we are still at the beginning of

this journey and that more time will be

required to allow for a full consideration

of the issues and outcomes. We expect

to be able to widen our disclosures in

future Annual Reports.

The areas in which we are unable

to comply and require more time

to implement recommendations

are listed below. It is expected that

full implementation of these TCFD

recommendations will require between

two and three years, except for the

measurement of scope 3 emissions

where no time frame can currently be

determined, as further clarity is required

to identify which emissions would be

applicable for the Company to have to

measure. Areas of non-compliance are:

• Completion of a full risk and

opportunity assessment of climate-

related risks and opportunities over

the short, medium and long term,

taking into account different scenarios

including a 2 degree Celsius or lower

scenario;

• A description of the relative

significance of climate-related risks in

relation to our other principal risks;

• Identification of specific climate-

related targets and the metrics to be

used to assess the achievement of

these targets; and

• Measurement and disclosure of

scope 3 emissions.

In relation to the four pillars relating to

disclosures, the Company’s current

position is as follows:

• Governance: The board of directors

retains ultimate responsibility for the

Company’s environmental policies

and for seeking to minimise the effect

on the environment of our operations.

This includes developing principles

and approaches to protecting the

environment to the extent that we are

able, minimising the environmental

impact of our business and

providing a framework to manage

climate related risks. Once these

principles and approaches have

been developed management will be

responsible for their implementation.

The board is considering whether

subsidiary working parties should

be formed and whether external

assistance would be beneficial to

review and quantify our carbon

emissions;

• Strategy: A fundamental change

to our business will arise from the

transition from cars powered by

fossil fuels to cars powered by

non-fossil fuels by 2030, most likely

battery-electric but possibly also

hydrogen. Energy supply, particularly

of electricity and gas, will require

close monitoring to ensure supplies

are sustainable and affordable. The

Company will continue its policy of

entering into long-term contracts

at fixed prices for the supply of

electricity and gas;

• Risk management: The Company

has not yet been able to implement

a process for identifying and

assessing all climate-related risks

but expects to have done so during

the coming year. We will be reliant

on our manufacturers to control

the new car transition away from

fossil-fuel powered engines by the

supply of appropriately powered new

cars but we will continue to monitor

diversification of representation

and other climate-related risks and

opportunities; and

• Metrics and targets: The Company’s

aim is to consistently reduce its

energy usage, and hence the amount

of CO

we emit from our activities,

and to contribute towards worldwide

efforts to limit global warming to

1.5% above pre-industrial levels. We

disclose below our emissions caused

by activities in the current financial

year but we do not currently have

the data available to be able to set

targets for future years.

The Company is aware of its

environmental responsibilities arising from

its motor retailing and aftersales activities

and recognises that some of its activities

affect the environment. Our Health,

Safety and Environment Officer has

received formal training in environmental

management and is appropriately

experienced in this field. Our policy is

to promote and operate processes and

procedures which, so far as is reasonably

practicable, avoid or minimise the

contamination of water, air or the ground.

Licences are obtained from the relevant

authorities, where required, to operate

certain elements of the Company’s

business. Waste is disposed of by

authorised contractors and is recycled

where possible. Special care is taken in

the storage of fuels and oils. Through the

management of these activities, we seek

to minimise any adverse effects of its

activities on the environment.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business

We also seek to reduce our energy

and water consumption and our use of

plastic materials. Audit processes are

in place to measure usage and make

recommendations for improvements.

An electrical test monitoring regime

is in place throughout the Company’s

businesses. Use of the latest building

materials is made in the construction

of new sites and the refurbishment of

existing locations.

As our manufacturers transition away

from petrol and diesel-powered cars

our own fleet increasingly reflects that

movement. At 31 March 2022 17% of

our own demonstrator, courtesy and staff

car fleet comprised either alternatively-

fuelled or battery-electric cars.

Future emissions legislative

changes

The Government has indicated that

the sale of vehicles powered solely by

an internal combustion engine will be

banned from the end of 2030 onwards.

Hybrid vehicles, which are powered by a

combination of a battery and an internal

combustion engine, will still be allowed

to be sold up to the end of 2035. After

that time, all vehicles will need to be

powered without the use of an internal

combustion engine. The implementation

of this intended legislation will bring

significant change to the motor retail

industry, and we are working with our

manufacturers to more fully develop

our transitional plans. We have already

installed electric charging points in all our

dealerships, although further installations

will be required in the coming years.

Anumber of the other actions we have

already taken are detailed below and

we anticipate fuller disclosures of our

plans, and their possible impact on

the business, will be made in future

AnnualReports.

Streamlined energy and

carbon reporting

This section includes our mandatory

reporting of greenhouse gas emissions

for the period 1 January 2021 to

31 December 2021, the latest annual

period for which data is available, and

is pursuant to the Companies Act

2006 (Strategic Report and Directors’

Report) Regulations 2013. We report

our emissions data using an operational

control approach taking data for which

we deem ourselves responsible, including

both energy consumption and vehicle

usage for business use.

In the 2021 calendar year, our

businesses emitted 796 tonnes of carbon

dioxide (“CO

”) (2020: 1,197 tonnes). The

significant reduction in the tonnage of

emitted from our usage of electricity

arose primarily from the improvement in

the conversion factor for electricity, rather

than reduction in the absolute level of

kWhs used, as a result of the increasing

levels of UK electrical generation coming

from renewables and other non-fossil fuel

sources.

Our emissions are principally of CO

and

are from the following sources:

Greenhouse gas emissions data

Tonnes of

2021

Tonnes of

2020

Tonnes of

2019

Scope 1

Gas consumption 278.9 250.8 308.8

Owned transport 39.4 27.4 74.2

Water supply 4.1 4.4 4.8

Scope 2

Purchased electricity 479.1 920.8 972.6

Generated electricity (5.5) (6.3) (6.3)

Statutory total 796.0 1,197.1 1,354.1

Revenue (£million) 201.4 176.1 203.7

Scope 1 and Scope 2 energy

consumption and greenhouse gas

emissions data has been calculated

in line with the UK Government

environmental reporting guidance.

Emission Factor Databases consistent

with the UK Government environmental

reporting guidance have been used,

utilising the current published kWh gross

calorific value and CO

e emissions

factors relevant for the reporting calendar

year. We have selected emissions

£million of revenues per tonne as

our intensity ratio as this, in our view,

provides the best comparative measure

over time.

2019 intensity ratio: 6.6 tonnes of CO

per £million of revenue

2020 intensity ratio: 6.8 tonnes of CO

per £million of revenue

2021 intensity ratio: 4.0 tonnes of CO

per £million of revenue

The Company’s total energy

consumption for the period 1 January

2021 to 31 December 2021 was

3.9 million kWh (2020: 3.5 million kWh).

The 2020 calendar year was heavily

impacted by the covid-19 pandemic

for much of the year with lockdown

periods where, to varying degrees, the

business was in lockdown mode and

not fully operational, which had the

effect of reducing its energy usage. The

methodology for calculating this annual

energy consumption figure was the same

as that outlined above for producing the

estimate of the Company greenhouse

gas emissions. All of the Company’s

energy consumption arose in the United

Kingdom.

Our greenhouse gas emissions

associated with waste arise from a

number of waste streams generated from

our business. For conversion to carbon

dioxide equivalent (“CO2e”) data is not

readily available for a number of our

waste streams, so we have chosen to

report this in weight and percentage of

waste recycled compared to waste sent

to landfill, as opposed to CO

Waste in 2021 was 509.1 tonnes

(2020: 491.8 tonnes) of which 95% was

recycled (2020: 98%).

Strategic Report continued

Caffyns plc Annual Report 2022

Reducing carbon and waste

During the year, we have continued

to assess and monitor our energy use

and, where practicable, we continue to

implement measures in order to reduce

the environmental impact of our activities.

Climate change influences seasonal

energy usage and while, at times, we

benefit from milder weather, we are

aware that any adverse change could

affect energy usage. To minimise our

energy usage we continue, where

practicable, to install LED lighting at our

sites as this uses significantly less energy

than conventional lighting. In addition,

we limit the duration of periods when full

lighting is used, using sensors and timers

to further reduce the energy we use.

We continue to improve our energy use

and efficiency by replacing old equipment

with new efficient units and ensuring

workshop doors are closed when not in

use by fitting automatic closing devices.

Water use in valeting areas uses recycling

facilities, where practicable, and all

sites have appropriate water filtration

systems. At one dealership, we are able

to generate electricity through the use of

roof-mounted photovoltaic cells, whilst

elsewhere, we use air-sourced heat

pumps to reduce electricity consumption.

We seek to limit our paper consumption

and waste through increasingly paperless

communications and systems, and to

minimise the use of plastic materials.

Health and safety

The board recognises its responsibility

to members of staff and others working

or visiting our facilities to provide, so

far as is reasonably practicable, an

environment that is safe and without risk

to their health and this is always the first

agenda item at each board meeting. The

board maintains ultimate responsibility for

health and safety issues with a full-time

Heath, Safety and Environment Officer

responsible on a day-to-day basis,

supported by all levels of management.

The Company’s policy is to identify

potential hazards and assess the risks

presented by its activities and to provide

systems and procedures which allow

our staff to take responsible decisions

in their work in relation to their own, and

others’, safety. We promote awareness

of potential risks and hazards and

implementation of corresponding

preventative or remedial actions through

online health and safety systems,

operations manuals and monthly

communication on topical issues. With

clear lines of operating unit responsibility,

staff are supported by specialist guidance

from the Heath, Safety and Environment

Officer. All our staff have access to a

detailed health and safety guide.

Section 172 statement

Section 172 of the Companies Act

2006 requires directors to take into

consideration the interests of all

stakeholders and other matters in

their decision making. The directors

continue to have regard to the interests

of the Company’s employees and other

stakeholders, the impact of its activities

on the community, the environment

and the Company’s reputation for

good business conduct, when making

decisions. In this context, acting in good

faith and fairly, the directors consider

what is most likely to promote the

success of the Company for its members

in the long term. We explain in this

Annual Report how the board engages

with stakeholders.

• Relations with key stakeholders, such

as shareholders and suppliers, are

considered in more detail on page 22;

• The Company’s employees are

recognised as vital to its success and

employee relations are considered

in more detail on pages 3, 8 and 36.

The board intends to further enhance

its methods of engagement with its

employees in the coming financial

year with the Chief Executive visiting

the Company’s sites regularly for

question-and-answer sessions with

staff. He will report to the board on

the outcome of these sessions. In

addition, the board takes account of

employees’ interests when making

decisions;

• The directors are fully aware of

their responsibilities to promote

the success of the Company in

accordance with section 172 of the

Companies Act 2006. To ensure

the Company operates in line with

good corporate practice, all directors

receive refresher training annually

on the scope and application of

section 172. This encourages the

board to reflect on how the Company

engages with its stakeholders and

opportunities for enhancement in

the future and was considered at the

Company’s board meeting in March

2022.As required, the Company

Secretary provides support to the

board to help ensure that sufficient

consideration is given to issues

relating to the matters set out in

s172(1)(a)-(f);

• The board regularly reviews the

Company’s principal stakeholders

and how it engages with them;

• This is achieved through information

provided by management and also by

direct engagement with stakeholders

themselves; and

• We aim to work responsibly with our

stakeholders, including suppliers.

The board has recently reviewed its

anti-corruption and anti-bribery, equal

opportunities, and whistleblowing

policies.

During the year under review, ended

31 March 2022, the key decisions taken

by the board included:

Covid-19 pandemic: The Company

started its financial year with its car

showrooms closed and able to operate

only a click-and-collect service, as

they were classified by Government as

non-essential businesses. Fortunately,

restrictions were lifted in mid-April 2021

and, from that point, our showrooms

joined our workshops in being able to

operate as usual, albeit with strict social

distancing in place for customers and

staff and, for a time, measures for car

sales such as appointment-only access

to showrooms and unaccompanied

test drives. As the year has progressed,

covid-19 has become largely an endemic

threat, but the board has been mindful

of ensuring a safe environment for its

employees and customers.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business

Dividends: The Company is aware

of its responsibility to shareholders to

provide a return on the investment that

they have made and has returned over

£3.50 in dividends per Ordinary share

over the last two decades. However, the

initial stages of the covid-19 pandemic

presented a major challenge to the

business and resulted in the Company

receiving significant financial support from

Government and local Councils and also

from stakeholders such as its funders

and suppliers. As a result, the board

paused the payment of dividends in the

previous financial year, whilst remaining

committed to restarting the payment of

dividends to shareholders as soon as

it deemed it was appropriate to do so.

At the half-year stage, in September

2021, the board decided that it would

be appropriate to restart dividends and

an interim dividend of 7.5 pence was

declared to holders of the Ordinary

shares. The financial performance of the

Company in the current financial year has

been strong, allowing the board to also

declare a final dividend for the year, of

15.0 pence per Ordinary share.

Pension scheme triennial valuation:

The triennial valuation of the Company’s

defined benefit pension scheme was

effective from 31 March 2020. The

Scheme has operated with an actuarial

deficit for a number of years with a

recovery plan having been agreed

between the Company and the Scheme’s

trustees following the previous triennial

valuation in 2017. This recovery plan

included the payment of a one-off

cash contribution of £1 million to the

Scheme, which was paid in June 2021.

The board has been very mindful of

its responsibilities to its current and

previous employees who are members

of the Scheme and for the need to

appropriately deal with the Scheme’s

deficit, whilst ensuring that the Company

has adequate resources to develop and

strengthen its businesses, in order to

ensure its future success.

The board has worked constructively

with the Scheme’s trustees and agreed

a new recovery plan with the Scheme’s

trustees. The formal valuation and

associated recovery plan were submitted

to the Pensions Regulator prior to the

requisite deadline of 30 June 2021.

Relocation of Volvo Worthing:

The Company was able to extend its

representation for Volvo in June 2020

through the provision of a new dealer

agreement for a West Sussex territory,

based in Worthing. The directors were

encouraged with the level of trading

in its first year of operation and have

agreed with the manufacturer that

the business should be relocated to a

new-build facility, to be constructed on

land already owned by the Company in

nearby Angmering. Planning permission

for the new facility is being sought and

construction is expected to start once

a planning consent is granted, with the

new facility expected to be available to

open in 2023.

Additional manufacturer

representation: The board continues

to seek new opportunities to maximise

the effectiveness of its property portfolio

and was pleased to receive an offer

to extend its representation for Lotus

through an additional territory in Sussex,

geographically adjacent to its existing

territory in Kent. Lotus Cars are part

of the Zhejiang Geely group and are

developing several new electric-vehicle

models, including the Evija, an electric-

powered supercar. We are excited to

be extending our representation of this

venerable British brand and expect to

commence trading in June 2022.

Lewes freehold: The Company’s

freehold property in Lewes is surplus

to requirements as no long-term motor

trade use for the property has been

identified. The board has therefore

decided that the best option is for

the property to be developed for an

alternative non-motor retail use and that

maximum value would be gained through

a sale of the freehold. It is expected that

contracts will be exchanged shortly for

a sale to a third party, contingent on

an appropriate planning consent being

obtained by the purchaser. The final sale

of the freehold would not be expected to

complete until 2025.

By order of the board

SGM Caffyn

Chief Executive

26 May 2022

Board of Directors

Directors

RICHARD C WRIGHT PG Dip FIMI FCIM

Chairman

SIMON G M CAFFYN MA FIMI

Chief Executive

MICHAEL WARREN BSc FCA

Finance

SARAH J CAFFYN BSc FCIPD AICSA FIMI

Human Resources

NIGEL T GOURLAY BSc

Non-executive and senior independent director

STEPHEN G BELLAMY BCom CA(NZ)

Non-executive

Bankers

HSBC BANK PLC

1 Centenary Square, Birmingham B1 1HQ

VOLKSWAGEN BANK

Brunswick Court, Yeomans Drive, Blakelands, Milton Keynes, MK14 5LR

Independent Auditor

BDO LLP

Statutory Auditor

Arcadia House, Maritime Walk, Ocean Village, Southampton, SO14 3TL

Company Secretary

SARAH J CAFFYN BSc FCIPD AICSA FIMI

Registered Office

4 Meads Road, Eastbourne, East Sussex, BN20 7DR

Telephone (01323) 730201

Caffyns plc Annual Report 2022

Chairman’s Statement on Corporate Governance

This statement explains how the

Company has applied the main and

supporting principles of corporate

governance and describes the

Company’s compliance with the

provisions of the UK Corporate

Governance Code (the “Code”), as

published in 2018 by the Financial

Reporting Council and available at

www.frc.org.uk.

The Company fully complied with all

provisions of the Code throughout the

year ended 31 March 2022, except for

Provisions 10, 11, 24, 36, 38 and 39.

• Provision 10 requires that non-

executive directors should

be deemed to have lost their

independence once they have served

for nine years. Mr R C Wright was

appointed as Chairman on 26 July

2012 so exceeded nine years’ service

during the financial year. The board

believes that Mr R C Wright will

continue to act independently and

to robustly challenge the executive,

where appropriate;

• Provision 11 requires at least half

the board, excluding the Chairman,

should consist of independent

non-executive directors. The board

believes the composition of the

board and the committees reflect the

compact nature of the board and size

of the Company as a whole, and that

directors have shown that they are

able to work in a collegiate fashion;

• Provision 24 requires that the

chairman of the board should not

be a member of the Audit & Risk

Committee. The Company believes

that an Audit & Risk Committee

of three non-executive directors

operates better than one with just

two members and, due to the size of

the board, the chairman needs to be

a member in order to achieve this;

• Provision 36 requires that

remuneration schemes for

directors should promote long-term

shareholdings by executive directors

and support alignment with long-term

shareholder interests. The Company

operates a Save As You Earn scheme

for all eligible employees, including

directors, but does not operate a

Long-Term Incentive Plan (“LTIP”) for

directors, primarily due to the volatility

in the share price and relative lack of

liquidity in the trading of its shares.

However, all executive directors

are Ordinary shareholders and

those shareholdings are detailed on

page 36;

• Provision 38 requires that only

directors’ salaries should be

pensionable. The Company Secretary

is a member of the Company’s

defined contribution pension scheme

on the same terms as all other

employees and any bonus payments

made to her are pensionable. This

is a long-standing arrangement with

which the board is satisfied and has

decided that it would not be in the

best interests of the Company to

change her existing employment

contract; and

• Provision 39 requires that notice

periods should be one year or less.

The Chief Executive has a service

contract which runs for more than

twelve months (see page 27 of the

Directors’ Remuneration Report). This

also is a long-standing arrangement.

The Remuneration Committee

reviews the position annually and

has decided that it would not be in

the best interests of the Company to

change his existing contract.

A description of the Company’s business

model and strategy is set out in the

Strategic Report on page 7.

Structure of the board and its

key activities

The board is collectively responsible for

the long-term success of the Company

and for ensuring that it operates to a

governance standard which serves the

best interests of the Company. The board

sets the strategy of the Company and its

individual trading businesses and ensures

that the Company has in place the

financial and human resources it needs

to meet its objectives. There is a written

schedule of matters reserved for board

decision, which is summarised below.

Schedule of matters reserved

for decision by the board

• Business strategy;

• Approval of significant capital projects

and other investments;

• Principal terms of agreements for the

Company’s principal banking facilities;

• Annual business plan and budget

monitoring;

• Risk management strategy and

internal control and governance

arrangements;

• Approval of acquisitions and

divestments;

• Changes to management and control

structure;

• Significant changes to accounting

policies and/or practices;

• Financial reporting to shareholders;

• Dividend policy;

• Health and safety policy;

• Changes in employee share

incentives;

• Reviewing the overall corporate

governance arrangements;

• Appointments to the board and its

committees;

• Policies relating to directors’

remuneration and service;

• Prosecution, defence or settlement of

material litigation;

• Any alterations to the share capital of

the Company;

• Approval of all circulars and

announcements to shareholders;

• Major changes to the Company’s

pension schemes; and

• Insurance cover, including directors’

and officers’ liability insurance and

indemnification of the directors.

The Chairman takes responsibility for

ensuring that the directors receive

accurate, timely and clear information.

Monthly financial information is provided

to the directors. Regular and ad hoc

reports and presentations are circulated,

with all board and committee papers

being issued in advance of meetings by

the Company Secretary. In addition to

formal board meetings, the Chairman

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Chairman’s Statement on Corporate Governance

continued

maintains regular contact with the Chief

Executive and other directors to discuss

specific issues. In furtherance of their

duties, the directors have full access to

the Company Secretary and may take

independent professional advice at the

Company’s expense. The board believes

that, given the experience and skills of

its directors, the identification of training

needs is best left to the individual’s

discretion. If any developmental need

is identified through the board’s formal

appraisal process or by an individual

director, the Company makes the

necessary resources available.

As part of their role, the non-executive

directors constructively challenge and

help develop proposals on strategy.

The non-executive directors scrutinise

management’s performance in meeting

agreed goals and objectives and monitor

the reporting of performance. They satisfy

themselves on the integrity of financial

information and that the Company’s

financial controls and systems of risk

management are robust and defensible.

They determine appropriate levels of

remuneration of executive directors and

have a prime role in appointing and,

where necessary, removing executive

directors, and in succession planning.

The non-executive directors meet

formally, without the executive directors,

at least once a year.

Operating within prescribed delegated

authority, such as capital expenditure

limits, the operational running of the

Company and its businesses is carried

out by the executive directors, led by the

Chief Executive.

The board delegates certain of its duties

to its Audit and Risk, Nomination and

Remuneration Committees, each of

which operates within prescribed terms

of reference. These are set out on the

Company’s website. The responsibilities

of the board’s committees are set out

below and on page 19 of this report and

in the Directors’ Remuneration Report.

The board has evaluated the

performance of its Audit & Risk and

Remuneration Committees for the

year under review. The Chairman and

the respective committee chairman

take responsibility for carrying out any

actions recommended as a result of

that evaluation.

Performance evaluation

The board has established a procedure

to evaluate its performance, as well

of its Audit & Risk and Remuneration

committees, and its individual directors.

Detailed questionnaires are completed

by the directors, who then debate any

matters arising.

Individual director evaluation has

shown that each director continues to

demonstrate commitment to the role.

The non-executive directors, led by

the senior independent director, have

carried out a performance evaluation

of the Chairman after taking account of

the views of the executive directors. The

Chairman has reviewed the performance

of the non-executive directors and the

Chief Executive. The Chief Executive has

reviewed the other executive directors.

The board intends to carry out further

performance evaluations but will keep

under review the method and frequency.

The latest board evaluation process

concluded that the board and its

committees were operating effectively,

with clear demarcation of the respective

responsibilities of individual directors

and board committees. The board is

satisfied that all directors are each able

to devote the amount of time required to

attend to the Company’s affairs and their

duties as a board member. The Chairman

discusses with each director any training

and development needs.

Board composition and

independence

As at 26 May 2022, the board comprised

three executive directors and three non-

executive directors, one of whom is the

Chairman. Mr R C Wright is the non-

executive Chairman and Mr S G M Caffyn

is the Chief Executive. The Chairman

leads the board and the Chief Executive

manages the Company and implements

the strategy and policies adopted by

the board. There is a clear division of

responsibility between the role of the

non-executive Chairman and the Chief

Executive; this is recorded in a written

statement which is reviewed and agreed

annually by the board. The Chairman is

responsible for leadership of the board

and ensuring its effectiveness for all

aspects of its role.

The Company maintains appropriate

directors’ and officers’ insurance in

respect of legal action against its

directors.

Directors’ conflict of interest

Conflicts of interest can include situations

where a director has an interest that

directly or indirectly conflicts, or may

possibly conflict, with the interests of the

Company. The board operates a formal

system for directors to declare at all

board meetings all conflicts of interest.

The non-conflicted directors must act

in the way they consider, in good faith,

would be most likely to promote the

success of the Company.

Balance and challenge

The non-executive directors complement

the skills and experience of the executive

directors, providing the requisite degree

of judgement and scrutiny to the

decision-making process at board and

committee level. Mr N T Gourlay is the

senior independent director.

The board maintains and regularly

reviews a register of all interests, offices

and appointments that are material to

be considered in the assessment of

the independence of directors and has

concluded that there are not, in relation

to any director, any relationships or

circumstances regarded by the Company

as affecting their exercising independent

judgement.

Re-election of directors

All directors will seek re-election annually

in accordance with the latest corporate

governance recommendations.

Meetings and attendance

There were eight meetings of the board in

the year under review. All directors were

in attendance for all of the meetings.

Nomination Committee

Our Nomination Committee comprises

two non-executive directors, the non-

executive Chairman and the Chief

Executive. The members are:

R C Wright (Chairman)

N T Gourlay

S G Bellamy

S G M Caffyn

Caffyns plc Annual Report 2022

The Nomination Committee is

responsible for leading the process for

appointments to the board and meets

at least once a year. The Committee is

chaired by Mr R C Wright. The Company

Secretary or alternate also attends

meetings in her capacity as secretary

of the Committee. Where the matters

discussed relate to the chairman,

such as in the case of selection and

appointment of the Company Chairman,

the senior independent director chairs

the Committee. New directors receive

a full, formal and tailored induction on

joining the board.

The principal responsibilities of the

Committee are as follows:

• To regularly review the structure, size

and composition of the board and

make recommendations to the board

regarding any adjustments deemed

appropriate;

• To prepare the description of the

role and capabilities required for

a particular board appointment.

Executive search consultants may be

retained as appropriate to assist in

this process;

• To identify, and nominate for the

approval by the board, candidates to

fill board vacancies as and when they

arise;

• To satisfy itself, with regard to

succession planning, that processes

are in place regarding both board and

senior appointments; and

• To undertake an annual performance

evaluation to ensure that all members

of the board have devoted sufficient

time to their duties.

The Committee met twice during the

year. All members eligible to attend were

present at both the meetings.

Audit and Risk Committee

Our Audit and Risk Committee comprises

two non-executive directors and the

Chairman. The members are:

N T Gourlay (chairman)

R C Wright

S G Bellamy

The Committee is chaired by Mr N T

Gourlay. The Company Secretary, or

alternate, also attends meetings in her

capacity as secretary of the Committee.

The chairman of the Committee is

considered by the board as having recent

and relevant financial experience. The

board also remains satisfied that the

Committee as a whole has competence

relevant to the sectors in which the

Company operates. The chairman of the

board is on the Committee due to his

experience and the small number of non-

executive directors on the board. The

board are satisfied with this arrangement.

The Audit and Risk Committee meets at

least three times a year. The meetings are

attended by invitation by the executive

directors and by the head of the internal

audit function and the internal auditor,

and by representatives of the Company’s

external auditor, at the chairman’s

discretion.

The Committee’s meetings in quarters

one and three coincide with the

Company’s reporting timetable for

its audited financial statements and

unaudited interim condensed financial

statements respectively. During these

meetings, the Committee:

• Reviews the drafts of the financial

statements and preliminary and

interim results announcements; and

• Reviews all published accounts

(including interim reports) and

post-audit findings before their

presentation to the board, focusing

in particular on accounting policies,

compliance, management judgement

and estimates, and considers the

reports of the external auditor on the

unaudited interim condensed financial

statements and the full-year audited

financial statements.

At the second of these meetings,

the Committee reviews the external

audit plan.

The Committee’s third meeting is

primarily concerned with:

• Reviewing the Company’s systems of

control and their effectiveness;

• Significant corporate governance

issues, such as those relating to the

regulation of financial services;

• Reviewing the external auditor’s

performance;

• Reviewing the risk register and

making recommendations to the

board on the content and relative

importance of the risks identified;

• Recommending to the board the

reappointment, or not, of the external

auditor; and

• Reviewing the effectiveness and

independence of the external auditor,

including monitoring the level of audit

and non-audit fees.

The Committee met three times in the

year with all directors in attendance at all

the meetings. The Committee reviewed

the effectiveness of the Company’s

system of internal control and financial

risk management during the year,

including the review of the Company’s

risk register, and including consideration

of reports from both the internal and

external auditors. The Committee

reported the results of its work to the

board and the board considered these

reports when reviewing the effectiveness

of the Company’s system of internal

control which forms part of the board’s

high-level risk review performed during

the year. The effectiveness of the internal

audit function was also monitored.

The Committee provides advice to the

board on whether the annual report is

fair, balanced and provides the necessary

information shareholders require to

assess the Company’s performance,

business model and strategy. In doing

so, the following issues have been

addressed specifically:

• Review of key strategic risks:

The Committee chairman conducts

an annual review of key strategic

risks and would normally undertake

site visits in order to ensure that

the review includes a detailed

understanding of the business.

However, due to the covid-19

pandemic, these visits remained

suspended in the year. The review

highlights the key risks based on

a combination of likelihood and

impact, and then also considers what

appropriate mitigating factors should

be implemented (highlights from this

work are included in the Strategic

Report).

• Review of poorly performing

dealerships: As part of both

the interim and year-end review

processes, consideration is given to

potential impairments of property,

plant and equipment, investment

property and goodwill relating to

poorly performing locations and that

any related impairments are provided

for. Management then follow up

with detailed action plans to either

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Chairman’s Statement on Corporate Governance

continued

improve dealership performance or

seek an exit solution. The Committee

also reviews progress on these plans

at the following review. As part of the

external audit, the Committee fully

discusses with the external auditor

the identification of cash generating

units (“CGUs”) for the purposes of

impairment testing. The Committee

is satisfied that no impairments were

required in relation to the current

financial year.

• Going concern: The Finance

Director provides an assessment of

the Company’s ability to continue to

trade on a going concern basis for

a period of one year from the date

of approval of this Annual Report.

Forecasts are based on financial

plans agreed with the board (budgets

or forecasts), the Company’s most

recent trading results, and include a

range of possible downside scenarios

including the impact of the ongoing

covid-19 pandemic and restrictions

placed on business in order to

combat its effects. The assumptions

that underpin the assessments are

considered and discussed in detail

when the Committee meets. The

conclusion of that review is included

in the Going Concern section of

this report.

• Inventory valuation: The value

of new and used cars, as well as

the provision for slow-moving and

obsolete inventory, can have a

significant influence on the inventory

valuation in the financial statements.

The Committee has considered the

Company’s procedures and controls,

which are satisfactory, to reduce the

risk of misstatement in relation to

inventory valuation.

• Pensions: The Company operates

a defined benefit pension scheme,

closed to future accrual, which has

an excess of liabilities over the value

of assets owned by the scheme.

The assessment of the valuation

of the scheme is based on several

key assumptions, which can have a

significant impact on the valuation

of the deficit. The Committee has

considered the assumptions used for

the valuation of the liabilities of the

scheme and is satisfied that these

are reasonable.

Mr N T Gourlay will attend the 2022

Annual General Meeting and will be

available at that meeting to answer

any questions regarding the workings

of the Audit & Risk Committee that

shareholders may wish to raise.

Anti-bribery

During the year, as well as its routine

business, the Committee continued to

monitor the suitability of the Company’s

controls designed to combat bribery

to satisfy itself of the adequacy of

its systems and procedures for the

prevention of bribery and corruption,

particularly in the light of the Bribery Act

2010. It has reviewed the Company’s

anti-bribery policy statement which has

been adopted by the board.

Whistleblowing

The Committee has reviewed the

arrangements for its employees to raise,

in confidence, concerns about possible

improprieties in relation to financial

reporting, suspected fraud and dishonest

acts, or other similar matters, commonly

known as “whistleblowing”. The

Committee reviews any such reported

incidences and any improvements to

internal procedures that may be required.

Non-audit services provided

by the external auditor

Non-audit services provided by the

Company’s auditor are kept under review

by the Committee. The Company’s

auditor does not provide compliance

services in the field of taxation advice.

The Committee ensures that the

auditor’s objectivity and independence

are safeguarded by ensuring that the

level of fees is not material to either the

Company nor the auditor. The report from

BDO LLP confirming their independence

and objectivity was reviewed by

the chairman of the Audit and Risk

Committee and the Finance Director. The

level of fees paid to BDO LLP for non-

audit services is not regarded to conflict

with auditor independence. Fees payable

to the auditor are set out in note 3 to the

financial statements.

Effectiveness and

independence of the

external auditor

The Committee is responsible for

advising the board on the appointment of

the auditor, assessing their independence

and formulating policy on the award of

non-audit work. The current auditor is

BDO and the year under review is their

third year of tenure. They were appointed

as the result of a formal competitive

tender process in 2019.

Non-audit work is only awarded to the

external auditor after due consideration

of matters of objectivity, independence,

value for money, quality of service

and efficiency.

At the conclusion of each year’s

audit, the performance of the external

auditor is reviewed by the Committee,

with the executive directors, covering

such areas as quality of audit team,

business understanding, audit approach

and process management. Where

appropriate, actions are agreed against

the points raised and subsequently

monitored for progress.

We note that, as part of their normal

cycle of reviews, the Financial Reporting

Council (“FRC”) has reviewed BDO’s

audit of the 31 March 2021 Annual

Report. The Audit & Risk Committee

received the final report on 23 May 2022

and has had initial discussions as to

the findings with the audit partner. The

chairman of the Audit & Risk Committee

will engage further with the wider audit

committee once he has discussed the

detailed report with the FRC.

Tax strategy and objective

As a responsible taxpayer, the Company

is committed to establishing, maintaining

and monitoring the implementation of an

appropriate tax strategy. Our tax strategy

is aligned with our objective of paying the

correct amount of tax at the right time.

Commercial transactions are therefore

structured in the most tax efficient

way but without resorting to artificial

arrangements that we would regard as

abusive. There is an ethical dimension

to achieving this objective. The ethical

Caffyns plc Annual Report 2022

dimension reflects the need to mitigate

the risk to the Company’s reputation that

would arise from tax strategy that entails

aggressive tax planning.

A copy of the Company’s tax strategy

is available from its corporate website,

www.caffynsplc.co.uk.

Going concern

The financial statements have been

prepared on a going concern basis,

which the directors consider appropriate

for the reasons set out below.

The directors have considered the going

concern basis and have undertaken

a detailed review of trading and cash

flow forecasts for a period of one year

from the date of approval of this Annual

Report. This has focused primarily on the

achievement of the banking covenants.

All three bank covenant tests have been

passed for the year under review. Under

the Company’s first covenant test, it

is required to make underlying profits

before senior interest(that being paid

to HSBC and VW Bank on its term loan

and revolving credit facility borrowings),

corporation tax, depreciation and

amortisation (“senior EBITDA”) for a

rolling twelve-month period which is

at least four times the level of senior

interest. Under the second test, the

Company’s borrowings from HSBC and

VW Bank on its term loan and revolving

credit facilities must be less than 375% of

its senior EBITDA.

The Company’s final covenant test

requires that the level of its bank

borrowings do not exceed 70% of the

independently assessed value of its

charged freehold properties. Property

values would need to reduce by some

two-thirds before this covenant test

became at risk of failure.

These Company’s covenants are tested

quarterly with the test on 31 March

2023 being the final test to be carried

out within the twelve-month period from

the anniversary of the signing of these

financial statements. The Company has

modelled this period and conclude that

there is headroom that would allow for an

approximate 10% reduction in expected

new and used units over this period.

External market commentary provided by

the Society of Motor Manufacturers and

Traders (“SMMT”) indicate that new car

registrationsare forecast to show a year-

on-year increase of 5% in 2022 to

1.72 million, with a further 17% increase

into 2023 to 2.02 million registrations as

the global shortage in semiconductors

ends, allowing manufacturing levels to

rise. The used car market has remained

stable over the five years from 2015 to

2019, at between 7.6 and 8.2 million

transactions and dropped by only 15% in

2020 due to the effects of the covid-19

pandemic, compared to a comparable

29% fall in new car registrations. Since

showrooms reopened in April 2021,

demand for used cars has been buoyant

and transactions grew by 12% in 2021.

The continuing shortage in new car

supply has assisted the used car market

and is expected to continue to do so.

The Company’s financial results in the

year under review were robust and the

current new carorder take held for future

delivery is at elevated levels.

The directors have also considered the

Company’s working capital requirements.

The Company meets its day-to-day

working capital requirements through

short-term stocking loans, bank

overdraft and revolving credit facility, and

medium-term revolving credit facilities

and term loans. At the year-end, the

medium-term banking facilities included

a term loan with an outstanding balance

of £6.2 million and a revolving credit

facility of £6.0 million from HSBC, its

primary bankers, with both facilities

being next renewable in April 2026.

HSBC also make available a short-term

overdraft facility of £3.5 million, which

is renewed annually each August. The

Company also has a ten-year term loan

from Volkswagen Bank with a balance

outstanding at 31 March 2022 of

£1.0 million, which is repayable, to March

2024, and a short-term revolving-credit

facility of £4.0 million, which is renewed

annually each August. In the opinion

of the directors, there is a reasonable

expectation that all facilities will be

renewed at their scheduled expiry dates.

The failure of a covenant test would

render these facilities repayable on

demand at the option of the lender.

Information concerning the Company’s

liquidity and financing risk are set

out on page 10 and note 21 to the

financial statements.

The directors have a reasonable

expectation that the Company has

adequate resources and headroom

against the covenant test to be able

continue in operational existence for the

foreseeable future and for a period of

one year from the date of approval of the

Annual Report. For those reasons, they

continue to adopt the going concern

basis in preparing this Annual Report.

Viability statement

In accordance with provision 31 of the

UK Corporate Governance Code, the

directors have assessed the viability of

the Company over a three-year period

to 31 March 2025 and have concluded

that the Company is viable over that

chosen period. The directors believe

this period to be appropriate as the

Company’s strategic review considered

by the board encompasses this period.

In making their assessment, the directors

have considered the Company’s current

financial position and performance

and its cash flow projections, including

future capital expenditure, in relation to

the availability of finance and funding

facilities, and have considered these

factors in relation to the principal risks

and uncertainties which are included in

the Report of the Directors.

During the year to 31 March 2022, the

board carried out a robust assessment

of the principal risks facing the Company,

including those that would threaten its

business model, future performance,

solvency or liquidity. The directors believe

that the Company is well placed to

manage its business risks successfully,

having considered the principal risks

and uncertainties. Accordingly, the

board believes that, taking into account

the Company’s current position, and

subject to the principal risks faced by

the business, the Company will be able

to continue in operation and to meet its

liabilities as they fall due for the period up

to 31 March 2025.

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Chairman’s Statement on Corporate Governance

continued

Risk management and

internal controls

The board is responsible for

maintaining a sound system of

internal controls, including financial,

operational and compliance controls

and risk management, and reviews

the effectiveness of the system at

least annually in order to safeguard

shareholders’ investment and the

Company’s assets. The system is

designed to manage rather than eliminate

risk and can provide only reasonable and

not absolute assurance against material

misstatement or loss.

The board has completed a robust

assessment of the Company’s

emerging and principal risks, including

a description of its principal risks, the

procedures that are in place to identify

emerging risks, and an explanation of

how these risks are being managed or

mitigated.

The board has reviewed the effectiveness

of the system of internal control. In

particular, it has reviewed and updated

the process for identifying and evaluating

the significant risks affecting the business

and the policies and procedures by

which these risks are managed.

Management are responsible for the

identification and evaluation of significant

risks applicable to their areas of

business together with the design and

operation of suitable internal controls.

These risks are assessed on a regular

basis and may be associated with a

variety of internal or external sources,

including control breakdowns, disruption

to information systems, competition,

natural catastrophe, customer or supplier

actions and regulatory requirements.

The process used by the board is to

review the effectiveness of the system

of internal control, including a review of

legal compliance, health and safety and

environmental issues on a six-monthly

basis. Insurance and risk management

and treasury issues are reviewed annually

or more frequently if necessary. In

addition, the Audit and Risk Committee

reviews the scope of audits, the half-

yearly and annual financial statements

(including compliance with legal and

regulatory requirements) and reports

to the board on financial issues raised

by both the internal and external audit

functions. Financial control is exercised

through an organisational structure which

has clear management responsibilities

with segregation of duties, authorisation

procedures and appropriate information

systems. The system of annual

budgeting with monthly reporting and

comparisons to budget is a key control

over the business and in the preparation

of consolidated accounts.

There is an ongoing programme of

internal audit visits to monitor financial

and operational controls throughout the

Company. The executive directors receive

regular reports from the internal audit and

health and safety monitoring functions

which include recommendations for

improvement.

Financial reporting

The directors consider the annual report

and accounts, taken as a whole, to be

fair, balanced and understandable, and

provides the information necessary for

shareholders to assess the Company’s

position, performance, business model

and strategy.

Relations with shareholders

The board values the constructive views

of its shareholders and recognises their

interest in the Company’s strategy and

performance, board membership and

quality of management. The views of

major shareholders are reported back

to the board as appropriate. The non-

executive directors are available to attend

meetings with major shareholders. The

principal methods of communication

with private investors are the Interim

Report, the Annual Report and the

Annual General Meeting. Information

on the Company is also included on its

corporate website, www.caffynsplc.co.uk.

The Annual General Meeting is used

to communicate with investors. The

chairmen of the Audit and Risk,

Remuneration and Nomination

Committees are available to answer

questions. Separate resolutions are

proposed on each issue so that they can

be given proper consideration and there

is a resolution to approve the Annual

Report and financial statements. The

Company counts all proxy votes and,

after it has been dealt with by a show

of hands, indicates the level of proxies

lodged on each resolution.

Relations with suppliers

The board maintains close relationships

with its suppliers and, in particular, with

the nine motor manufacturers for which

it currently holds operating franchises:

namely Audi, LEVC, Lotus, MG, SEAT,

Skoda, Vauxhall, Volkswagen and

Volvo. The Chief Executive holds regular

meetings with these parties and the

Company’s operations are split into three

divisions with the head of each division

specifically tasked with maintaining a

close and mutually beneficial relationship

with their manufacturer. For its wider

supplier base, the Company ensures

that it operates in an ethical manner,

ensuring that invoices are settled within

agreed terms. The average credit period

taken for trade-related purchases in the

year under review was twenty-eight days

(2021: thirty-three days). The shortening

of the payment settlement period arose

primarily from the withdrawal in the prior

year of certain payment extensions

allowed by many of the Company’s

vehicle manufacturers in relation to the

covid-19 pandemic.

During the year, the Company has been

appointed by Lotus Cars to extend its

representation, with the addition of a

Sussex territory. The Company expects

to commence trading for this new

business brands from its existing site in

Lewes, Sussex, in June 2022.

By order of the board

R C Wright

Chairman

26 May 2022

Caffyns plc Annual Report 2022

Directors’ Remuneration Report

Annual Statement from

the Chairman of the

Remuneration Committee

Introduction

On behalf of your board, I am pleased

to present our Directors’ Remuneration

Report for the year ended 31 March

2022. The Directors’ Remuneration

Report has been prepared on behalf

of the board by the Remuneration

Committee in accordance with the

requirements of the Companies Act

2006 and the Large and Medium-sized

Companies and Groups (Accounts and

Reports) (Amendments) Regulations

2013, and is split into two sections:

• The directors’ remuneration policy

sets out the Company’s policy on

remuneration, which was subject

to a binding shareholder vote at

the Annual General Meeting on 24

September 2020. This remuneration

policy will continue to be voted on in

the future at least once every three

years; and

• The annual report on remuneration

sets out the payments and awards

made to the directors and details the

link between company performance

and remuneration for the financial

year ended 31 March 2022.

The information set out on pages 24 to

34 (the annual report on remuneration)

is subject to audit except for the

performance graph and table, the

change in remuneration of the Chief

Executive, the relative importance of

the spend on pay, the implementation

of remuneration policy in the year, the

considerations by the directors of matters

relating to directors’ remuneration and

the statement of shareholder voting at

the 2020 Annual General Meeting.

Remuneration outcomes

for the financial year ended

31 March 2022

Annual bonus opportunities for the

directors are based on the achievement

of underlying profit before tax targets,

subject to the discretion of the

Remuneration Committee. The necessary

profit target was achieved in relation to

the financial year ended 31 March 2022

which would have led to the award of

bonuses to the executive directors of

100% of salary. However, the executive

directors requested the Remuneration

Committee to apply its discretion and

reduce the level of bonus award to 83%

of salary in order to ensure that the

executive directors did not benefit from

the positive, unbudgeted impact on

the result for the year from the support

received by the Company from the partial

holiday from business rates provided by

local Councils in the areas in which the

Company operates.

Key remuneration decisions for

the coming financial year ending

31 March 2023

Under the Company’s annual salary

review, the base salaries for the executive

directors were increased by 3.5% with

effect from 1 April 2022. Salaries for

employees in general were increased

by an overall average of 3.5% from

that date.

Conclusion

The directors’ remuneration policy that

follows this annual statement sets out the

Committee’s principles on remuneration

for the future and the annual report

on remuneration provides details of

the remuneration for the year ended

31 March 2022.

The Committee will continue to be

mindful of shareholder views and

interests and we believe that our

directors’ remuneration policy continues

to be aligned with the achievement of the

Company’s business objectives.

By order of the board

S G Bellamy

Chairman of the Remuneration Committee

26 May 2022

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Directors’ Remuneration Report continued

Caffyns plc Annual Report 2022

Remuneration policy

The policy of the Committee is to ensure that the executive directors are fairly rewarded for their individual contributions to the

Company’s overall performance and to provide a competitive remuneration package to executive directors to attract, retain and

motivate individuals of the calibre required to ensure that the Company is managed successfully in the interests of all stakeholders.

In addition, the Committee’s policy is that a substantial proportion of the remuneration of the executive directors should be

performance-related.

The Company’s directors’ remuneration policy is voted on every three years and was last approved by shareholders at the Annual

General Meeting held on 24 September 2020 and became effective from that date. The full policy was disclosed in the 2020 Annual

Report, which is available on the Caffyns plc website located at www.caffynsplc.co.uk.

The main elements of the remuneration package of executive directors are set out below:

Purpose and link to strategy Operation Maximum potential value Performance metrics

Base salary

Provide competitive

remuneration that will attract

and retain high-calibre

executive directors to develop

and implement the Company’s

strategy, without paying

more than necessary, and

having regard to the views

of shareholders and other

stakeholders.

Reviewed annually effective

from 1 April to reflect

role, responsibility and

performance of the individual

and the Company, and to

take account of rates of

pay for comparable roles

in similar companies. Paid

in twelve equal monthly

instalments during the year.

When selecting comparators,

the Committee has regard

to the Company’s revenue,

market worth and business

sector.

There is no prescribed

maximum increase although

the Committee would

carefully consider any

increases against those

awarded to the Company’s

employees, taken as a

whole. The annual rate of

any increase is set out in the

Annual Report in the section

covering remuneration for

the current year and the

following year.

The Committee considers

individual salaries at the

appropriate Committee meeting

each year taking due account

of the factors noted in the

operation of the salary policy.

Benefits

Provide market competitive

benefits consistent with the

role.

Benefits consist of the

provision of a company

car, private medical health

insurance, business-

related and certain other

subscriptions, and the

opportunity to join any

Company savings-related

share option scheme.

The cost of providing

benefits varies from time

to time and is borne wholly

by the Company except for

the cost of private medical

health insurance where the

Company contributes half of

the cost.

Not applicable.

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Purpose and link to strategy Operation Maximum potential value Performance metrics

Annual bonus

Incentivises achievement

of business objectives

by providing a reward for

performance against annual

targets.

Paid in cash after the end of

the financial year to which it

relates.

Up to 100% of salary. Targets based on the underlying

profit before tax of the Company.

The Committee sets threshold

and maximum targets on an

annual basis. In general:

• A percentage of the

maximum bonus is payable

for hitting the threshold

target; and

• 100% of the maximum

bonus is payable for

meeting or exceeding the

maximum target.

A sliding scale operates between

threshold and maximum

performance. Payment of any

bonus is subject to the discretion

of the Committee and, if deemed

appropriate, a bonus of up to

10% of salary may be paid in

exceptional circumstances,

despite the threshold target not

being reached.

Long-term incentives

Alignment of interests with

shareholders by providing

long-term incentives delivered

in the form of shares.

Executive directors are

able to apply for maximum

entitlement under the rules

of any Company savings-

related share option scheme.

No other long-term

incentive scheme is

considered appropriate for

the Company’s specific

circumstances.

See page 31 for details. Not applicable.

Pension

Attract and retain executive

directors for the long term

by providing funding for

retirement.

Executive directors are

eligible to join the Company’s

defined contribution pension

scheme on the same

terms as staff generally. In

accordance with the rules

of the pension scheme,

bonuses are pensionable.

As a result of changes in

pensions’ legislation effective

from 6 April 2006, executive

directors can choose to be

paid a salary supplement

in lieu of the employers’

contribution to the

Company’s pension scheme.

3% of base salary plus

bonus.

Not applicable.

Directors’ Remuneration Report continued

Caffyns plc Annual Report 2022

Notes to the policy table

The remuneration policy is designed

to support the strategy and promote

long-term sustainable success.

There is no link between the levels of

remuneration earned by the executive

directors and the Company’s share price.

When reviewing the remuneration policy,

the Remuneration Committee remains

mindful of the Company’s purpose,

values and culture.

Performance conditions

The Committee selected the performance

conditions as they are central to the

Company’s strategy and are key metrics

used by the executive directors to

oversee the operation of the business.

The performance targets for the annual

bonus are determined annually by the

Committee.

The performance targets for any annual

bonus in the coming financial year

ending 31 March 2023 will be based on

achievement of a pre-set profit before

tax for that year. The target profit would

be the profit excluding property profits

and losses and pension fund costs or

gains. The Remuneration Committee

also reserves the right to make additional

adjustments to the profit target when

calculating bonus entitlement for items

(losses or gains) that they considered not

to be part of normal underlying profit for

that year. Furthermore, in determining

whether to award a bonus, the

Committee would also take into account

factors such as dividend cover and

year-on-year changes to the net asset

value of the Company. The Committee

is of the opinion that these performance

targets are commercially sensitive and

that it would therefore be detrimental to

the Company to disclose their details in

advance. The targets will be disclosed

after the end of the financial year in the

Directors’ Remuneration Report in next

year’s Annual Report.

In exceptional circumstances, the

Remuneration Committee would have

the discretion to pay a maximum of 10%

of salary as a bonus, even if performance

were to be below the threshold required.

Differences from remuneration

policy for all employees

All employees of the Company are

entitled to base salary and benefits.

The opportunity to earn commission

or a bonus is made available to a high

proportion of employees. The maximum

opportunity available is based on the

seniority and responsibility of the role.

Statement of consideration

of employment conditions of

employees elsewhere in the

Company

The Committee receives reports on an

annual basis on the level of pay rises

awarded across the Company and takes

these into account when determining

salary increases for executive directors.

In addition, the Committee receives

reports on the structure of remuneration

for senior management in the tier below

the executive directors and uses this

information to ensure a consistency of

approach for its most senior managers.

The Committee does not specifically

invite employees to comment on the

directors’ remuneration policy, but it does

take note of any comments made by

employees.

Statement of consideration of

shareholder views

The board considers shareholder

feedback received in relation to the

Annual General Meeting each year and

any action is built into the Committee’s

business for the ensuing period. This,

and any additional feedback received

from shareholders from time to time, is

considered by the Committee as part

of the Company’s annual review of

remuneration policy.

Approach to recruitment

remuneration

The Committee’s approach to

recruitment remuneration is to offer

a market competitive remuneration

package sufficient to attract high-calibre

candidates who are appropriate to the

role but without paying any more than is

necessary.

Any new executive director’s

remuneration package would include

the same elements and be in line with

the policy table set out earlier in the

directors’ remuneration policy, including

the same limits on performance-related

remuneration.

Were an internal candidate promoted to

the board, the original grant terms and

conditions of any bonus or share awards

made before that promotion would

continue to apply.

Reasonable relocation and other similar

expenses may be paid if appropriate.

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Directors’ service contracts, notice periods and termination payments

Provision Policy Details

Contractual provisions

on a change of control

of the Company

Other provisions

in specific service

contracts

Notice periods in

executive directors’

service contracts.

Twelve months by executive

directors and the Company.

Executive directors

may be required

to work during the

notice period.

Twelve months by

executive directors and

the Company.

S G M Caffyn may give

six months’ notice but

is entitled to two years’

notice from the Company

and an unreduced early

retirement pension.

M Warren may give six

months’ notice and is

entitled to six months’

notice from the Company.

Compensation for

loss of office.

No more than twelve

months’ basic salary, bonus

and benefits (including

Company pension

contributions).

None. None, except for the

Chief Executive.

Termination payment to

S G M Caffyn following

a change of control

comprises a cash amount

equal to two years’ basic

salary, bonus and benefits

(including Company

pension contributions).

Treatment of

annual bonus on

termination.

Bonuses that have already

been declared are payable

in full. In the event of

termination by the Company

(except for cause), a

prorated bonus to the end

of the notice period would

also be payable.

None. None. None.

Treatment of

unvested options

from savings-

related share option

schemes.

Good leavers may exercise

their options within six

months of cessation (one

year for death).

Options of leavers for fraud,

dishonesty or misconduct

lapse. Options of other

leavers may be exercised

within six months of

cessation, but only to the

extent that they would

ordinarily become vested

during that time. There is no

discretion to treat any such

leaver as a “good leaver”.

Other than death,

“good leaver”

circumstances

comprise:

injury, disability,

redundancy,

retirement or

transfer of

employing

business outside

the Company.

The number of

options that can

be exercised is

reduced pro rata

to reflect the

proportion of the

vesting period

before cessation.

The number of options

that can be exercised

is reduced pro rata to

reflect the proportion of

the vesting period before

cessation.

Not applicable.

Directors’ Remuneration Report continued

Caffyns plc Annual Report 2022

Provision Policy Details

Contractual provisions

on a change of control

of the Company

Other provisions

in specific service

contracts

Exercise of

discretion.

Intended only to be relied

upon to provide flexibility in

unusual circumstances.

The Committee’s

determination

would consider

the particular

circumstances

of the executive

director’s

departure and

the recent

performance of the

Company.

Not applicable. Not applicable.

Outside

appointments.

Subject to approval. Board approval

must be sought.

Not applicable. Not applicable.

Non-executive

directors.

Appointed for three-year

terms.

Early termination

by either the

Company or the

director may occur

with six months’

notice. Fees

for that period

would be paid as

compensation

if the early

termination was

requested by the

Company.

Not applicable. Not applicable.

In the event of the negotiation of a compromise or settlement agreement between the Company and a departing director, the

Committee may make payments it considers reasonable in settlement of potential legal claims. Such payments may also include

reasonable reimbursements of professional fees in connection with such agreements.

The Committee may also include the reimbursement of repatriation costs or fees for professional or outplacement advice in the

termination package, if it considers it reasonable to do so. It may also allow the continuation of benefits for a limited period.

There are no contractual requirements for directors to own shares in the Company, although they are encouraged to become

shareholders in order to increase the alignment of their interests with those of other shareholders. At 31 March 2022, all directors

held a direct interest in the Ordinary shares of the Company and their interests are detailed on page 36.

Service contracts

Executive directors are appointed under rolling service contracts, whereas non-executive directors each have a fixed-term

appointment of three years, renewable upon expiry at the Company’s discretion. When considering the reappointment of a non-

executive director, the board reviews their attendance at, and participation in, meetings and their overall performance, and takes into

account the balance of skills and experience of the board as a whole.

Director

Commencement of

current renewal contract Expiry

Unexpired terms at

31 March 2022

R C Wright 27 July 2021 26 July 2024 28 months

N T Gourlay 26 September 2019 25 September 2022 6 months

S G Bellamy 18 June 2019 17 June 2022 3 months

Subsequent to the year-end, the contract of Mr S G Bellamy has been extended by three years to 17 June 2025.

Copies of directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office.

Directors’ service contracts, notice periods and termination payments continued

Fees from external directorships

None of the executive directors holds office as a non-executive director of other companies other than in a voluntary or honorary

(that is, unpaid) capacity. The Company does not have a formal policy on whether an executive director may or may not keep fees

gained from holding an external non-executive directorship. This would be decided on a case-by-case basis.

Total remuneration opportunity for the year ending 31 March 2023

The chart below illustrates the remuneration that would be paid to each of the executive directors under three different performance

scenarios: (i) below threshold; (ii) on target; and (iii) outperformance.

The elements of remuneration have been categorised into two components: (i) fixed; and (ii) annual variable (annual bonus awards).

S G M Caffyn

Below threshold

Target

Outperformance

50% £611,000

20% £382,000

£306,000

50%

80%

100%

M Warren

S J C Caffyn

Fixed Annual bonus

Below threshold

Target

Outperformance

50% £314,000

20% £196,000

£157,000

50%

80%

100%

Below threshold

Target

Outperformance

50% £100,000

20% £62,000

£50,000

50%

80%

100%

Each element of remuneration is defined in the table below:

Element Description

Fixed Base salary and benefits in kind

Annual variable Annual bonus awards

The on-target scenario assumes that for the annual bonus, underlying profit before tax would be 109% of the threshold target.

Non-executive directors’ fee policy

The policy for the remuneration of the non-executive directors is as set out below. Non-executive directors are not entitled to a

bonus, cannot participate in the Company’s savings-related share option scheme and are not eligible for pension arrangements or

any other employment benefits.

Purpose and link to

strategy Operation Maximum potential value Performance metrics

Non-executive director fees

Attract non-executive

directors who have a

broad range of experience

and skills to oversee the

implementation of the

Company’s strategy.

Non-executive directors’ fees are

determined by the board within

the limits set out in the Articles of

Association and are paid in twelve

equal, monthly instalments during

the year.

Reviewed annually to reflect

the role, responsibility and

performance of the individual

and the Company. Annual rate

of increase set out in the annual

report on remuneration for the

current year and the following year.

No prescribed maximum annual

increase.

None.

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Directors’ Remuneration Report continued

Annual report on remuneration

Save for the performance graph and table, the change in the remuneration of the Chief Executive, the relative importance of the

spend on pay, the implementation of remuneration policy for the year ending 31 March 2023, the consideration by the directors

of matters relating to directors’ remuneration and the statement of shareholder voting at the 2020 Annual General Meeting, the

information set out in this part of the Directors’ Remuneration Report is subject to audit.

Single total figure of remuneration for the year ended 31 March 2022

The following table shows a single total figure of remuneration in respect of qualifying services for the year ended 31 March 2022

for each director, together with comparative figures for the year ended 31 March 2021. The information provided in this part of the

Directors’ Remuneration Report is subject to audit.

When considering the year-on-year movements, it should be noted that the comparative year’s salaries included reductions that

formed part of the Company’s response to the covid-19 pandemic, which commenced in March 2020. Under that response, the

executive directors and the Chairman of the Company agreed to reduce their contractual salaries to a rate of £37,500 per annum,

for the month of April 2020. The remaining non-executive directors, whose annual fees were already below this level, agreed to a

20% reduction in their fees. These salary and fee reductions were then unwound in stages with the full-time executive directors

moving to 50% of their contractual salary from 1 May 2020 and then to 80% of their contractual salary from 1 June 2020. The

remuneration of both the Company Secretary and the Chairman remained at the annual ceiling of £37,500 for the month of May

2020 and then increased to 80% of their contractual salary and fees for June 2020. All board members returned to their full

contractual fee and salary levels from 1 July 2020. The total salary reductions across the three-month period amounted to £68,000

and these savings are reflected in the remuneration table below. In addition, the inflationary pay increase that had been scheduled

for implementation from 1 April 2020 was initially deferred, and subsequently cancelled. Lastly, under the terms of the directors’

bonus scheme for the prior year, the directors were entitled to a bonus equivalent to 31% of salary but waived those bonuses in

recognition of the exceptional circumstances of that year.

Salary

and fees

£’000

Taxable

benefits

£’000

Annual

bonus

£’000

In lieu of pension

contributions

£’000

Single

total figure

£’000

Fixed

sums

£’000

Variable

sums

£’000

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2022

Executive

S G M Caffyn 295 252 21 21 244 — 16 8 576 281 332 244

M Warren 152 130 5 7 125 — 7 4 289 141 164 125

S J Caffyn 48 45 8 6 40 — 3 1 99 52 59 40

Total 495 427 34 34 409 — 26 13 964 474 555 409

Non-executive

R C Wright 68 61 — — — — — — 68 61 68 —

N T Gourlay 30 28 — — — — — — 30 28 30 —

S G Bellamy 30 28 — — — — — — 30 28 30 —

Total 128 117 — — — — — — 128 117 128 —

623 544 34 34 409 — 26 13 1,092 591 683 409

Employment benefits made available to the executive directors include the provision of a company car, a 50% contribution towards

the cost of private medical health and the cost of appropriate subscriptions.

Annual bonus

Bonuses are earned by reference to the financial year and paid in May or June following the end of the financial year and on

completion of the external audit. Any bonuses accruing to the executive directors in respect of the year ended 31 March 2022

were based on the underlying profit before tax as shown below.

Bonus paid as a percentage of base salary

S G M Caffyn M Warren S J Caffyn

Threshold Target Maximum

Actual

performance Max Actual Max Actual Max Actual

Underlying

profit before tax

(£’million)* £2.20 £2.44 £4.20 £4.57 100% 83% 100% 83% 100% 83%

Bonus receivable 15% 25% 100% 100% £244,000 £125,000 £40,000

* The underlying profit before tax is calculated after taking account of the cost of such bonus including employer’s National Insurance charges and contributions in lieu of

pension contributions.

Caffyns plc Annual Report 2022

Although the stipulated maximum profit target was met in relation to the financial year ended 31 March 2022, the executive directors

requested that the Remuneration Committee apply its discretion and award a reduced level of bonuses, of 83%, to the executive

directors. This was due to the level of support received by the Company from the partial holiday from business rates provided by

local Councils in the areas in which the Company operates.

Pension entitlements and cash allowances

One executive director, the Company Secretary, was a deferred member of the Company’s closed defined benefit pension scheme

at 31 March 2022 (2021: one). The defined benefit pension scheme will provide a pension to the Company Secretary of a maximum

of two-thirds of final salary in respect of benefits accrued up to 31 March 2006. From 1 April 2006 until 1 April 2010 when the

scheme closed to future accrual, the accrued benefits of this director were based on a “career average” basis and based upon

earnings in each financial year. Under the rules of the scheme, the Company Secretary is eligible for a pension at normal retirement

age of 65. If early retirement is taken before age 65, the accrued pension is discounted by 5% per annum (2021: 5%) simple, except

where the Company consents to early retirement between 60 and 65 and then no discount is applied. Pensions paid increase in

line with price indexation which may be limited. On death, a one-half spouse’s pension becomes due. Children’s allowances up to a

maximum of 100% of the executive’s pension may be payable, including any spouse’s pension. Allowance is made in transfer value

payments for discretionary benefits. The total annual accrued pension excludes transferred-in benefits.

Normal

retirement date

Total annual accrued

defined benefit pension

at 31 March 2022

£’000

Total annual accrued

defined benefit pension

at 31 March 2021

£’000

S J Caffyn 12 December 2033 37 36

The pension for the Company Secretary for service since 2010 has been provided on a contributory basis through the Company’s

defined contribution pension scheme. In certain years, the Company Secretary elected not to be included in the defined contribution

pension scheme and instead to be paid a salary supplement in lieu of the employer’s contribution to the Company’s defined

contribution pension scheme.

In the year to 31 March 2022, one of the executive directors was a member of the Company’s defined contribution pension scheme

(2021: one).

The non-executive directors are not members of the Company’s defined contribution pension scheme (2021: none).

Statement of directors’ shareholdings

The directors’ shareholdings as at 31 March 2022 are summarised within the Report of the Directors.

All-employee share scheme

Details of share options held by executive directors under the Company’s savings-related share option schemes, the latest of which

were granted in December 2020, are as follows:

Scheme Date of grant

Earliest

exercise

date Expiry date

Exercise

price

Number at

1 April

2021

Granted/

(lapsed) in

the year

Number at

31 March

2022

SGM Caffyn ShareSave 23/12/2020 01/04/2024 30/09/2024 3.06 1,211 — 1,211

M Warren ShareSave 23/12/2020 01/04/2024 30/09/2024 3.06 1,211 — 1,211

The market value of the shares at the date of the grant on 23 December 2020 was £3.85 giving a face value of the awards for each

of the directors listed of £957.

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Directors’ Remuneration Report continued

Performance graph and table

The chart below shows the Company’s eight-year annual Total Shareholders’ Return performance against the FTSE Small-Cap Total

Return Index, which is considered an appropriate comparison to other public companies of a similar size.

0.0

50.0

100.0

150.0

200.0

FTSE Small Cap TSR Caffyns TSR

20/04/2014 20/04/2015 20/04/2016 20/04/2017 20/04/2018 20/04/2019 20/04/2020 20/04/2021 20/04/2022

The table below sets out the total remuneration delivered to the Chief Executive over each of the last nine years, valued using the

same methodology as applied to the single total figure of remuneration.

Chief Executive: S G M Caffyn

Financial years ended 31 March 2014 2015 2016 2017 2018 2019 2020 2021 2022

Total single remuneration figure (£’000) 534 389 410 388 302 364 319 281 576

Annual bonus % of maximum opportunity 100% 39% 43% 31% 0% 19% 0% 0% 83%

Salary and fees

% increase/(decrease)

Benefit-in-kind

% increase/(decrease)

Annual bonus

% increase

2019/20 to

2020/21

Current year

to prior year

2019/20 to

2020/21

Current year

to prior year

2019/20 to

2020/21

Current year

to prior year

Executive directors

Simon Caffyn (13)% 2% 4% (1)% 0% ∞

Sarah Caffyn (5)% 2% 44% 47% 0% ∞

Michael Warren (7)% 2% (45)% (25)% 0% ∞

Non-executive directors

Richard Wright (9)% 2% 0% 0% 0% 0%

Nigel Gourlay (5)% 2% 0% 0% 0% 0%

Stephen Bellamy (5)% 2% 0% 0% 0% 0%

Employee average

All employees (4)% 2% 14% (7.7)% 62% 64%

When considering the year-on-year increases in the table above, it should be noted that, as a result of the covid-19 pandemic, the

directors made voluntary salary reductions in the prior year period from April to June 2020 and waived bonuses that would have

been payable for the year ended 31 March 2021 equivalent to 31% of salary. The contractual salaries of the directors remained

unchanged during the year ended 31 March 2021 with the usual annual pay review, effective 1 April 2020, being cancelled due to

the covid-19 pandemic. Full details of the salaries and bonuses sacrificed in the prior year can be found on page 30.

The underlying package of benefit-in-kind for the directors, and for employees in general, remained unchanged in comparison to the

prior years although the outcomes were different. Care should be exercised when considering the percentage changes, given the

relatively small sums involved in each year.

Caffyns plc Annual Report 2022

Salary

only

2022

£’000

Total

earnings

2022

£’000

Ratio

2022

Salary

only

2021

£’000

Total

Earnings

2021

£’000

Ratio

2021

Single remuneration figure for the Chief

Executive 295 576 252 281

Remuneration for the Company’s

remaining full-time equivalent employees:

25th percentile 30 46 13:1 32 42 7:1

Median 24 33 17:1 14 32 9:1

75th percentile 14 23 25:1 21 22 13:1

The pay ratio disclosure above complies with Regulation 18 of The Companies (Miscellaneous Reporting) regulations 2018.

These ratios have been prepared using Option A in the regulations by ranking the annualised earnings of those employees of the

Company in employment on 31 March 2022, the last day of the financial year under review. Earnings includes salary, bonuses,

variable elements of pay such as commissions and overtime, holiday and sickness pay, company pension contributions and the

taxable value of benefits-in-kind. The Company’s Chairman and non-executive directors have been excluded from the calculation

as they receive a fee rather than a salary. Any employees on zero-hour contracts have been included if they worked in the month of

March 2022.

Change in remuneration of Chief Executive

The base salary of the Chief Executive increased by 2% between 31 March 2021 and 31 March 2022, mirroring that for the

Company’s Regional Directors and Heads of Business. Neither the Chief Executive nor the comparator group received any changes

to their employment benefits during the year. The Chief Executive received a bonus for the current year but waived his bonus for

the prior year. The bonuses earned by the comparator group increased by 145% compared to the prior year, which was heavily

impacted by the covid-19 pandemic. The comparator group comprises Regional Directors and Heads of Business and has been

selected on the basis that these managers have direct senior operational management responsibilities.

Relative importance of spend on pay

The table below sets out the total spend on pay in the two years to 31 March 2022 compared with other disbursements from profit

(i.e. distributions to shareholders). These were the most significant outgoings for the Company in the last financial year).

Spend in

2022

£’000

Spend in

2021

£’000

Decrease

Spend on staff pay (including directors) 15,455 13,614 13.5

Profit distributed by way of dividend 606 — ∞

A final dividend of 15.0 pence per ordinary share has been declared for the year ended 31 March 2022, in addition to an interim

dividend of 7.5 pence that was paid during the year. The total dividend payable in respect of the year to 31 March 2022 will

therefore be £606,000 (2021: £Nil).

Implementation of remuneration policy for the coming financial year ending 31 March 2023

The annual salaries and fees to be paid to directors in the coming financial year are set out in the table below, together with any

increases expressed as a percentage.

2023

salary/fees

£’000

2022

salary/fees

£’000

Increase

S G M Caffyn 306 295 3.5

M Warren 157 152 3.5

S J Caffyn 50 48 3.5

R C Wright 70 68 3.5

N T Gourlay 31 30 3.5

S G Bellamy 31 30 3.5

Stock code CFYN

www.caffyns.co.uk

Our Business Financials Other informationGovernanceOur Business Other informationGovernance FinancialsGovernance

Directors’ Remuneration Report continued

The basis for determining annual bonus

payments for the financial year ending

31 March 2023 is set out in the policy

table in the Directors’ Remuneration

Report on page 25. The profit targets

are considered commercially sensitive

because of the information that it could

provide to the Company’s competitors

and consequently these profit targets

will only be disclosed after the end

of the financial year, in the Directors’

Remuneration Report in the 2023 Annual

Report.

Consideration by the

directors of matters relating

to directors’ remuneration

The Committee

The Committee is responsible for

reviewing and recommending the

framework and policy for remuneration

of the executive directors and of senior

management. The Committee’s terms of

reference are available on the Company’s

corporate website. The members of the

Committee at 31 March 2022 were

Mr S G Bellamy (Chairman), Mr R C

Wright and Mr N T Gourlay. Mr S G

Bellamy and Mr N T Gourlay were

independent non-executive directors

throughout the year. The Committee

met three times during the year and all

members were present.

The primary role of the Committee is to

set the directors’ remuneration policy and

accordingly to:

• review, recommend and monitor the

level and structure of remuneration for

the executive directors and to review

and monitor the level and structure

of remuneration of other senior

executives;

• approve the remuneration package

for the executive directors;

• determine the balance between

base pay and performance-related

elements of the package to align

executive directors’ interests with

those of shareholders and other

stakeholders; and

• approve annual incentive payments

for executive directors.

Summary of activity during the

year ended 31 March 2022

During the year, the Committee

conducted its annual review of all

aspects of the remuneration packages

of the executive directors to ensure

that they continue to reward and

motivate achievement of medium and

long-term objectives, and align their

interests with those of shareholders and

other stakeholders. Accordingly, the

Committee’s activities during the year

included:

• reviewing the basic salaries of the

executive directors and reviewing and

monitoring the level and structure

of remuneration of other senior

executives;

• reviewing the basic salary of the

Company’s Chairman. This review

was performed by Mr S G Bellamy

and Mr N T Gourlay only; and

• setting the annual performance targets

in line with the Company’s plan for the

coming financial year ending 31 March

2023 and determining the amounts

that may potentially have been

payable for the financial year under

review ended 31 March 2022.

Statement of voting at the 2020 Annual General Meeting

At the last Annual General Meeting, votes to approve the Directors’ Remuneration Report were cast as follows:

Votes for % Votes against % Withheld %

2,899,279 99.95 1,700 0.05 100 0.00

A shareholder vote on the directors’ remuneration policy is required at least every third year. The policy was last voted on at the

2020 Annual General Meeting and will be voted on again at the 2023 Annual General Meeting. Votes at the 2020 meeting on the

directors’ remuneration policy were cast as follows:

Votes for % Votes against % Withheld %

2,899,279 99.95 1,700 0.05 100 0.00

Mr S G Bellamy will attend the 2022 Annual General Meeting and will be available at that meeting to answer any questions that

shareholders may wish to raise.

By order of the board

S G Bellamy

Chairman of the Remuneration Committee

26 May 2022

Caffyns plc Annual Report 2022

Report of the Directors

The directors present their report and the

financial statements for the year ended

31 March 2022.

Results and dividends

The results of the Company for the year

are set out in the financial statements on

pages 48 to 85. An interim dividend of

7.5p per share was paid to shareholders

on 10 January 2022. The board is

recommending a final dividend of

15.0 pence per share (2021: Nil) making

a total of 22.5 pence per share (2021:

Nil). Total Ordinary dividends paid

in the year amounted to £202,000.

Dividends paid in the year to preference

shareholders were £72,000 (2021:

£72,000) as set out in note 10 to the

financial statements.

Future developments of the Company are

set out in the Operational and Business

Review on pages 2 to 6.

Financial risk management

Consideration of principal risks and

uncertainties is included on pages 9 to

11 of the Strategic Report, including the

management of financial risks. These

are also outlined further in note 21 to the

financial statements.

Appointment and

replacement of the Company’s

directors

The rules for the appointment and

replacement of the Company’s directors

are detailed in the Company’s Articles of

Association. Directors are appointed by

ordinary resolution at a general meeting

by shareholders entitled to vote or by

the board either to fill a vacancy or as

an addition to the existing board. The

appointment of non-executive directors

is on the recommendation of the

Nomination Committee; the procedure is

detailed in the Chairman’s Statement on

Corporate Governance on page 18.

Directors

Details of the directors who served during

the year and who remained in office at

31 March 2022 are set out below.

Mr R C Wright PG Dip FIMI FCIM was

appointed Chairman on 26 July 2012.

He joined the board as a non-executive

director and Chairman-elect on

1 November 2011. He has previously

held senior executive roles with the Ford

Motor Company including: Director,

European Operations at Jaguar Cars

Limited; Director of Sales, Ford Motor

Company Limited; and President/

Managing Director of Ford Belgium NV.

He was Chairman of API Group plc from

2001 until 31 October 2014, and sat on

the advisory board of Warwick Business

School, University of Warwick, for several

years. He is the former Chair of the board

of National Savings and Investments, part

of HM Treasury. He is currently an advisor

to a number of privately held companies

including being Chairman of Thames

River Moorings Limited.

Mr N T Gourlay BSc, a Chartered

Accountant, joined the board as a non-

executive director on 26 September

2013. He spent more than twenty years

with the BAT plc group of companies,

leaving in 2001. In 2003 Mr Gourlay

co-founded Animos LLP, a business

consultancy of which he remains a

partner.

Mr S G Bellamy BCom CA(NZ) joined the

board on 18 June 2019and has been

chairman and non-executive director to

a wide range of both public and private

companiesand chairman of, and advisor

to, investment committees and capital

providers. He was previously joint founder

and Chief Executive Officer of Accretion

Capital LLP and Chief Operating Officer

and Chief Financial Officer of Sherwood

International Plc. Prior to Sherwood, he

was a UK Investment Director of Brierley

Investments, an active investor in quoted

UK companies. He is a New Zealand

Chartered Accountant andworked at

Coopers & Lybrand (now PwC), both

in New Zealand and New York. He is

currently also an advisor to mid-market

private equity firms.

Mr S G M Caffyn MA FIMI joined

the board on 16 July 1992 and was

appointed Chief Executive on

1 May 1998. He graduated from

Cambridge in 1983 having read

engineering, and subsequently worked

for Andersen Consulting. He joined the

Company in 1990.

Mr M Warren BSc FCA joined the board

on 31 May 2016 and was appointed

Finance Director on 31 July 2016. He is a

Chartered Accountant and spent twenty

one years with H.R. Owen plc of which

the eight years until April 2015 were as

Finance Director. He graduated from

Southampton in 1986 having read civil

engineering and subsequently worked for

PwC.

Ms S J Caffyn BSc FCIPD AICSA FIMI

has thirty years’ Human Resource

experience across several different

sectors. She joined the board on

28 April 2003 as Human Resources

Director, having previously been Group

Personnel Manager and Company

Secretary. A Chartered Company

Secretary, she has governance

experience from several not-for-profit

organisations.

Stock code CFYN

www.caffyns.co.uk

Our Business Financials Other informationGovernanceOur Business Other informationGovernance FinancialsGovernance

Report of the Directors continued

Interests in shares

The interests of the directors and their families in the shares of the Company are as follows:

As at 31 March 2022 As at 31 March 2021

Ordinary

11%

Preference

Preference Ordinary

11%

Preference

R C Wright 7,500 — — 7,500 — —

S G M Caffyn 76,988 1,600 200 76,988 1,600 200

M Warren 6,825 — — 6,825 — —

S J Caffyn 46,232 1,655 — 46,232 1,655 —

N T Gourlay 4,893 — — 4,893 — —

S G Bellamy 5,000 — — 5,000 — —

Mr S G M Caffyn and Ms S J Caffyn

are directors of Caffyn Family Holdings

Limited, which owns all the 2,000,000

6% Cumulative Second Preference

shares which have full voting rights,

except in relation to matters that under

the Listing Rules (as amended from time

to time) are required to be voted on by

premium-listed securities, being the

Ordinary shares.

The market price of the Company’s

Ordinary shares at 31 March 2022 was

£5.50 and the range of market prices

during the year was £3.70 to £6.00.

Compensation for loss of

office

In the event of an executive director’s

employment with the Company

being terminated, Mr S G M Caffyn is

entitled to receive from the Company

a sum equivalent to twice his annual

emoluments, which applied immediately

before his termination. Ms S J Caffyn is

entitled to receive from the Company

a sum equivalent to her annual

emoluments, which applied immediately

before her termination, and Mr M Warren

is entitled to receive from the Company

a sum equivalent to six months’

emoluments, which applied immediately

before his termination. Emoluments

include a proportion of the available

bonus, which the expired part of the

measured period for bonus bears to the

whole of such measurement period. The

executive directors’ service contracts

commenced from the date of their

appointment to the board.

In the event of the Chairman’s or a non-

executive director’s employment with

the Company being terminated, they are

entitled to receive from the Company a

sum equivalent to six months’ fees.

Directors’ indemnity and

insurance

The Company’s Articles of Association

permit the board to grant the directors

indemnities in relation to their duties

as directors in respect of liabilities

incurred by them in connection with

any negligence, default, breach of duty

or breach of trust in relation to the

Company. In line with market practice,

each director has the benefit of a deed

of indemnity. The Company has also

purchased insurance cover for the

directors against liabilities arising in

relation to the Company, as permitted by

the Companies Act 2006. This insurance

does not cover fraudulent activity.

Sharesave scheme

The Company encourages employee

share ownership through the provision of

periodic Save As You Earn schemes. The

current scheme, which is administered

by the Yorkshire Building Society, was

launched in December 2020 with share

options for 101,926 Ordinary shares

being subscribed. The scheme matures

in February 2024 when the share options

become exercisable upon expiry of a

three-year savings contract at a pre-

determined price of £3.06 per share. At

31 March 2022, the number of share

options outstanding was 94,325.

Greenhouse gas emissions

Information on greenhouse gas

emissions is set out in the Strategic

Report on page13.

Employees

Employees are encouraged to discuss

with management any matters which

they are concerned about and issues

affecting the Company. The Chief

Executive had planned in the previous

financial year to start visiting each site

regularly for a question-and-answer

session with staff, although this has

had to be delayed due to the covid-19

pandemic. Once physical visits are able

to occur on a routine basis, he will be

reporting to the board on the outcome

of these sessions. In addition, the board

takes account of employees’ interests

when making decisions. Suggestions

from employees aimed at improving the

Company’s performance are welcomed.

The board reviews feedback from the

employee consultation group on pay

and bonuses as well as reviewing all

exit interview feedback. The board

also meets with senior staff during the

strategic review process. The Company

has a Human Resources director, Ms S J

Caffyn. Further information on employees

is set out in the Strategic Report on page

8 and the Section 172 statement on

page 14.

Caffyns plc Annual Report 2022

Share capital and the rights

and obligations attaching to

As at 31 March 2022, the issued share

capital of the Company comprised

Ordinary shares of 50p each and three

classes of preference share, namely 7%

Cumulative First Preference shares of £1

each, 11% Cumulative Preference shares

of £1 each, and 6% Cumulative Second

Preference shares of 10p each. Details of

the share capital of the Company are set

out in note 25 to the financial statements.

Subject to applicable statutes and other

shareholders’ rights, shares may be

issued with such rights and restrictions

as the Company may by ordinary

resolution decide.

Holders of Ordinary shares are entitled

to attend and speak at general meetings

of the Company, to appoint one or more

proxies (and, if they are corporations,

corporate representatives). Holders of

Ordinary shares are entitled to receive a

dividend, if one is declared, and a copy

of the Company’s annual report and

accounts.

Holders of Cumulative First Preference

shares are entitled, in priority to any

payment of dividend on any other

class of shares, to a fixed cumulative

preferential dividend at the rate of 7% per

annum.

Subject to the rights of the holders of

Cumulative First Preference shares,

holders of 6% Cumulative Second

Preference shares of 10p each are

entitled in priority to any payment of

dividend on any other class of shares to

a fixed cumulative preferential dividend at

the rate of 6% per annum.

Subject to the rights of the holders of

Cumulative First Preference shares and

6% Cumulative Second Preference

shares of 10p, holders of 11%

Cumulative Preference shares of £1 each

are entitled in priority to any payment of

dividend on any other class of shares to

a fixed cumulative preferential dividend

at the rate of 11% per annum. The

percentage of the total share capital

represented by each class of share as at

31 March 2022 is shown below.

The full rights and obligations attaching

to the Company’s shares are set out in

the Company’s Articles of Association,

copies of which can be obtained from

Companies House or by writing to the

Company Secretary.

£’000 %

Authorised

500,000 7% Cumulative First Preference shares of £1 each 500 12.35

1,250,000 11% Cumulative Preference shares of £1 each 1,250 30.86

3,000,000 6% Cumulative Second Preference shares of 10p each 300 7.41

4,000,000 Ordinary shares of 50p each 2,000 49.38

4,050 100.00

Allotted, called-up and fully paid

170,732 7% Cumulative First Preference shares of £1 each 171 7.58

441,401 11% Cumulative Preference shares of £1 each 441 19.60

2,000,000 6% Cumulative Second Preference shares of 10p each 200 8.88

Total Preference shares recognised as a financial liability 812 36.06

2,879,298 Ordinary shares of 50p each 1,439 63.94

2,251 100.00

Stock code CFYN

www.caffyns.co.uk

Our Business Financials Other informationGovernanceOur Business Other informationGovernance FinancialsGovernance

Report of the Directors continued

Property

The Company valued its portfolio of

freehold premises as at 31 March 2022.

The valuation was carried out by CBRE

Limited, Chartered Surveyors, based on

an existing use valuation. The excess

of the valuation over net book value

at that date was £13.3 million

(2021: £12.3 million). In accordance with

the Company’s accounting policies, this

surplus has not been incorporated into

these financial statements.

Voting rights, restrictions on

voting rights and deadlines

for voting rights

Shareholders (other than any who,

under the provisions of the Articles of

Association or the terms of the shares

they hold, are not entitled to receive

such notices from the Company) have

the right to receive notice of, and attend,

and to vote at all general meetings of

the Company. The Company’s auditor

has similar rights except that they may

not vote. A resolution put to the vote at

any general meeting is to be decided

on a show of hands unless (before or

on the declaration of the result of the

show of hands or on the withdrawal of

any demand for a poll) a poll is properly

demanded.

Every member present in person at a

general meeting has, on the calling of a

poll, one vote for every Ordinary share of

which the member is the holder, and one

vote for every 6% Cumulative Second

Preference share of which the member

is the holder. In the case of joint holders

of a share, the vote of the member

whose name stands first in the register

of members is accepted to the exclusion

of any vote tendered by any other

joint holder. Unless the board decides

otherwise, a shareholder may not vote at

any general meeting or class meeting or

exercise any rights in relation to meetings

while any amount of money relating to

their shares remains outstanding.

A member is entitled to appoint a proxy

to exercise all or any of their rights to

attend and speak and vote on their

behalf at a general meeting. Further

details regarding voting at the Annual

General Meeting can be found in the

notes to the Notice of the Annual General

Meeting. To be effective, paper proxy

appointments and voting instructions

must be received by the Company’s

registrars no later than 48 hours before a

general meeting.

There are no restrictions on the transfer

of Ordinary shares other than certain

restrictions which may be imposed

pursuant to the Articles of Association of

the Company, certain restrictions, which

may, from time to time, be imposed by

laws and regulations (for example in

relation to insider dealing), restrictions

pursuant to the Company’s share dealing

code whereby directors and certain

employees of the Company require

prior approval to deal in the Company’s

shares, and where a person has failed to

provide the Company with information

concerning the interests in those shares.

The Company is not aware of any

arrangements or agreements between

shareholders that may result in

restrictions on the transfer of Ordinary

shares or on voting rights.

Significant direct or indirect

shareholdings

At 24 May 2022, the directors were

aware of the following interests in 3% or

more of the nominal value of the Ordinary

share capital (excluding treasury shares)

of the Company:

Ordinary

shares %

Maland Pension Fund (Pershing Nominees Ltd RKCLT) 390,000 14.47

Charles Stanley 241,114 8.93

HSBC Republic Bank Suisse SA 128,349 4.76

Caffyns Pension Fund 125,570 4.66

GAM Exempt UK Opportunities Fund 108,575 4.01

Interactive Investor Services Nominees Ltd 107,997 4.00

A W Caffyn/B Lees 107,409 3.98

K E Caffyn 104,804 3.89

M I Caffyn 103,495 3.84

Armstrong Investments (Nortrust Nominees) 100,000 3.71

Caffyns plc Annual Report 2022

Fostering relationships with

stakeholders

Details of the Company’s engagement

with stakeholders are explained in more

detail on page 14.

The Company also engages with its

suppliers in order to maintain good

relationships, and with its prospective

and actual customers by offering

excellent service and an attractive omni-

channel retail experience.

Modern Slavery Act 2015

In the light of the legislation regarding

employment and human rights, in

particular the Modern Slavery Act 2015,

the board continues to review its policies

and risk management processes to

determine additional measures which

may be required to prevent slavery and

human trafficking taking place in any part

of its businesses, or in its supply chains.

We expect all who have, or seek to have,

a business relationship with Caffyns

plc or with any of our employees, to

familiarise themselves with our anti-

slavery values and to act at all times in

a way which is consistent with those

values.

The board has adopted a Statement on

Slavery and Human Trafficking, which

can be found on its corporate website at

www.caffynsplc.co.uk.

Business at the Annual

General Meeting

As well as dealing with formal business,

the Company takes the opportunity

afforded at the Annual General Meeting

to provide up-to-date information

about the Company’s trading position

and to invite and answer questions

from shareholders on its policies and

business. At the Annual General Meeting,

a separate resolution is proposed for

each substantive matter. The Company’s

Annual Report and financial statements

are posted to shareholders, together with

the Notice of Annual General Meeting

summarising the business proposed,

giving the requisite period of notice.

The board has carefully considered the

format of this year’s Annual General

Meeting, which is scheduled to be held

on 2 August 2022, and its intention is

that the meeting will be run as an open

meeting to which shareholders will be

invited to attend in person. Further

information will be made available

closer to the date of the meeting via the

Company’s corporate website, www.

caffynsplc.co.uk.

Auditor

BDO LLP has indicated its willingness

to continue as the independent auditor

to the Company and a resolution

concerning its reappointment will be

proposed at the Annual General Meeting

in August 2022.

By order of the board

S J Caffyn

Company Secretary

26 May 2022

Stock code CFYN

www.caffyns.co.uk

Our Business Financials Other informationGovernanceOur Business Other informationGovernance FinancialsGovernance

Directors’ Responsibilities Statement

Caffyns plc Annual Report 2022

The directors are responsible for

preparing the annual report and the

financial statements in accordance with

UK-adopted international accounting

standards and applicable law and

regulations.

Company law requires the directors

to prepare financial statements for

each financial year. Under that law,

the directors are required to prepare

the group financial statements and

have elected to prepare the company

financial statements in accordance with

UK-adopted international accounting

standards. Under company law, the

directors must not approve the financial

statements unless they are satisfied that

they give a true and fair view of the state

of affairs of the group and company and

of the profit or loss for the group for that

period.

In preparing these financial statements

the directors are required to:

• select suitable accounting policies

and then apply them consistently;

• make judgements and accounting

estimates that are reasonable and

prudent;

• state whether they have been

prepared in accordance with

UK-adopted international accounting

standards, subject to any material

departures disclosed and explained in

the financial statements;

• prepare the financial statements on

the going concern basis unless it is

inappropriate to presume that the

Group and the Company will continue

in business;

• prepare a Director’s Report, a

Strategic Report and Remuneration

Committee Report which comply with

the requirements of the Companies

Act 2006.

The directors are responsible for keeping

adequate accounting records that

are sufficient to show and explain the

company’s transactions and disclose

with reasonable accuracy at any time the

financial position of the Company and

enable them to ensure that the financial

statements comply with the Companies

Act 2006.

They are also responsible for

safeguarding the assets of the Company

and hence for taking reasonable steps

for the prevention and detection of fraud

and other irregularities. The directors are

responsible for ensuring that the Annual

Report and accounts, taken as a whole,

are fair, balanced, and understandable

and provides the information necessary

for shareholders to assess the Group’s

performance, business model and

strategy.

Website publication

The directors are responsible for

ensuring the Annual Report and the

financial statements are made available

on a website. Financial statements are

published on the Company’s corporate

website, www.caffynsplc.co.uk, in

accordance with legislation in the United

Kingdom governing the preparation and

dissemination of financial statements,

which may vary from legislation in other

jurisdictions. The maintenance and

integrity of the Company’s website is

the responsibility of the directors. The

directors’ responsibility also extends

to the ongoing integrity of the financial

statements contained therein.

Directors’ responsibilities

pursuant to Disclosure

Guidance and Transparency

Rules 4 (“DTR 4”)

The directors confirm to the best of their

knowledge that:

• the financial statements have

been prepared in accordance with

the applicable set of accounting

standards, give a true and fair view of

the assets, liabilities, financial position

and profit and loss of the Group and

the Company; and

• the Annual Report includes a fair

review of the development and

performance of the business and the

financial position of the Group and

Company, together with a description

of the principal risks and uncertainties

that they face.

Approved by order of the board

S G M Caffyn M Warren

Chief Executive Finance Director

26 May 2022

Report of the Independent Auditor

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Opinion on the financial

statements

In our opinion:

• the financial statements give a true

and fair view of the state of the

Group’s and of the Parent Company’s

affairs as at 31 March 2022 and of

the Group’s and Parent Company’s

profit for the year then ended;

• the Group financial statements

have been properly prepared in

accordance with UK-adopted

international accounting standards;

• the Parent Company financial

statements have been properly

prepared in accordance with

UK-adopted international accounting

standards; and

• the financial statements have been

prepared in accordance with the

requirements of the Companies

Act 2006.

We have audited the financial statements

of Caffyns plc (the ‘Parent Company’)

and its subsidiaries (the ‘Group’) for

the year ended 31 March 2022 which

comprise the Group and Company

Income Statement, the Group and

Company Statement of Comprehensive

Income, the Group and Company

Statement of Financial Position, the

Group and Company Statement of

Changes in Equity, the Group and

Company Cash Flow Statement and

notes to the financial statements,

including a summary of significant

accounting policies. The financial

reporting framework that has been

applied in their preparation is applicable

law and UK-adopted international

accounting standards and as regards the

Parent Company financial statements, as

applied in accordance with the provisions

of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance

with International Standards on Auditing

(UK) (ISAs (UK)) and applicable law. Our

responsibilities under those standards

are further described in the Auditor’s

responsibilities for the audit of the

financial statements section of our report.

We believe that the audit evidence

we have obtained is sufficient and

appropriate to provide a basis for our

opinion. Our audit opinion is consistent

with the additional report to the audit

committee.

Independence

Following the recommendation of the

Audit & Risk Committee, we were

appointed by the directors on 25 July

2019 to audit the financial statements

for the year ended 31 March 2020 and

subsequent financial periods. The period

of total uninterrupted engagement

including retenders and reappointments

is three years, covering the years ended

31 March 2020 to 31 March 2022. We

remain independent of the Group and

the Parent Company in accordance with

the ethical requirements that are relevant

to our audit of the financial statements

in the UK, including the FRC’s Ethical

Standard as applied to listed public

interest entities, and we have fulfilled

our other ethical responsibilities in

accordance with these requirements.

The non-audit services prohibited by that

standard were not provided to the Group

or the Parent Company.

Conclusions relating to

going concern

In auditing the financial statements, we

have concluded that the directors’ use

of the going concern basis of accounting

in the preparation of the financial

statements is appropriate. Our evaluation

of the directors’ assessment of the

Group and the Parent Company’s ability

to continue to adopt the going concern

basis of accounting included:

• Evaluating the directors’ assessment

of going concern through analysis

of the Group’s cash flow forecast

through to 31 March 2025, including

assessing and challenging the

assumptions underlying the forecasts

by reference to our own knowledge

of the industry and also commentary

and forecasts made by industry

experts (e.g. SMMT, CAP).

• As part of this process, we have

considered the impact of factors

such as inflationary and supply-chain

pressures. We have also sensitised

these forecasts and considered

the underlying assumptions of the

forecasts to industry commentary.

• We also obtained an understanding

of the financing facilities, including the

nature of these facilities, repayment

terms and covenants. We then

assessed the facility headroom and

covenant compliance calculations on

both a base case scenario, and the

sensitised forecasts.

• We considered the likelihood of the

sensitised forecasts happening and

considered what actions the Group

has available should there be a

potential covenant breach.

We assessed the adequacy and

appropriateness of the going concern

disclosures in the financial statements

with reference to the requirements of the

financial reporting framework and our

understanding of the business.

Based on the work we have performed,

we have not identified any material

uncertainties relating to events or

conditions that, individually or collectively,

may cast significant doubt on the Group

and the Parent Company’s ability to

continue as a going concern for a period

of one year from when the financial

statements are authorised for issue.

In relation to the Parent Company’s

reporting on how it has applied the UK

Corporate Governance Code, we have

nothing material to add or draw attention

to in relation to the directors’ statement

in the financial statements about whether

the directors considered it appropriate

to adopt the going concern basis of

accounting.

Our responsibilities and the

responsibilities of the directors with

respect to going concern are described

in the relevant sections of this report.

Report of the Independent Auditor continued

Caffyns plc Annual Report 2022

Overview

Coverage

100% (2021: 100%) of Group profit before tax

100% (2021: 100%) of Group revenue

100% (2021: 100%) of Group total assets

Key audit matters

2022 2021

Defined benefit pension scheme ✔ ✔

Going concern ✗ ✔

Impairment review ✗ ✔

Going concern is no longer considered to be a key audit matter due to the strength of the Company’s

and Group’s performance during the year and financial position at the year-end.

The impairment review is also no longer considered a key audit matter due to the financial performance

of the Group and Company and the extent of the headroom in management’s assessment.

Materiality Group financial statements as a whole

£220,000 (2021: £80,000) based on 5% (2021: 5%) of profit before tax (2021: profit before tax adjusted

for the impairment charge in the year)

These are areas which have been subject to a full scope audit by the group engagement team

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system

of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of

management override of internal controls, including assessing whether there was evidence of bias by the directors that may have

represented a risk of material misstatement.

The only trading component in the Group is the Parent Company, Caffyns plc, with all the subsidiary companies being dormant.

Caffyns plc was identified as the only significant component and was subject to a full scope audit by the Group audit team. The

remaining components were considered to be not significant and were subject to analytical review procedures at a Group level by

the Group audit team.

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Financials Other informationGovernanceOur Business Financials

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial

statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to

fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the

audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial

statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

How the scope of our audit addressed

the key audit matter

Defined benefit

pension scheme

Refer to note

23, accounting

policies on page

53 to 58

The Group operates a defined benefit

pension scheme, which is accounted for in

accordance with IAS 19 (Revised) Employee

Benefits.

Management exercises a number of

judgements and actuarial assumptions, with

the assistance from their actuaries, which

have a significant impact on the valuation of

the pension scheme liabilities recognised on

the statement of financial position.

The valuation of the defined benefit pension

scheme is highly sensitive to movements into

the key inputs involved in valuing the liability.

The valuation of the liability is therefore

considered a significant audit risk.

We performed an assessment of whether the Group’s

accounting policy for the defined benefit pension scheme

complied with IAS 19 Employee Benefits and tested its

consistent application with reference to the principles in the

standard.

Working with our external actuarial experts, we challenged

the appropriateness of the actuarial valuation methodologies

and their inherent assumptions such as discount rates,

growth rates and mortality rates with reference to relevant

market data and industry practice. We also considered the

competence, capabilities, objectivity and independence of

management’s as well as our own actuarial experts.

We also tested the accuracy of the underlying data utilised

in the actuarial valuation on a sample basis to source

documentation such as the pension scheme accounting

records.

Key observations:

Based on the procedures performed, we considered the

assumptions and judgements made by management to be

reasonable.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We

consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of

reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality

level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not

necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular

circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Report of the Independent Auditor continued

Caffyns plc Annual Report 2022

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality

as follows:

Group financial statements Parent company financial statements

2022

2021

2022

2021

Materiality 220,000 80,000 220,000 80,000

Basis for

determining

materiality

5% of profit before tax 5% of adjusted profit

before tax

5% of profit before tax 5% of adjusted profit

before tax

Rationale for

the benchmark

applied

We considered 5%

of profit before tax to

be a key performance

benchmark for the

Group and the users of

the financial statements

in assessing financial

performance. There

were no impairments or

other items considered

to be exceptional

during the year for the

purposes of adjusting

profit before tax as the

basis of materiality.

We considered 5% of

adjusted profit before tax

to be a key performance

benchmark for the

Group and the users of

the financial statements

in assessing financial

performance.

We considered 5%

of profit before tax to

be a key performance

benchmark for the

Parent Company and

the users of the financial

statements in assessing

financial performance.

There were no

impairments or other

items considered to be

exceptional during the

year for the purposes of

adjusting profit before

tax as the basis of

materiality.

We considered 5% of

adjusted profit before tax

to be a key performance

benchmark for the Parent

Company and the users

of the financial statements

in assessing financial

Performance

materiality

165,000 60,000 165,000 60,000

Basis for

determining

performance

materiality

On the basis of our risk

assessment, together

with our assessment

of the Group’s control

environment, our

judgement is that

performance materiality

for the financial

statements should be

75% of materiality. The

basis of calculating

performance materiality

is unchanged from the

prior year.

On the basis of our risk

assessment, together

with our assessment

of the Group’s control

environment, our

judgement is that

performance materiality

for the financial

statements should be

75% of materiality.

On the basis of our risk

assessment, together

with our assessment of

the Parent Company’s

control environment,

our judgement is that

performance materiality

for the financial

statements should be

75% of materiality. The

basis of calculating

performance materiality

is unchanged from the

prior year.

On the basis of our risk

assessment, together

with our assessment of

the Parent Company’s

control environment,

our judgement is that

performance materiality

for the financial

statements should be

75% of materiality.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £8,800

(2021:£1,600). We also agreed to report differences below this threshold that, in our view, warranted reporting on

qualitativegrounds.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Other information

The directors are responsible for the other information. The other information comprises the information included in the Annual

Report other than the financial statements and our Auditor’s Report thereon. Our opinion on the financial statements does not cover

the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance

conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is

materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears

to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to

determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have

performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Corporate governance statement

The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the

Corporate Governance Statement relating to the Parent Company compliance with the provisions of the UK Corporate Governance

Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.

Going concern and

longer-term viability

• The directors’ statement with regards to the appropriateness of adopting the going concern basis of

accounting and any material uncertainties identified set out on page 21; and

• The directors’ explanation as to their assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate set out on page 21.

Other Code

provisions

• Directors’ statement on fair, balanced and understandable set out on page 22;

• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks

set out on page 22;

• The section of the Annual Report that describes the review of effectiveness of risk management and

internal control systems set out on page 22; and

• The section describing the work of the Audit & Risk Committee set out on page 19.

Report of the Independent Auditor continued

Caffyns plc Annual Report 2022

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the

Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic Report

and Directors’

Report

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and the Directors’ Report for the financial year for which

the financial statements are prepared is consistent with the financial statements; and

• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable

legal requirements.

In the light of the knowledge and understanding of the Group and Parent Company and its environment

obtained in the course of the audit, we have not identified material misstatements in the Strategic Report

or the Directors’ Report.

Directors’

remuneration

In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared

in accordance with the Companies Act 2006.

Corporate

governance

statement

In our opinion, based on the work undertaken in the course of the audit the information about internal

control and risk management systems in relation to financial reporting processes and about share capital

structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Guidance and Transparency

Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the

financial statements and has been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Parent Company and its

environment obtained in the course of the audit, we have not identified material misstatements in this

information.

In our opinion, based on the work undertaken in the course of the audit information about the Parent

Company’s corporate governance code and practices and about its administrative, management and

supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.

We have nothing to report arising from our responsibility to report if a corporate governance statement

has not been prepared by the Parent Company.

Matters on which

we are required to

report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act

2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for

our audit have not been received from branches not visited by us; or

• the Parent Company financial statements and the part of the Directors’ Remuneration Report to be

audited are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial

statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is

necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no

realistic alternative but to do so.

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Financials Other informationGovernanceOur Business Financials

Auditor’s responsibilities

for the audit of the financial

statements

Our objectives are to obtain reasonable

assurance about whether the financial

statements as a whole are free from

material misstatement, whether due to

fraud or error, and to issue an auditor’s

report that includes our opinion.

Reasonable assurance is a high level

of assurance, but is not a guarantee

that an audit conducted in accordance

with ISAs (UK) will always detect a

material misstatement when it exists.

Misstatements can arise from fraud

or error and are considered material

if, individually or in the aggregate,

they could reasonably be expected

to influence the economic decisions

of users taken on the basis of these

financial statements.

Extent to which the audit was

capable of detecting irregularities,

including fraud

Irregularities, including fraud, are

instances of non-compliance with laws

and regulations. We design procedures

in line with our responsibilities, outlined

above, to detect material misstatements

in respect of irregularities, including fraud.

The extent to which our procedures

are capable of detecting irregularities,

including fraud is detailed below:

Procedures performed by the Group

audit team included:

• Discussions with management,

the directors and those charged

with governance regarding known

or suspected instances of fraud

or non-compliance with laws and

regulations;

• Obtaining an understanding of

controls designed to prevent and

detect irregularities, including specific

consideration of controls and group

accounting policies relating to

significant accounting estimates;

• Obtaining an understanding of the

significant laws and regulations

impacting the Group and the

motor retail industry, including data

protection laws and regulations

around FCA compliance;

• Communicating relevant laws and

regulations and potential fraud risks

to all engagement team members

(which included motor dealership

specialists) and remained alert to

any indications of fraud or non-

compliance with laws and regulations

throughout the audit;

• Reviewing minutes of meetings of

those charged with governance

to identify any instances of non-

compliance with laws and regulations;

• Considering the susceptibility of the

financial statements to misstatement

as a result of fraud and identifying

the areas in which fraud might occur

as being through the management

override of controls and manual

adjustments to revenue and

estimates in inventory;

• Testing journals entries as part of

our planned audit approach, with a

particular focus on journal entries to

key financial statement areas such as

revenue and inventories and journals

raised after the year-end; and

• Consideration of significant

management judgements, particularly

in respect of the underlying

assumptions in impairment

assessments and estimating the

defined pension benefit liability

(as detailed within key audit

matters above).

Our audit procedures were designed to

respond to risks of material misstatement

in the financial statements, recognising

that the risk of not detecting a material

misstatement due to fraud is higher

than the risk of not detecting one

resulting from error, as fraud may involve

deliberate concealment by, for example,

forgery, misrepresentations or through

collusion. There are inherent limitations

in the audit procedures performed and

the further removed non-compliance with

laws and regulations is from the events

and transactions reflected in the financial

statements, the less likely we are to

become aware of it.

A further description of our

responsibilities is available on the

Financial Reporting Council’s website at:

www.frc.org.uk/auditorsresponsibilities.

This description forms part of our

auditor’s report.

Use of our report

This report is made solely to the Parent

Company’s members, as a body, in

accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work

has been undertaken so that we might

state to the Parent Company’s members

those matters we are required to state

to them in an auditor’s report and for

no other purpose. To the fullest extent

permitted by law, we do not accept or

assume responsibility to anyone other

than the Parent Company and the Parent

Company’s members as a body, for

our audit work, for this report, or for the

opinions we have formed.

Stephen Le Bas

(Senior Statutory Auditor)

For and on behalf of BDO LLP,

Statutory Auditor

Southampton

United Kingdom

BDO LLP is a limited liability partnership

registered in England and Wales

(with registered number OC305127).

26 May 2022

Income Statement

for the year ended 31 March 2022

Group and Company

Note

2022

£’000

2021

£’000

Revenue 1 223,928 165,085

Cost of sales (191,982) (142,304)

Gross profit 31,946 22,781

Operating expenses

Distribution costs (17,442) (13,481)

Administration expenses (9,227) (7,317)

Operating profit before other income 5,277 1,983

Other income (net) 4 390 909

Operating profit 5,667 2,892

Operating profit before non-underlying items 5,690 3,142

Non-underlying items within operating profit 2 (23) (250)

Operating profit 3 5,667 2,892

Finance expense 6 (1,116) (1,266)

Finance expense on pension scheme 7 (166) (202)

Net finance expense (1,282) (1,468)

Profit before taxation 4,385 1,424

Profit before tax and non-underlying items 4,574 1,876

Non-underlying items within operating profit 2 (23) (250)

Non-underlying items within finance expense on pension scheme 2 (166) (202)

Profit before taxation 4,385 1,424

Taxation 8 (1,386) (14)

Profit for the year attributable to the owners of the parent 2,999 1,410

Earnings per share

Basic 9 111.3p 52.4p

Diluted 9 109.6p 52.1p

Underlying earnings per share

Basic 9 117.0p 66.0p

Diluted 9 115.2p 65.6p

See accompanying notes to the financial statements.

Caffyns plc Annual Report 2022

Statement of Comprehensive Income

for the year ended 31 March 2022

Group and Company

Note

2022

£’000

2021

£’000

Profit for the year 2,999 1,410

Items that will never be reclassified to profit and loss:

Remeasurement of net defined benefit liability 23 5,045 (301)

Deferred tax on remeasurement 24 (1,261) 57

Effect of change in deferred tax rate 511 —

Total other comprehensive income/(expense), net of taxation 4,295 (244)

Total comprehensive income for the year 7,294 1,166

See accompanying notes to the financial statements.

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Financials Other informationGovernanceOur Business Financials

Statement of Financial Position

at 31 March 2022

Note

Group

2022

£’000

Group

2021

£’000

Company

2022

£’000

Company

2021

£’000

Non-current assets

Right-of-use assets 11 1,413 610 1,413 610

Property, plant and equipment 12 38,975 37,624 38,975 37,624

Investment properties 13 7,646 7,751 7,646 7,751

Interest in lease 14 389 557 389 557

Goodwill 15 286 286 286 286

Deferred tax asset 24 — 412 — 412

Investment in subsidiary undertakings 16 — — 250 250

48,709 47,240 48,959 47,490

Current assets

Inventories 17 27,546 36,562 27,546 36,562

Trade and other receivables 18 5,264 5,072 5,264 5,072

Interest in lease 14 168 173 168 173

Current tax recoverable 40 34 40 34

Cash and cash equivalents 2,759 5,735 2,759 5,735

35,777 47,576 35,777 47,576

Total assets 84,486 94,816 84,736 95,066

Current liabilities

Interest-bearing bank overdrafts and loans 20 1,875 3,875 1,875 3,875

Trade and other payables 19 29,495 39,338 29,745 39,588

Lease liabilities 22 496 495 496 495

Current tax payable 236 306 236 306

32,102 44,014 32,352 44,264

Net current assets 3,675 3,562 3,425 3,312

Non-current liabilities

Interest-bearing bank loans 20 11,312 12,187 11,312 12,187

Lease liabilities 22 1,434 783 1,434 783

Deferred tax liability 1,298 — 1,298 —

Preference shares 25 812 812 812 812

Retirement benefit obligations 23 2,797 9,434 2,797 9,434

17,653 23,216 17,653 23,216

Total liabilities 49,755 67,230 50,005 67,480

Net assets 34,731 27,586 34,731 27,586

Capital and reserves

Share capital 25 1,439 1,439 1,439 1,439

Share premium account 272 272 272 272

Capital redemption reserve 707 707 707 707

Non-distributable reserve 1,724 1,724 1,724 1,724

Retained earnings 30,589 23,444 30,589 23,444

Total equity attributable to shareholders 34,731 27,586 34,731 27,586

The financial statements were approved by the board of directors and authorised for issue on 26 May 2022 and were signed on its

behalf by:

R C Wright M Warren

Chairman Finance Director

See accompanying notes to the financial statements. Company number: 105664

Caffyns plc Annual Report 2022

Statement of Changes in Equity

for the year ended 31 March 2022

Group and Company

capital

£’000

premium

£’000

Capital

redemption

reserve

£’000

Non-

distributable

reserve

£’000

Retained

earnings

£’000

Total

£’000

At 1 April 2021 1,439 272 707 1,724 23,444 27,586

Total comprehensive income

Profit for the year — — — — 2,999 2,999

Other comprehensive income — — — — 4,295 4,295

Total comprehensive

income for the year — — — — 7,294 7,294

Transactions with owners:

Dividends — — — — (202) (202)

Issue of shares – SAYE — — — — — —

Share-based payment — — — — 53 53

At 31 March 2022 1,439 272 707 1,724 30,589 34,731

for the year ended 31 March 2021

Group and Company

capital

£’000

premium

£’000

Capital

redemption

reserve

£’000

Non-

distributable

reserve

£’000

Retained

earnings

£’000

Total

£’000

At 1 April 2020 1,439 272 707 1,724 22,238 26,380

Total comprehensive

income/(expense)

Profit for the year — — — — 1,410 1,410

Other comprehensive expense — — — — (244) (244)

Total comprehensive

income for the year — — — — 1,166 1,166

Transactions with owners:

Issue of shares – SAYE — — — — 3 3

Share-based payment — — — — 37 37

At 31 March 2021 1,439 272 707 1,724 23,444 27,586

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Financials Other informationGovernanceOur Business Financials

Cash Flow Statement

for the year ended 31 March 2022

Group and Company

Note

2022

£’000

2021

£’000

Net cash inflow from operating activities 27 3,390 6,724

Investing activities

Proceeds on disposal of property, plant and equipment — —

Purchases of property, plant and equipment (2,837) (394)

Receipt from investment in lease 185 185

Net cash outflow from investing activities (2,652) (209)

Financing activities

Revolving credit facility repaid (2,000) (2,000)

Revolving credit facility utilised — 1,000

Secured loans repaid (875) (657)

Bank refinancing arrangement fees (98) —

Issue of shares – SAYE scheme — 3

Dividends paid (202) —

Repayment of lease liabilities (539) (604)

Net cash outflow from financing activities (3,714) (2,258)

Net (decrease)/increase in cash and cash equivalents (2,976) 4,257

Cash and cash equivalents at beginning of year 5,735 1,478

Cash and cash equivalents at end of year 2,759 5,735

See accompanying notes to the financial statements.

Caffyns plc Annual Report 2022

Principal Accounting Policies

Basis of preparation and

statement of compliance

The financial statements have been

prepared in accordance with UK-adopted

international accounting standards in

conformity with the requirements of the

Companies Act 2006 and in accordance

with International Financial Reporting

Standards (“IFRS”) as adopted in the

United Kingdom.

The financial statements have been

prepared on the historical cost basis. The

principal accounting policies adopted

are set out below. The preparation of

financial statements in conformity with

IFRSs requires the use of estimates and

assumptions that affect the reported

amounts of assets and liabilities at the

date of the financial statements and

the reported amounts of revenues and

expenses during the reporting year.

Although these estimates are based

upon management’s best knowledge of

the amount, events or actions, actual

results may ultimately differ from those

estimates.

The estimated and underlying

assumptions are reviewed on an ongoing

basis. Revisions to accounting estimates

are recognised in the period in which the

estimate is revised if the revision affects

only that period or in the period of the

revision and future periods if the revision

affects both current and future periods.

Judgements made by the directors in

the application of accounting policies

that have significant effect on the

financial statements and estimates with

a significant risk of material adjustment in

the next year are discussed in note 32.

The consolidated financial statements are

prepared in Sterling, which is both the

functional currency of the Company and

its subsidiaries and the presentational

currency of the Group. All values are

rounded to the nearest thousand

pounds (£’000) except where otherwise

indicated.

Standards, amendments and

interpretations to existing

Standards that are not yet

effective and have not been

adopted early by the Group

There have been no adoptions during the

year which have had any material impact

on the financial statements.

At the date of authorisation of these

financial statements, there are no new

Standards, or amendments to existing

Standards, that have been published by

the International Accounting Standards

Board that are not effective, and, in some

cases, not yet been adopted by the UK

endorsement board that would have a

material impact on the Group.

Going concern

The financial statements have been

prepared on a going concern basis,

which the directors consider appropriate

for the reasons set out below.

The directors have considered the going

concern basis and have undertaken a

detailed review of trading and cash flow

forecasts for a period in excess of one

year from the date of approval of this

Annual Report. This has focused primarily

on the achievement of the banking

covenants, which have all been achieved

for the year under review.

Under the Company’s first covenant test,

it is required to make underlying earnings

before bank interest, depreciation and

amortisation (“senior EBITDA”) for the

rolling twelve-month period to

31 March 2022, which is at least four

times the level of interest payable

on bank borrowings to HSBC and

Volkswagen Bank (“senior interest”).

The Company’s second covenant test

requires total bank borrowings to HSBC

and Volkswagen Bank at 31 March 2022

not to exceed 375% of senior EBITDA

for the rolling twelve-month period to

31March 2022.

The Company’s final covenant test

requires that the level of its bank

borrowings do not exceed 70% of the

independently assessed value of its

charged freehold properties.

In the coming twelve months, each of

the three covenant tests must be passed

at 30 June 2022, 30 September 2022,

31 December 2022 and 31 March

2023, with the test on 31 March 2023

being the final test to be carried out

within the twelve-month period from

the anniversary of the signing of these

financial statements. The Company has

modelled this period and conclude that

there is headroom that would allow for an

approximate 10% reduction in expected

new and used units over this period.

External market commentary provided by

the Society of Motor Manufacturers and

Traders (“SMMT”) indicate that new car

registrationsare forecast to show a year-

on-year increase of 5% in 2022 to 1.72

million, with a further 17% increase into

2023 to 2.02 million registrations as the

global shortage in semiconductors ends

allowing manufacturing levels to rise. The

used car market has remained stable

over the five years from 2015 to 2019, at

between 7.6 and 8.2 million transactions

and dropped by only 15% in 2020 due

to the effects of the covid-19 pandemic,

compared to a comparable 29% fall in

new car registrations. Since showrooms

reopened in April 2021, demand for used

cars has been buoyant and transactions

grew by 12 % in 2021. The continuing

shortage in new car supply has assisted

the used car market, and is expected

to continue to do so. The Company’s

financial results in the year under review

were robust and the current new

carorder take held for future delivery is at

elevated levels.

The directors have also considered the

Company’s working capital requirements.

The Company meets its day-to-day

working capital requirements through

short-term stocking loans and bank

overdraft and medium-term revolving

credit facilities and term loans. At the

year-end, the medium-term banking

facilities included a term loan with an

outstanding balance of £6.2 million and

a revolving credit facility of £6.0 million

from HSBC, its primary bankers, with

both facilities being renewable in April

2026. HSBC also make available a short-

term overdraft facility of £3.5million,

which is renewed annually in August.

TheCompany also has a ten-year term

loan from Volkswagen Bank with a

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Principal Accounting Policies continued

balance outstanding at 31 March 2022

of £1.0 million, which is repayable to

March 2024, and a short-term revolving

credit facility of £4.0 million, which is

renewed annually in August. In the

opinion of the directors, there is a

reasonable expectation that all facilities

will be renewed at their scheduled expiry

dates. The failure of a covenant test

would render these facilities repayable on

demand at the option of the lender.

Information concerning the Company’s

liquidity and financing risk are set out

on page 10 and note 21 to the financial

statements.

The directors have a reasonable

expectation that the Company has

adequate resources and headroom

against the covenant test to be able

continue in operational existence for the

foreseeable future and for at least twelve

months from the date of approval of the

Annual Report. For those reasons, they

continue to adopt the going concern

basis in preparing this Annual Report.

Basis of consolidation

The consolidated financial statements

incorporate the financial statements of

the Company and its subsidiaries (“the

Group”) made up to 31 March each year.

All subsidiaries are currently dormant, so

the income, expenses and cash flows

are the same for the Group and the

Company.

The results of businesses and

subsidiaries acquired or disposed of

during the year are included in the

Consolidated Income Statement using

the acquisition method from the effective

date of acquisition or up to the effective

date of disposal, as appropriate.

Where necessary, adjustments are made

to the financial statements of subsidiaries

to bring the accounting policies used into

line with those used by the Group.

All intra-Group transactions, balances,

income and expenses are eliminated on

consolidation.

Acquisitions

On acquisition, the assets and liabilities

and contingent liabilities of a subsidiary

are measured at their fair values at the

date of acquisition. Any excess of the

cost of acquisition over the fair values

of the identifiable net assets acquired

is recognised as goodwill, which is

allocated to Cash Generating Units

(“CGUs”). Any deficiency of the cost

of acquisition below the fair values of

the identifiable net assets acquired (i.e.

discount on acquisition) is credited to

profit or loss in the period of acquisition.

Goodwill

Goodwill represents the excess of the

cost of an acquisition over the fair value

of the net identifiable assets acquired and

is tested annually for impairment. Any

impairment is recognised immediately

in the income statement and is not

subsequently reversed. Gains and losses

on subsequent disposal of the assets

acquired include any related goodwill.

Goodwill arising on acquisitions before

the date of transition to IFRS has been

retained at the previous UK GAAP

amounts subject to being tested for

impairment at that date, and annually

thereafter.

Revenue recognition

Revenue generated from a contract

for the sale of goods is recognised

on delivery when all promises to the

customer have been fulfilled, such as

the supply of a specific vehicle. If the

customer has added various accessory

products to their order, the Company’s

promise is fulfilled by supplying these

products onto the vehicle at the time of

its delivery. Where the Company acts

as an agent on behalf of a principal in

relation to the sale of a new car, the

associated income is recognised within

revenue in the period in which the

product is sold.

Finance commissions are earned from

the finance house that is providing a

finance arrangement to a consumer

buying the vehicle. In this regard, the

Company’s customer is considered to be

the finance house, rather than the end

user of the vehicle. Income derived from

such commissions is recognised within

revenue on completion of the arranging

of the various products (i.e. at the point

at which control passes to the customer).

For servicing work, the Company

promises to complete the work in

accordance to the contract. This

obligation is satisfied when the customer

takes collection of their vehicle on

completion of the work. If a customer

takes out a service plan, the Company

has a future obligation to complete

agreed work over a set period of time –

these obligations are only completed in

full once those elements of the service

plan have expired. Where the Company

sells a service plan alongside a vehicle,

the service element is distinct from the

vehicle sale and is subject to a fixed and

determinable transaction price. Each

individual service included within the

service plan is considered distinct and

revenue is recognised at a point in time

when the services have been carried out.

The obligation of supplying vehicle

parts to customers is satisfied when the

customer takes delivery of the goods.

Supplier income

The Company receives income from

brand partners and other suppliers.

These are generally based on achieving

certain predetermined objectives such as

specific sales volumes and maintaining

agreed operational standards. The

supplier income received is recognised

as a deduction from cost of sales at the

point when it is reasonably certain that

the targets have been achieved for the

relevant period and when income can be

measured reliably based on the terms

of each relevant supplier agreement.

Supplier income that has been earned

but not invoiced at the balance sheet

date is recognised in other receivables.

Manufacturer bonuses are recognised

as income to gross profit but not within

revenue.

Government and other

support grants

Government grants received under

the Coronavirus Job retention Scheme

(“CJRS”) and support and re-opening

grants received from local Councils in the

geographical areas that the Company

operates are recognised where there is

reasonable assurance that the grants

will be received and that all attached

conditions have been complied with.

The grants received under CJRS are

credited to the appropriate cost lines in

Income Statement to which the affected

furlough employees would normally be

charged. Local Council support and re-

opening grants are recognised as Other

Income.

Caffyns plc Annual Report 2022

Non-underlying items

Non-underlying items are those items

that are unusual because of their size,

nature or incidence. Management

consider that these items should be

disclosed separately to enable a full

understanding of the operating results.

Profits and losses on disposal of

property, plant and equipment are also

disclosed as non-underlying, as are

certain redundancy costs and costs

attributable to vacant properties held

pending their disposal.

The net financing return and service cost

on pension obligations in respect of the

defined benefit pension scheme, which

is closed to future accrual, are presented

as non-underlying items due to the

inability of management to influence the

underlying assumptions from which the

charges are derived.

All other activities are treated as

underlying.

Borrowing costs

All borrowing costs are recognised in the

Income Statement in the period in which

they are incurred unless the borrowing

costs are directly attributable to the

acquisition, construction or production of

a qualifying asset, in which case they are

capitalised.

Retirement benefit costs

The Company operates the Caffyns

Pension Scheme, which is a defined

benefit pension scheme. The defined

benefit scheme defines the amount of

pension benefit that an employee will

receive on retirement, dependent on one

or more factors including age, years of

service and final salary. The Scheme was

closed to new members in 2006 and to

future accrual in April 2010.

Under IAS 19 (Revised) Employee

Benefits, the defined benefit deficit is

included on the Statement of Financial

Position. Liabilities are calculated

based on the current yields on high-

quality corporate bonds and on market

conditions. Surpluses are only included

to the extent that they are recoverable

through reduced contributions in the

future or through refunds from the

Scheme.

Remeasurement arising from experience

adjustments and changes in actuarial

assumptions each year are charged

or credited, net of deferred tax, to

reserves and shown in the Statement of

Comprehensive Income.

An interest expense or income is

calculated on the defined benefit liability

or asset respectively by applying the

discount rate to that defined benefit

liability or asset.

The Company also provides pension

arrangements for employees under

defined contribution schemes.

Contributions for these schemes are

charged to the Income Statement in the

year in which they are payable.

Share-based employee

compensation

The Company operates an equity settled

share-based compensation plan for

all employees through the Company’s

Save As You Earn (“SAYE”) scheme. All

employee services received in exchange

for the grant of any share-based

compensation are measured at their fair

values. These are indirectly determined

by reference to the share option

awarded. Their fair value is appraised at

the grant date. The vesting period from

the date of grant is three years.

All share-based compensation is

ultimately recognised as an expense

in the Income Statement with a

corresponding credit to retained

earnings, net of deferred tax where

applicable in the Statement of Financial

Position. If vesting periods or other

vesting conditions apply, the expense is

allocated over the vesting period, based

on the best available estimate of the

number of share options expected to

vest. Service and performance vesting

conditions are included in assumptions

about the number of options that are

expected to become exercisable.

Non-vesting conditions, such as the

employee’s requirement to continue

to save under the SAYE scheme, are

considered when determining the

fair value of the award. Estimates are

subsequently revised if there is any

indication that the number of share

options expected to vest differs from

previous estimates. No adjustment to

the expense recognised in prior periods

is made if fewer share options ultimately

are exercised than originally estimated.

Failure by the employee to meet a vesting

condition is treated as a cancellation.

Fair value is measured by use of the

Black-Scholes model. The expected life

used in the model has been adjusted,

based on management’s best estimate,

for the effects of non-transferability,

exercise restrictions and behavioural

considerations.

Taxation

The tax expense represents the sum of

the tax currently payable and deferred

tax. Tax balances are not discounted.

The tax currently payable is based

on taxable profit for the year. Taxable

profit differs from net profit as reported

in the Income Statement because it

excludes items of income or expense

that are taxable or deductible in other

years and it further excludes items that

are never taxable or deductible. The

liability for current tax is calculated using

tax rates that have been enacted or

substantively enacted by the year-end

accounting date.

Deferred tax is the tax expected to be

payable or recoverable on differences

between the carrying amounts of assets

and liabilities in the financial statements

and the corresponding tax bases

used in the computation of taxable

profit and is accounted for using the

liability method. Deferred tax liabilities

are generally recognised for all taxable

temporary differences and deferred tax

assets are recognised to the extent that

it is probable that taxable profits will

be available against which deductible

temporary differences can be utilised.

Such assets and liabilities are not

recognised if the temporary difference

arises from goodwill or from the initial

recognition (other than in a business

combination) of other assets and liabilities

in a transaction that affects neither the

tax profit nor the accounting profit.

The carrying amount of deferred tax

assets is reviewed at each financial year-

end date and reduced to the extent that

it is no longer probable that sufficient

taxable profits will be available to allow all

or part of the asset to be recovered.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Principal Accounting Policies continued

Deferred tax is calculated at the tax

rates that are expected to apply in

the period when the liability is settled

or the asset is realised. Deferred tax

is charged or credited in the Income

Statement, except when it relates to

items charged or credited within other

comprehensive income, in which case

the deferred tax is also dealt with in other

comprehensive income. The tax base of

an item considers its intended method of

recovery by either sale or use.

Property, plant and

equipment

Land and buildings used in the business

are stated in the Statement of Financial

Position at cost. The property held at the

date of transition to IFRSs in 2007 was

recognised at deemed cost, being the

carrying amount at the date of transition

to IFRSs. The date of the last valuation

undertaken under its previous GAAP was

in 1995.

Depreciation on buildings is charged

to the Income Statement. On the

subsequent sale of a property, the

attributable surplus remaining in the non-

distributable reserve is transferred directly

to accumulated profits.

Properties in the course of construction

are carried at cost, less any recognised

impairment loss. Cost includes

professional fees and attributable

borrowing costs. Depreciation of these

assets, on the same basis as other

property assets, commences when the

assets are ready for their intended use.

Properties are regarded as purchased

or sold on the date on which contracts

for the purchase or sale become

unconditional. The gain or loss arising on

the disposal of an asset is determined

as the difference between the sales

proceeds and the carrying amount of the

asset and is recognised in the Income

Statement.

Other assets are stated at cost less

accumulated depreciation and any

recognised impairment loss.

Depreciation is charged so as to write off

the cost less residual values of assets,

other than land and properties under

construction, over their estimated useful

lives using the straight-line method, on

the following basis:

Freehold buildings – 50 years

Leasehold buildings – period of lease

Plant and machinery,

fixtures and fittings – 3 to 10 years

The residual value of all assets,

depreciation methods and useful

economic lives, if significant, are

assessed annually.

Investment property

Investment property, which is

property held to earn rentals and/

or capital appreciation, is stated at

cost less accumulated depreciation

and impairment. Rental income from

investment property is recognised on

a straight-line basis over the term of

the lease. Depreciation is charged to

write off the cost less residual values

of investment properties over their

estimated useful lives using the straight-

line method over 50 years. Any transfers

from property, plant and equipment

are made at cost less accumulated

depreciation.

Leases

The Company recognises a right-of-

use asset and a lease liability at the

commencement date of the lease. The

right-of-use asset is initially measured

at cost, and subsequently at cost

less accumulated depreciation and

impairment losses and is then adjusted

for certain remeasurements of the lease

liability. Depreciation is recognised on a

straight-line basis over the period of the

lease the right-of-use asset is expected

to be utilised.

The lease liability is initially measured

at the present value of lease payments

that are not paid at the commencement

date, discounted by the Company’s

incremental borrowing rate. The lease

liability is subsequently increased by

the interest cost on the lease liability

and reduced by payments made. It is

remeasured when there is a change in

future lease payments arising from a

change of index or rate, a variation in

amounts payable following contractual

rent reviews and changes in the

assessment of whether an extension/

termination option is reasonably certain

to be exercised.

Where lease contracts include renewal

and termination options, judgement is

applied to determine the lease term. The

assessment of whether the Company

is reasonably certain to exercise such

options impacts the lease term and the

subsequent recognition of the lease

liability and right-of-use asset.

Where the Company acts as a lessor,

receipts of lease payments are

recognised in the income statement on

a straight-line basis over the period of

the lease unless it is deemed that the

risks and rewards of ownership have

been substantially transferred to the

Company’s lessee. If it is deemed that

the risks and rewards of ownership have

been substantially transferred then the

Company will, rather than recognise

a right-of-use asset, recognise an

investment in the lease, this being the

present value of future lease receipts

discounted at the interest rate implicit

in the lease or, if this is not specified, at

the Company’s incremental borrowing

rate. The finance lease receivable will be

increased by the interest received less

payments made by the lessee.

Impairment

a. Impairment of goodwill: Goodwill

is tested annually for impairment. If

an impairment provision is made, it

cannot subsequently be reversed.

b. Impairment of property, plant and

equipment, investment properties and

right-of-use assets: At each financial

year-end date, the Company reviews

the carrying amounts of its property,

plant and equipment, investment

properties and right-of-use assets in

order to determine whether there is

any indication that those assets have

suffered an impairment loss. If such

indication exists, the recoverable

amount of the asset is estimated

to determine the extent of the

impairment loss (if any). Where the

asset does not generate cash inflows

that are independent from other

assets, the Company estimates the

recoverable amount of the CGU to

which it belongs.

Caffyns plc Annual Report 2022

The recoverable amount is the higher

of fair value less costs to sell and

value in use. In assessing value in use,

the estimated future cash inflows are

discounted to their present value using a

pre-tax discount rate that reflects current

market assessments of the time value of

money and the risks specific to the asset

for which the estimates of future cash

inflows have not been adjusted.

If the recoverable amount of an asset

or CGU is estimated to be less than its

carrying amount, the carrying amount

of the asset (CGU) is reduced to its

recoverable amount.

An impairment loss is recognised as an

expense immediately, unless the relevant

asset is carried at a revalued amount, in

which case the impairment loss is treated

as a revaluation decrease.

Where an impairment loss subsequently

reverses, the carrying amount of the

asset (CGU) is increased to the revised

estimate of its recoverable amount, but

so that the increased carrying amount

does not exceed the carrying amount

that would have been determined had

no impairment loss been recognised for

the asset (CGU) in prior years. A reversal

of an impairment loss is recognised as

income immediately, unless the relevant

asset is carried at a revalued amount, in

which case the reversal of the impairment

loss is treated as a revaluation increase.

For the purpose of impairment testing,

assets are grouped together into the

smallest group of assets that generates

cash inflows from continuing use that

are largely independent of the cash

inflows from other groups of assets.

Management have determined that the

CGUs are the individual dealerships for

each franchise.

Inventories

Inventories are stated at the lower of cost

and net realisable value. Cost represents

the purchase price plus any additional

costs incurred.

Vehicle inventories include owned

vehicles used for demonstration

purposes and as courtesy cars for

service customers. Consignment vehicles

are regarded as being under the effective

control of the Company and are included

within inventories on the Statement

of Financial Position as the Company

has substantially all the significant risks

and rewards of ownership even though

legal title may not yet have passed. The

corresponding liability is included in trade

and other payables. Parts inventories are

valued at cost and are written down to

net realisable value, in accordance with

normal industry practice, by providing for

obsolescence on a time in stock basis.

Net realisable value represents the

estimated selling price less all estimated

costs to completion and costs to be

incurred in marketing and selling.

Cash and cash equivalents

Cash and cash equivalents comprise

cash in hand and on demand deposits.

In the Cash Flow Statement, cash and

cash equivalents exclude the Company’s

Cash Overdraft facility from Volkswagen

Bank, as this facility has the properties

of a revolving credit facility. This facility is

shown within interest-bearing borrowings

in current liabilities on the Statement of

Financial Position.

Investments in subsidiary

undertakings

Investments in subsidiary undertakings

are included at cost less amounts written

off if the investment is determined to

have been impaired and are included in

the Parent Company’s separate financial

statements.

Interest-bearing borrowings

Interest-bearing bank loans and

revolving credit facilities are recorded

at their fair value on initial recognition

(normally the proceeds received less

transaction costs that are directly

attributable to the financial liability) and

subsequently at amortised cost under

the effective interest method. Finance

charges, including premiums payable on

settlement or redemption and direct issue

costs, are accounted for on an accruals

basis to profit or loss using the effective

interest method and are added to the

carrying amount of the instrument to the

extent that they are not settled in the

period in which they arise.

Trade and other payables

Trade payables are not interest-bearing

and are stated at their fair value on initial

recognition and are subsequently carried

at amortised cost.

Other payables include obligations

relating to consignment stock and vehicle

stocking loans.

Obligations relating to consignment

stock relate to new cars supplied by

manufacturers on consignment terms

and the full purchase price can be

funded.

Vehicle stocking loans relates to

creditors in relation to used vehicles and

is funded up to a level generally 80%

of market value of the used car based

on independent market guides. The

utilisation is recorded at fair value with

associated interest charged to profit

or loss. Cash flows relating to these

arrangements are included in operating

cash flows.

Equity

Ordinary shares are classified as equity.

Incremental costs directly attributable

to the issue of new shares are shown in

equity as a deduction, net of tax, from

the proceeds.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Principal Accounting Policies continued

for the year ended 31 March 2022

Share premium includes any premium

received on the sale of shares. Any

transaction costs associated with the

issuing of shares are deducted from

share premium, net of any corporation

tax benefits.

The capital redemption reserve

comprises the nominal value of ordinary

and preference share capital purchased

by the Company in prior years and

cancelled. The non-distributable reserve

within equity is a revaluation reserve

which comprises gains and losses due

to the revaluation of property, plant

and equipment prior to 1995. Retained

earnings includes all current and prior

period retained profits.

Where any company in the Group

purchases the Company’s equity

share capital (treasury shares), the

consideration paid, including any

directly attributable incremental costs

(net of tax), is deducted from equity

attributable to the Company’s equity

holders until the shares are cancelled,

reissued or disposed of. Where such

shares are subsequently sold or reissued

any consideration received, net of

any directly attributable incremental

transactions costs and the related tax

effects, is included in equity attributable

to the Company’s equity holders.

Preference shares

Preference shares are accounted for as

non-current liabilities, as they have the

attributes of debt. Preference dividends

are accounted for as finance charges

within finance expenses.

Financial instruments

Recognition, initial measurement

and re-recognition

Financial assets and financial liabilities

are recognised when the Company

becomes a party to the contractual

provisions of the financial instrument

and are measured initially at fair value

adjusted for transaction costs, except for

those carried at fair value through profit

and loss which are measured initially at

fair value. Subsequent measurement of

financial assets and financial liabilities is

described below.

Financial assets are derecognised when

the contractual rights to the cash flows

from the financial asset expire, or when

the financial asset and substantially all

the risks and rewards are transferred.

The only types of financial assets held

by the Group are financial assets at

amortised cost.

Financial liabilities are derecognised

when the obligation specified in the

contract is discharged, cancelled or

expires.

Financial assets at amortised cost

Trade receivables do not carry any

interest and are stated at their fair value

on initial recognition as reduced by

appropriate allowances for estimated

irrecoverable amounts and subsequently

carried at amortised cost.

The Group applies the IFRS 9 simplified

approach to measuring expected credit

losses, which uses a lifetime expected

loss allowance for all receivables. The

expected loss rates are based on the

payment profile of sales over 36 months

before the year-end date, or the first day

of the accounting period under review

respectively, and the corresponding

historical losses expected in the

period. The Company also considers

future expected credit losses due to

circumstances in addition to historical

loss rates.

Caffyns plc Annual Report 2022

Notes to the Financial Statements

for the year ended 31 March 2022

1. General information

Caffyns plc is a company incorporated in England and Wales under the Companies Act 2006 and is listed on the London Stock

Exchange. The address of the registered office is given on page 1

6. Its revenue is attributable to the sole activity of operating as

a motor retailer in the south-east of the United Kingdom and comprises revenue from:

2022

£’000

2021

£’000

Sale of goods 211,485 154,269

Rendering of services 12,443 10,816

Total revenue 223,928 165,085

Sales of motor vehicles, parts and aftersales services

The Group’s full revenue recognition policy is set out in the section on Principal Accounting Policies under the heading Revenue

Recognition. The Group generates revenue through the sale of new and used motor vehicles and of parts (together comprising Sale

of Goods as shown above), and through the provision of aftersales services in the form of vehicle servicing, maintenance and repairs

and introducing customers to finance companies (together comprising Rendering of Services as shown above).

The Group recognises revenue from the sale of new and used motor vehicles when a customer takes possession of the vehicle,

at which point they have an obligation to pay in full and as such control is considered to transfer at this point. The Group typically

receives cash equal to the invoice amount for most direct retail sales to consumers at the time the consumer takes possession

of the vehicle. When the consumer has taken out a finance agreement to purchase the vehicle, the Group receives payment from

the finance company at the time the consumer takes possession of the vehicle. Payment terms on sales to corporate customers

typically range from seven to ten days. The Company acts as an agent in instances where it facilitates sales that have been

arranged by the manufacturer.

The Group recognises revenue from the provision of aftersales services when the service has been completed, at which point

customers have an obligation to pay in full. The Group typically receives cash equal to the invoice amount for most direct retail sales

to consumers at the time the service has been completed. Payment terms on sales to corporate customers typically range from 30

to 60 days.

All revenue recognised in the Income Statement is from contracts with customers and no other revenue has been recognised. No

impaired losses have been recognised on any receivables arising from a contract with a customer.

Due to the nature of the Group’s contractual relationships with customers and the nature of the services provided, there are no

timing differences between revenue recognised in the Income Statement and trade receivables being recognised in the Statement of

Financial Position.

There have been no significant judgements regarding the timing of transactions or the associated transaction price.

The transaction price is set out in individual contractual agreements and there is a range of prices based on the types of goods and

services offered. There are no variable pricing considerations.

Contract liabilities relating to aftersales service plans

Where the Group receives an amount of consideration in advance of completion of performance obligations under a contract

with a customer, the value of the advance consideration is initially recognised as a contract liability within liabilities. Revenue is

subsequently recognised as the performance obligations are completed over the period of the contract (i.e. as control is passed to

the customer). Contract liabilities are presented within trade and other payables in the Statement of Financial Position and disclosed

in note 19 Trade and Other Payables. Approximately one-third of the value of these liabilities would be anticipated to be recognised

as revenue in each of the next three financial years.

Contract costs

The Group applies the practical expedient in paragraph 94 of IFRS 15 Revenue from Contracts and recognises the incremental

costs of obtaining contracts as an expense when incurred if the amortisation period of the assets that the Group otherwise would

have recognised is one year or less. The Group is satisfied that any incremental costs incurred in obtaining contracts that extend for

more than one year is immaterial.

Transaction price allocation to remaining performance obligations

The Group applies the practical expedient in paragraph 121 if IFRS 15 and does not disclose information about remaining

performance obligations that have original expected durations of one year or less.

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Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

1. General information continued

Segmental reporting

Based upon the management information reported to the chief operating decision maker, the Chief Executive, in the opinion of the

directors the Company has one reportable segment. The Company physically operates and is managed from individual dealership

sites although strategic and investment decisions are made based on dealership groupings or market territories. The Company’s

individual dealerships represent a range of manufacturers but are considered to have similar economic characteristics, such as

margin structures, and offer similar products and services to a similar customer base. As such, the results of each dealership have

been aggregated to form one reportable segment. There are no major customers amounting to 10% or more of revenue. All revenue

and non-current assets derive from, or are based in, the United Kingdom.

2. Non-underlying items

2022

£’000

2021

£’000

Net loss on disposal of property, plant and equipment — (3)

Other income, net — (3)

Within operating expenses:

Service cost on pension scheme (23) (23)

Redundancy and restructuring costs — (40)

Property impairments — (184)

(23) (247)

Non-underlying items within operating profit (23) (250)

Net finance expense on pension scheme (166) (202)

Non-underlying items within net finance expense (166) (202)

Total non-underlying items before taxation (189) (452)

Taxation credit on non-underlying items 36 86

Total non-underlying items after taxation (153) (366)

In the prior period, the following items were recorded as non-underlying items:

• redundancy and restructuring costs of £40,000 were incurred in the year as a result of changes necessitated by the covid-19

pandemic;

• the carrying value of a freehold property was impaired by a total of £184,000 following advice from the Company’s independent

valuer, CBRE Limited (see notes 12 and 13).

3. Operating profit

Operating profit has been arrived at after charging/(crediting):

2022

£’000

2021

£’000

Employee benefit expense 17,428 15,236

Coronavirus Job Retention Scheme grant claims (110) (2,413)

Depreciation of property, plant, equipment and investment property

– owned asset 1,683 1,667

– right-of-use assets 339 315

Impairments of investment property — 184

Net loss on disposal of property, plant and equipment — 3

Short-term lease rentals payable – land and buildings 93 106

Rental income (336) (710)

The Company applies the exemption in IFRS 16 Leases not to recognise right-of-use assets and liabilities for leases with a duration

of less than twelve months.

Caffyns plc Annual Report 2022

Operating profit has been arrived at after charging:

2022

£’000

2021

£’000

Auditor’s remuneration

Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 73 73

Fees payable to the Company’s auditor and its associates for other services:

– pursuant to legislation being review of interim financial statements 20 13

93 86

The Company’s Statutory Auditor is BDO LLP.

The statutory audit of the Caffyns plc Occupational Pension Scheme is performed by Grant Thornton UK LLP.

A description of the work of the Audit and Risk Committee is set out in the Chairman’s Statement on Corporate Governance on

pages 19 and 20 and includes an explanation of how auditor objectivity and independence is safeguarded when non-audit services

are provided by the Statutory Auditor.

The Company refers to underlying profit and underlying EBITDA as being key alternative performance measures when considering

the results for the year. These performance metrics can be reconciled to the Company’s result for the year as follows:

2022

£’000

2021

£’000

Profit for the year 2,999 1,410

Tax charge (note 8) 1,386 14

Profit before tax 4,385 1,424

Net finance expense (notes 6 and 7) 1,282 1,468

Non-underlying items within operating profit (note 2) 23 250

Depreciation charged on property, plant and equipment, right-of-use assets and investment

properties (notes 11, 12 and 13) 2,022 1,982

Underlying earnings before interest, tax, depreciation and amortisation (“EBITDA”) 7,712 5,124

4. Other income

2022

£’000

2021

£’000

Rent receivable 336 710

Local Government covid-19 support grants 54 202

Loss on disposal of tangible fixed assets — (3)

Other income 390 909

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Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

5. Employee benefit expense

The average number of people (full-time equivalents) employed in the following areas was:

Group and Company

2022

Number

2021

Number

Sales 123 121

Aftersales 199 201

Administration 80 80

Average number of full-time equivalents employees 402 402

Employee benefit expense, including directors, during the year amounted to:

Group and Company

2022

£’000

2021

£’000

Wages and salaries 15,455 13,614

Social security costs 1,641 1,325

Redundancy costs — 40

Contributions to defined contribution plans 309 234

Other pension costs (see note 23) 189 225

Employee benefit expense 17,594 15,438

Directors’ emoluments were:

2022

£’000

2021

£’000

Salaries and short-term employee benefits 1,092 591

Details of the directors’ remuneration are provided in the Directors’ Remuneration Report on pages 23 to 34.

Key management compensation:

2022

£’000

2021

£’000

Salaries and short-term employee benefits 1,829 1,081

Key management personnel includes the directors and other key operational employees.

6. Finance expense

2022

£’000

2021

£’000

Interest payable on bank borrowings 297 367

Interest payable on inventory stocking loans (see note 19) 581 681

Interest on lease liabilities 37 21

Finance costs amortised 141 125

Preference dividends (see note 10) 72 72

Finance income on interest in lease (12) —

Finance expense 1,116 1,266

7. Finance expense on pension scheme

2022

£’000

2021

£’000

Defined benefit pension scheme net finance expense (see note 23) 166 202

Caffyns plc Annual Report 2022

8. Tax

2022

£’000

2021

£’000

Current tax

UK corporation tax 432 401

Adjustments recognised in the period for current tax of prior periods (5) (33)

Total charge 427 368

Deferred tax (see note 24)

Origination and reversal of temporary differences 312 (381)

Change in corporation tax rate 647 —

Adjustments recognised in the period for deferred tax of prior periods — 27

Total charge/(credit) 959 (354)

Tax charged in the Income Statement 1,386 14

The tax charge/(credit) arises as follows:

2022

£’000

2021

£’000

On normal trading 1,422 100

On non-underlying items (see note 2) (36) (86)

Tax charged in the Income Statement 1,386 14

The charge for the year can be reconciled to the profit per the Income Statement as follows:

2022

£’000

2021

£’000

Profit before tax 4,385 1,424

Tax at the UK corporation tax rate of 19% (2021: 19%) 833 271

Tax effect of expenses that are not deductible in determining taxable profit 126 133

Movement in rolled over and held over gains (215) (117)

Change in corporation tax rate 647 —

Reversal of impairment of Advanced Corporation Tax asset — (301)

Other differences — 34

Adjustment to tax charge in respect of prior periods (5) (6)

Tax charge for the year 1,386 14

The current year total tax charge is impacted by the effect of non-deductible expenses, which includes non-qualifying depreciation;

and one-off rate change adjustments to take into account the legislative increase in the corporation tax rate to 25% in 2023.

In the prior year, an impairment provision against the carrying value of an Advanced Corporation Tax asset was reversed. This

impairment was initially made in the yearended 31 March 2019 at which time management did not recognise an overall deferred

taxasset due to the inherent uncertainty at that date. This approach remained unchanged at the previous year end, with

31March2020 being immediately after the start of the first covid-19 lockdown, and at the height of the accompanying economic

uncertainty, but was altered at the half-year, at 30 September 2020. Forecasts prepared by management at that time, extending

across a five year period, reflected an improvement to the levels of profits and these forecasts allowed the previously held view to be

revised and the impairmentto be reversed, given management’s judgement of a higher level of certainty that the available Advanced

Corporation Taxand other deferred tax assetswould be utilised in future years.

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Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

8. Tax continued

The total tax charge for the year is made up as follows:

2022

£’000

2021

£’000

Total current tax charge 427 368

Deferred tax charge/(credit) 

Charged/(credited) in the Income Statement 959 (354)

Charged/(credited) against other comprehensive income 750 (57)

Total deferred tax charge/(credit) 1,709 (411)

Total tax charge/(credit) for the year 2,136 (43)

Factors affecting the future tax charge

The Company has unrelieved advance corporation tax of £0.5 million (2021: £1.1 million), which is available to be utilised against

future mainstream corporation tax liabilities and is accounted for in deferred tax (see note 24).

9. Earnings per Ordinary share

The calculation of the basic earnings per share is based on the earnings attributable to Ordinary shareholders divided by the

weighted average number of shares in issue during the year. Treasury shares are treated as cancelled for the purposes of this

calculation.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and

the post-tax effect of dividends and/or interest on the assumed conversion of all dilutive options and other dilutive potential Ordinary

shares.

Reconciliations of earnings and weighted average number of shares used in the calculations are set out below:

Underlying Basic

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Profit before tax 4,385 1,424 4,385 1,424

Adjustments: 

Non-underlying items (note 2) 189 452 — —

Profit before tax 4,574 1,876 4,385 1,424

Tax (note 8) (1,422) (100) (1,386) (14)

Profit after tax 3,152 1,776 2,999 1,410

Earnings per share (pence) 117.0p 66.0p 111.3p 52.4p

Diluted earnings per share (pence) 115.2p 65.6p 109.6p 52.1p

2022

£’000

2021

£’000

Underlying earnings after tax 3,152 1,776

Underlying earnings per share (pence) 117.0p 66.0p

Underlying diluted earnings per share (pence) 115.2p 65.6p

Non-underlying losses after tax (153) (366)

Losses per share (pence) (5.7)p (13.6)p

Diluted losses per share (pence) (5.6)p (13.5)p

Total earnings 3,019 1,410

Earnings per share (pence) 111.3p 52.4p

Diluted earnings per share (pence) 109.6p 52.1p

Caffyns plc Annual Report 2022

The number of fully paid Ordinary shares in circulation at the year-end was 2,695,502 (2021: 2,695,376). The weighted average

number of shares in issue for the purposes of the earnings per share calculation were 2,695,418 (2021: 2,694,846). The shares

granted in the year under the Company’s SAYE scheme have been treated as dilutive. For the purposes of this calculation, the

weighted average number of shares in issue for the purposes of the earnings per share calculation were 2,737,264

(2021: 2,707,660).

10. Dividends

2022

£’000

2021

£’000

Preference shares

7% Cumulative First Preference 12 12

11% Cumulative Preference 48 48

6% Cumulative Second Preference 12 12

Included in finance expense (see note 6) 72 72

Ordinary shares

Interim dividend of 7½ pence per Ordinary share paid in respect of the current year (2021: Nil) 202 —

No final dividend paid in respect of the March 2021 year end (2020: Nil) — —

202 —

A final dividend of 15.0 pence per Ordinary share was declared in respect of the current year ended 31 March 2022.

11. Right-of-use assets

Group and Company £’000

Deemed cost

At 1 April 2020 and 31 March 2021 1,181

Deemed cost

At 1 April 2021 1,181

Additions 1,142

At 31 March 2022 2,323

Accumulated depreciation

At 1 April 2020 256

Depreciation for the year 315

At 31 March 2021 571

Accumulated depreciation

At 1 April 2021 571

Depreciation for the year 339

At 31 March 2022 910

Net book value

At 31 March 2022 1,413

At 31 March 2021 610

The right-of-use assets above represent three long-term property leases for premises from which the Company operates a

Volkswagen dealership in Brighton, a Volvo dealership in Worthing and a car storage compound in Tunbridge Wells.

Depreciation charges of £339,000 (2021: £315,000) in respect of right-of-use assets has been recognised within administration

expenses in the Income Statement. The interest expense on the associated lease liability of £37,000 (2021: £21,000) is disclosed in

note 6. Payments made in the year on the above leases were £353,000 (2021: £335,000).

Payments made in the year under other leases with contractual periods of 12 months or less, which have not been required to be

capitalised, of £93,000 (2021: £106,000) are disclosed in note 3.

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Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

12. Property, plant and equipment

Group and Company

Freehold

property

£’000

Leasehold

improvements

£’000

Fixtures &

fittings

£’000

Plant &

machinery

£’000

Total

£’000

Cost or deemed cost

At 1 April 2020 40,752 728 5,220 6,517 53,217

Additions at cost — — 160 234 394

Disposals — — (30) (16) (46)

At 31 March 2021 40,752 728 5,350 6,735 53,565

Cost or deemed cost

At 1 April 2021 40,752 728 5,350 6,735 53,565

Additions at cost 1,945 — 508 476 2,929

Disposals — — (229) (2,135) (2,364)

At 31 March 2022 42,697 728 5,629 5,076 54,130

Accumulated depreciation

At 1 April 2020 5,530 507 3,596 4,801 14,434

Depreciation charge for the year 583 74 522 371 1,550

Disposals — — (27) (16) (43)

At 31 March 2021 6,113 581 4,091 5,156 15,941

Accumulated depreciation

At 1 April 2021 6,113 581 4,091 5,156 15,941

Depreciation charge for the year 616 73 506 383 1,578

Disposals — — (229) (2,135) (2,364)

At 31 March 2022 6,729 654 4,368 3,404 15,155

Net book value

31 March 2022 35,968 74 1,261 1,672 38,975

31 March 2021 34,639 147 1,259 1,579 37,624

31 March 2020 35,222 221 1,624 1,716 38,783

Short-term leasehold property for both the Company and the Group comprises £74,000 at net book value in the Statement of

Financial Position (2021: £147,000).

Depreciation charges of £1,578,000 (2021: £1,550,000) in respect of property, plant and equipment has been recognised within

administration expenses in the Income Statement.

The freehold properties were originally revalued externally on 31 March 1995 by Herring Baker Harris, Chartered Surveyors, at

open market value for existing use (which is close to the then fair value). Freehold properties acquired since that date and the other

assets listed above have been stated at cost in accordance with IAS 16 Property, Plant and Equipment. The Company valued its

portfolio of freehold premises and investment properties as at 31 March 2022. The valuation was carried out by CBRE Limited,

Chartered Surveyors, in accordance with the Royal Institution of Chartered Surveyors valuation – global and professional standards

requirements. The valuation is based on existing use value which has been calculated by applying various assumptions as to

tenure, letting, town planning, and the condition and repair of buildings and sites including ground and groundwater contamination.

Management are satisfied that this valuation is materially accurate. The excess of the valuation over net book value as at

31 March 2022 of those sites was £13.3 million (2021: £12.3 million). In accordance with the Company’s accounting policies,

this surplus has not been incorporated into these financial statements.

Caffyns plc Annual Report 2022

13. Investment properties

Group and Company

2022

£’000

2021

£’000

Cost

At 1 April 2021 and 31 March 2022 9,650 9,650

Accumulated depreciation

At 1 April 2021 1,899 1,598

Depreciation for the year 105 117

Impairments for the year — 184

At 31 March 2022 2,004 1,899

Net book value

At 31 March 2022 7,646 7,751

Depreciation and impairment charges of £105,000 (2021: £301,000) in respect of Investment properties have been recognised

within administration expenses in the Income Statement.

The Company owns a freehold property that is partially leased out to a third-party tenant, and accordingly accounts for the property

as an investment property. Based on an independent valuation of the property carried out by CBRE, no impairment charges were

required to be recognised in the Income Statement, as part of administration expenses (2021: £184,000). This investment property

represents the only asset included in that CGU. In assessing this property for impairment, the directors based their assessment of

the recoverable amount on fair value less selling costs.

The fair value measurement of the CGU in its entirety was categorised as a Level 3 within the hierarchy set out in IFRS 13 Fair

Measurement. The valuation technique that is used to measure the fair value less costs of disposal is consistent with that applied in

respect of the Company’s property, plant and equipment, which is set out in note 12. The following are key assumptions on which

the directors based their determination of fair value less costs of disposal in respect of that CGU:

• Market value of buildings per square foot: £195

• Market value of site per acre: £2,472,000

• Initial and reversionary yields: 6.7% and 7.0% respectively

• Costs of disposal: 1.5% of fair value

As described in note 12, the total excess of the valuation of all of the Company’s freehold properties over net book value as at

31 March 2022 was £13.3 million (2021: £12.3 million). Investment properties accounted for £0.8 million (2021: £0.6 million) of this

surplus.

14. Net investment in lease

Group and Company

2022

£’000

2021

£’000

Due after more than one year 389 557

Due within one year 168 173

At 31 March 2022 557 730

The premises shown above are sub-let to a third party under a lease which has the same terms and duration as the Company’s own

lease.

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Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

15. Goodwill

Group and Company

2022

£’000

2021

£’000

Cost

At 1 April 2021 and 31 March 2022 481 481

Provision for impairment 

At 1 April 2021 and 31 March 2022 195 195

Carrying amounts allocated to CGUs

Volkswagen, Brighton 200 200

Audi, Eastbourne 86 86

At 31 March 2022 286 286

For the purposes of the annual impairment testing, goodwill is allocated to a CGU. Each CGU is allocated against the lowest level

within the entity at which goodwill is monitored for management purposes. Consequently, the directors recognise CGUs to be those

assets attributable to individual dealerships and the table above sets out the allocation of goodwill into the individual dealership

CGUs. The carrying amount of goodwill allocated to the Volkswagen, Brighton CGU is the only amount considered significant in

comparison with the Group’s total carrying amount of goodwill.

Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate that the

carrying amount may not be recoverable and a potential impairment may be required. Impairment reviews have been performed for

all CGUs for the years ended 31 March 2021 and 2022.

Valuation basis

The recoverable amount of each CGU is based on the higher of its fair value less selling costs and value in use. The fair value

less selling costs of each CGU is based initially upon the market value of any property contained within it and is determined by an

independent valuer as described in note 12. Where the fair value less selling costs of a CGU indicates that an impairment may have

occurred, a discounted cash flow calculation is prepared in order to assess the value in use of that CGU, involving the application of

a pre-tax discount rate to the projected, risk-adjusted pre-tax cash inflows and terminal value.

Period of specific projected cash flows (Volkswagen, Brighton CGU)

The recoverable amount of the Volkswagen, Brighton CGU is based on value in use. Value in use is calculated using cash flow

projections for a five-year period from 1 April 2022 to 31 March 2027. These projections are based on the most recent budget

which has been approved by the board being the budget for the year ending 31 March 2023. The key assumptions in the most

recent annual budget on which the cash flow projections are based relate to expectations of sales volumes and margins, and

expectations around changes in the operating cost base. These assumptions are based on past experience, adjusted to expected

changes, and on external sources of information. The cash flows include ongoing capital expenditure required to maintain the

dealership but exclude any growth capital expenditure projects to which the Group was not committed at the reporting date.

Growth rates, ranging from -1% (2021: -1%) to 15% (2021: 176%) have been used to forecast cash flows for a further four years

beyond the budget period, through to 31 March 2027. These growth rates reflect the products and markets in which the CGU

operates. These growth rates do not give rise to an impairment. Growth rates are internal forecasts based on a combination

of internal and external information. Based on these forecasts, the headroom available on the total future profits is £3.2 million

(2021:£2.4 million) before an impairment would be necessary.

Period of specific projected cash flows (Volvo, Worthing CGU)

The recoverable amount of the Volvo, Worthing CGU is based on value in use. Value in use is calculated using cash flow projections

for a five-year period from 1 April 2022 to 31 March 2027. These projections are based on the most recent budget which has

been approved by the board being the budget for the year ending 31 March 2023. The key assumptions in the most recent annual

budget on which the cash flow projections are based relate to expectations of sales volumes and margins, and expectations around

changes in the operating cost base. These assumptions are based on past experience, adjusted to expected changes, and on

external sources of information. The cash flows include ongoing capital expenditure required to maintain the dealership but exclude

any growth capital expenditure projects to which the Group was not committed at the reporting date.

Growth rates, ranging from -46% (2021: -25%) to 7% (2021: 8%) have been used to forecast cash flows for a further four years

beyond the budget period, through to 31 March 2027. These growth rates reflect the products and markets in which the CGU

operates. These growth rates do not give rise to an impairment. Growth rates are internal forecasts based on a combination of

internal and external information. Based on these forecasts, the headroom available on the total future profits is £1.1 million

(2021: £1.7 million) before an impairment would be necessary.

Caffyns plc Annual Report 2022

Discount rate

The cash flow projections have been discounted using a rate derived from the Group’s pre-tax weighted average cost of capital,

adjusted for industry and market risk. The discount rate used was 12.4% (2021: 12.4%).

Terminal growth rate

The cash flows subsequent to the forecast period are extrapolated into the future over the useful economic life of the CGU using

a steady or declining growth rate that is consistent with that of the product and industry. These cash flows form the basis of what

is referred to as the terminal value. The growth rate to perpetuity beyond the initial budgeted cash flows used in the value in use

calculations to arrive at a terminal value is 0.5% (2021: 0.5%). Terminal growth rates are based on management’s estimate of future

long-term average growth rates.

Conclusion

At 31 March 2022, no impairment charge in respect of goodwill was identified (2021: no impairment charge).

Sensitivity to changes in key assumptions

Impairment testing is dependent on estimates and judgements, particularly as they relate to the forecasting of future cash flows. The

outcome of the impairment test is not sensitive to reasonably possible changes in respect of the projected cash flows, the discount

rate applied, nor in respect of the terminal growth rate assumed.

16. Investments in subsidiary undertakings

The Company owns the whole of the issued ordinary share capital of Caffyns Wessex Limited, Caffyns Properties Limited and

Fasthaven Limited, all of which are dormant. The amount at which the investments are stated is equivalent to the net assets of the

subsidiaries. All subsidiary undertakings are registered in England and Wales and have their registered office at 4 Meads Road,

Eastbourne, East Sussex, BN20 7DR.

Company

2022

£’000

Cost

At 1 April 2021 and 31 March 2022 476

Provision

At 1 April 2021 and 31 March 2022 226

Net book value

At 31 March 2022 250

At 31 March 2021 250

17. Inventories

Group and Company

2022

£’000

2021

£’000

Vehicles 22,561 19,741

Vehicles on consignment 3,969 15,995

Oil, spare parts and materials 1,009 821

Work in progress 7 5

At 31 March 2022 27,546 36,562

Group and Company:

2022

£’000

2021

£’000

Inventories recognised as an expense during the year 185,398 135,348

Inventories stated at fair value less costs to sell 884 708

Carrying value of inventories subject to retention of title clauses 14,675 23,940

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

17. Inventories continued

All vehicle inventories held under consignment stocking arrangements are deemed to be assets of the Group and are included

on the Statement of Financial Position from the date of consignment. The corresponding liabilities to the manufacturers are

included within trade and other payables. Inventories can be held on consignment for a maximum consignment period set by the

manufacturer, which is generally between 180 and 365 days. Interest is payable in certain cases for part of the consignment period,

at various rates indirectly linked to the Bank of England base rate.

During the year, £25,000 was recognised in respect of the write-down of inventories of spare parts due to general obsolescence

(2021: £37,000).

18. Trade and other receivables

Group and Company

2022

£’000

2021

£’000

Trade receivables 3,979 3,757

Allowance for doubtful debts (4) (3)

3,975 3,754

Other receivables 1,289 1,318

At 31 March 2022 5,264 5,072

All amounts are due within one year.

The Group makes an impairment provision for all debts that are considered unlikely to be collected. At 31 March 2022 trade

receivables were shown net of an allowance for impairment of £4,000 (2021: £3,000). The charge recognised during the year was

£4,000 (2021: £2,000).

Trade receivables have been classified at amortised cost under IFRS 9 Financial Instruments.

Group and Company

2022

£’000

2021

£’000

Not impaired:

Neither past due nor impaired 3,910 3,694

Past due up to three months but not impaired 65 60

At 31 March 2022 3,975 3,754

Group and Company

2022

£’000

2021

£’000

The movement in the allowance for impairment during the year was:

At 1 April 2021 3 7

Impairment recognised in the Income Statement 4 2

Utilisation (3) (6)

At 31 March 2022 4 3

All amounts are due within one year.

Credit risk

The Company’s principal financial assets are trade receivables, bank balances and cash that represent the Company’s maximum

exposure to credit risk in relation to financial assets.

The Company’s credit risk is primarily attributable to its trade receivables that are due on the earlier of the presentation of the invoice

or the expiry of a credit term. The amounts presented in the Statement of Financial Position are net of allowances for doubtful

receivables, estimated by the Company’s management based on prior experience and their assessment of the current economic

environment. Consequently, the directors consider that the carrying amount of trade and other receivables approximates to their

fair value.

Before granting any new customer credit terms the Company uses external credit rating agencies to assess the potential new

customer’s credit quality and to define credit facility limits to be made available. These credit limits and creditworthiness are regularly

reviewed. The concentration of credit risk is limited due to the customer base being large and unrelated. The Company has no

customer that represents more than 5% of the total balance of trade receivables.

Caffyns plc Annual Report 2022

19. Trade and other payables

2022

£’000

2021

£’000

Trade payable 14,034 14,742

Obligations relating to consignment stock 3,969 15,995

Vehicle stocking loans 7,327 5,100

Social security and other taxes 823 1,173

Accruals 2,732 1,482

Deferred income 532 614

Other creditors 78 232

Group total 29,495 39,338

Amounts owed to Group undertakings 250 250

Company total 29,745 39,588

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit

period taken for these trade-related purchases was 28 days (2021: 33 days).

The directors consider that the carrying amount of trade payables approximates to fair value.

The Group finances the purchases of new car inventory through the use of consignment funding facilities provided by its

manufacturer partners and which are shown above as Obligations relating to consignment stock. Vehicles are physically supplied

by the manufacturers with payment deferred until the earlier of the registration of the vehicle or the end of the consignment period,

generally 180 days. In certain circumstances, consignment periods can be extended with the agreement of the manufacturer. The

consignment funding facilities attract interest at a commercial rate.

The Group utilises vehicle stocking loans to assist with the purchase of certain used car inventory. Facilities are available from both

its manufacturer partners and a third-party finance provider and are generally available for a period of 90 days from the date of

purchase. These vehicle stocking loans attract interest at a commercial rate. Interest charges on consignment stocking loans and

vehicle stocking loans described above for the year ended 31 March 2022 were £581,000 (2021: £681,000).

The obligations relating to consignment stock are all subject to retention of title clauses for the vehicles to which they relate.

Obligations for used and demonstrator cars which have been funded are secured on the vehicles to which they relate and are

shown above as vehicle stocking loans. From a risk perspective, the Company’s funding is split between manufacturers through

their related finance arms and that funded by the Company through bank borrowings.

The Company deferred payments of VAT of £440,000 under the covid-19 payment deferral scheme operated by HMRC. This VAT

was to be settled by eleven equal monthly instalments, with payments having commenced in April 2021. At 31 March 2022, all

amounts had been settled (2021: £400,000 outstanding and included in within Social security and other taxes).

The movements in deferred income in the year were as follows:

2022

£’000

2021

£’000

At 1 April 2021 614 592

Utilisation of deferred income in the year (1,401) (1,136)

Income received and deferred in the year 1,319 1,158

At 31 March 2022 532 614

Management are satisfied in respect of the brought forward deferred income for both the current and prior years, that the amount of

deferred income not recognised as revenue in the year is not material.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

20. Interest-bearing loans and borrowings

Group and Company

2022

£’000

2021

£’000

Current liabilities:

Secured bank loans and overdrafts 1,875 3,875

Non-current liabilities:

Secured bank loans 11,312 12,187

At 31 March 2022 13,187 16,062

Note 21 sets out the maturity profile of non-current liabilities. The directors estimate that there is no material difference between the

fair value of the Company’s borrowings and their book value. The loan and overdraft facilities provided to the Company of

£20.7 million (2021: £26.1 million) are secured by a general debenture and fixed charges over certain freehold properties.

21. Financial instruments

The Group utilises financial instruments such as bank loans and overdrafts and new and used vehicle stocking loans to finance its

operations and to manage the interest rate and liquidity risks that arise from those operations and from its sources of finance. The

disclosures below apply to the Group and the Company unless otherwise noted.

Group and Company

2022

carrying

value &

fair value

£’000

2021

carrying

value &

fair value

£’000

Fair value of financial assets and liabilities:

Primary financial instruments held or issued to

finance operations

Classification

Long-term bank borrowings (note 20) Financial liability measured at amortised cost (11,312) (12,187)

Bank revolving-credit facility (note 20) Financial liability measured at amortised cost (1,000) (3,000)

Other short-term bank borrowings (note 20) Financial liability measured at amortised cost (875) (875)

Trade and other payables (note 19) Financial liability measured at amortised cost (28,140) (37,551)

Lease liabilities (note 22) (1,930) (1,278)

Trade and other receivables (note 18) Financial asset at amortised cost 5,264 5,072

Cash and cash equivalents Financial asset at amortised cost 2,759 5,735

Preference share capital (note 25) Financial liability measured at amortised cost (812) (812)

The amounted noted in the above table are the same for the Company apart from:

Trade and other payables (note 19) Financial liability measured at amortised cost (28,390) (37,801)

Financial risk management

The Group is exposed to the following risks from its use of financial instruments:

a. Funding and liquidity risk – the risk that the Group will not be able to meet its obligations as they fall due;

b. Credit risk – the risk of financial loss to the Group on the failure of a customer or counterparty to meet their obligations as they

fall due; and

c. Market risk – the risk that changes in market prices, such as interest rates, have on the Group’s financial performance.

The Group manages credit and liquidity risk by particularly focusing on working capital management. The Group’s quantitative

exposure to these risks is explained throughout these financial statements while the Group’s objectives and management of these

risks is set out below.

Caffyns plc Annual Report 2022

Capital management

The Group views its financial capital resources as primarily comprising share capital, bank loans and overdrafts, vehicle stocking

credit lines and operating cash flow.

The board’s policy is to maintain a strong capital base to facilitate market confidence and safeguard the Group’s ability to continue

as a going concern while maximising the return on capital to the Group’s shareholders. The Group monitors its capital through

closely scrutinising and reviewing its cash flows. The capital of the Group is £34.7 million (2021: £27.6 million) and comprises share

capital, share premium, retained earnings and other reserve accounts: the capital redemption reserve, the non-distributable reserve

and the other reserve. In order to maintain or adjust the capital structure, the Group may adjust the level of dividends paid to the

holders of Ordinary shares, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group’s ratio of net

bank loans and overdrafts to equity was 30% at 31 March 2022 (2021: 37%). Capital requirements imposed externally by HSBC are

that borrowings should not exceed 70% of the current open-market value for existing use of the Group’s freehold properties which

are subject to a fixed charge.

The underlying pre-tax return as a proportion of equity for the year was 13.2% (2021: 6.8%).

The Company has occasionally repurchased its own shares in the market and cancelled them to promote growth in earnings per

share. There is no predetermined plan for doing this, although the Company has permission from its shareholders to buy back up

to 15% of its equity in any one financial year. The Company may also purchase its own shares to satisfy share incentives issued to

employees and these shares are then held as treasury shares.

Treasury policy and procedures

The Company’s activities expose it primarily to the financial risks of changes in interest rates. There are no fixed rate borrowings

other than preference shares.

Funding and liquidity risk management

The Group finances its operations through a mixture of retained profits and borrowings from bank, vehicle stocking credit lines

and operating cash flow. The Group’s policy is to maintain a balance between committed and uncommitted facilities and between

term loans and overdrafts. Facilities are maintained at levels in excess of planned requirements and at 31 March 2022 the Group

had undrawn floating rate borrowing facilities of £10.3 million (2021: £15.7 million) represented by overdrafts and revolving credit

facilities which would be repayable on demand, in respect of which all conditions precedent had been met. The Group is not directly

exposed to foreign currency risk.

Interest rate management

The objective of the Group’s interest rate policy is to minimise interest costs while protecting the Group from adverse movements

in interest rates. Borrowings at variable rates expose the Group to cash flow interest rate risk whereas borrowings at fixed rates

expose the Group to fair value interest rate risk. The Group does not currently hedge any interest rate risk.

Interest rate risk sensitivity analysis

As all of the Group’s borrowings and vehicle stocking credit lines are floating rate instruments, they therefore have a sensitivity

to changes in market rates of interest. The effect of a change of 100 basis points in interest rates for floating rate instruments

outstanding at the period end, on the assumption that the instruments at the period end were outstanding for the entire period,

would change interest charges by £178,000 (2021: £154,000) before tax relief.

Credit risk management

The Group’s receivables are all denominated in sterling. The Group is exposed to credit risk primarily in respect of its trade

receivables and financial assets. Trade receivables are stated net of provision for estimated impairment losses. Exposure to credit

risk in respect of trade receivables is mitigated by the Group’s policy of only granting credit to certain customers after an appropriate

evaluation of their credit risk. Credit risk also arises in respect of amounts due from manufacturers in relation to bonuses and

warranty receivables. This risk is mitigated by the range of manufacturers dealt with, the Group’s procedures in effecting timely

collection of amounts due, and management’s belief that it does not expect any manufacturer to fail to meet its obligations. Finance

assets comprise cash balances. The counterparties are major banks and management do not expect any counterparty to fail

to meet its obligations. The maximum exposure to credit risk is represented by the carrying amount of the financial asset in the

Statement of Financial Position.

These objectives, policies and strategies are consistent with those applied in the previous year.

Stock code CFYN

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Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

21. Financial instruments continued

Group and Company

2022

carrying

value &

fair value

£’000

2021

carrying

value &

fair value

£’000

Bank balances and cash equivalents 2,759 5,735

The net bank borrowings of the Company at 31 March 2022 were £10.4 million (2021: £10.3 million).

2022

£’000

2021

£’000

Interest-bearing overdrafts and loans due within one year 1,875 3,875

Interest-bearing bank loans due after more than one year 11,312 12,187

Less: Cash and cash equivalents (2,759) (5,735)

At 31 March 2022 10,428 10,327

All borrowings are denominated in sterling. The effective interest rates for all borrowings are based on bank base rates. Information

regarding classification of balances and interest and the range of interest rates applied in the year to 31 March 2022 are set out in

the following table:

Carrying value

& fair value Classification

Interest

classification

Interest rate

range

Current: within one year or on demand

Revolving-credit facility 1,000 Amortised cost Floating Base rate + 2.50%

Term loan 500 Amortised cost Floating VBBR* + 1.75%

Term loan 375 Amortised cost Floating SONIA** + 2.75%

Trade and other payables 28,140 Amortised cost – –

Carrying value

& fair value Classification

Interest

classification

Interest rate

range

Not repayable within one year

Term loan 5,812 Amortised cost Floating SONIA** + 2.75%

Term loan 500 Amortised cost Floating VBBR * + 1.75%

Revolving-credit facility 5,000 Amortised cost Floating SONIA** + 2.75%

Preference share capital 812 Amortised cost Fixed –

* Volkswagen Bank Base Rate, a base rate calculated by Volkswagen Bank United Kingdom Branch.

** Sterling Overnight Index Average.

The maturity of non-current borrowings is as follows:

Group and Company

2022

£’000

2021

£’000

Between one and two years 1,167 12,207

Between two and five years 11,031 915

Over five years 1,636 1,260

At 31 March 2022 13,834 14,382

Caffyns plc Annual Report 2022

Maturities include lease liabilities and amounts drawn under revolving credit facilities. The maturities of lease liabilities represent

the undiscounted future repayments on those leases. The Company’s revolving credit facility can continue to be drawn in whole or

part at any time under a facility which will continue until April 2026. The maturities of the revolving credit facility represent the final

payment dates for those drawn facilities as at 31 March 2023. If the amounts drawn at the year-end were redrawn at the Group’s

usual practice of three-monthly drawings, the total cash outflows, assuming interest rates remain at the same rates as at year-end,

are estimated on an undiscounted basis as follows:

Group and Company

2022

£’000

2021

£’000

Within six months 359 320

Six – twelve months 359 320

More than twelve months 6,093 6,187

Contractual cash flows 6,811 6,827

The Group has a term loan with HSBC, first entered into in March 2018, originally of £7.5 million, at a rate of interest of 2.75% above

SONIA. The loan has a current four-year term to next expire in April 2026, and is repayable over 20 years. The balance outstanding

on this term loan at 31 March 2022 was £6.2 million (2021: £6.6 million) with capital repayments in the year of £0.38 million. HSBC

also make available to the Group a revolving-credit facility of £6.0 million at a rate of interest of 2.75% above SONIA. This facility

has a four-year term and expires in April 2026. The balance drawn as at 31 March 2022 was £5.0 million (2021: £5.0 million). These

facilities are subject to covenants which are tested quarterly with respect to debt/freehold property values and interest cover and

borrowing levels which were all passed at 31 March 2022. The failure of a covenant test would render these facilities repayable on

demand at the option of the lender.

The Group also has a bank term loan from Volkswagen Bank United Kingdom Branch, which carries a rate of interest of 1.75%

above VBBR. The loan is repayable over its ten-year term which expires in March 2024.

No reduction in term loan or revolving-credit facilities is expected to apply consequent to the trading results for the year ended

31 March 2022.

The Group also had £7.5 million of combined annual overdraft and revolving credit facilities (2021: £10.5 million) from HSBC and

Volkswagen Bank United Kingdom Branch and these facilities are next due for renewal in August 2022. The directors have every

expectation that these facilities will be renewed based on the current discussions with the relevant banks. These facilities carry

interest rates of 2.5% above UK bank base rate and 2.64% above VBBR, respectively.

The Group has granted security to HSBC and Volkswagen Bank United Kingdom Branch by way of a general debenture over its

assets and a fixed charge over certain freehold property. The total value of those assets at 31 March 2022 in the Statement of

Financial Position was £64.2 million (2021: £69.3 million). The Group has also granted security to its defined benefit pension scheme

by way of fixed charge over certain freehold properties. This charge ranks in priority behind those charges granted to HSBC and

Volkswagen Bank United Kingdom Branch.

The ongoing costs associated with the bank facilities are included in finance expense (see note 6).

The preference shares in issue do not have a maturity date as they are non-redeemable.

22. Lease liabilities

Group and Company

2022

£’000

2021

£’000

Deemed liability

At 1 April 2021 1,278 1,853

Additions in the year 1,142 —

Interest charge for the year

Lease payments

49

(539)

29

(604)

At 31 March 2022 1,930 1,278

Due in less than one year

Due after more than one year

496

1,434

495

783

At 31 March 2022 1,930 1,278

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

23. Retirement benefit scheme

Group and Company

Description of scheme

The Company operates a pension scheme, the Caffyns Pensions Scheme (“CPS”), providing benefits based on final pensionable

pay until 31 March 2006. With effect from 1 April 2006, the Scheme closed to new entrants and all members in the final salary

section were transferred to the career average section for future service and certain benefits were reduced. Depending on the

proportion of pensionable pay purchased, the Company contribution rates varied between 4% and 15%. With effect from 1 April

2010, the Scheme closed to future accrual with all members transferred to a defined contribution scheme for their future service. As

part of the 2014 funding valuation, it was agreed that the inflation measure used to set in-deferment and in-payment increases for

pensions in excess of guaranteed minimum pensions would change from the Retail Prices Index to the Consumer Prices Index for

members (or dependents of members) who were in service on or after 1 April 1991.

The Trustees are responsible for the operation and governance of the Scheme, including making decisions regarding the Scheme’s

funding and investment strategy, in conjunction with the Company. The assets of the Caffyns Pensions Scheme, administered by

Capita Employee Solutions, are held separately from those of the Company, being held in separate funds by the trustees of the

Caffyns Pensions Scheme. The Scheme rules do not impose a restriction on the level of Scheme asset that may be reported under

IAS 19. The Scheme has been registered with the Pensions Regulator and is subject to the scheme-specific funding requirements

as outlined in UK legislation. The liabilities are determined by a qualified actuary based on triennial valuations using the projected unit

method. The most recent completed valuation was at 31 March 2020.

Description of expected cash flows to and from the Scheme

As part of the 31 March 2020 funding valuation, the Trustees and the Company agreed a recovery plan with a view to eliminating the

scheme-specific funding shortfall by 30 June 2031. Over the year to 31 March 2022, the Company contributed £1,781,000

(2021: £527,000) to fund the existing deficit, of which £781,000 (2021: £502,000) was in relation to deficit-reduction contributions

and £1,000,000 was a one-off contribution.

Over the year to 31 March 2023, the Company expects to contribute £767,000 in relation to deficit-reduction contributions. In

addition, the Company will continue to make contributions towards risk benefits and to meet the administrative expenses of the

Scheme and its Pension Protection Fund levies.

The liabilities of the Scheme are based on the current value of expected benefit payment cash flows to members of the Scheme

over the next 70 to 80 years. The average duration of the liabilities is approximately 15 years. Expected benefit payments in the year

to 31 March 2023 are £3,817,000.

Risks to the Scheme

The ultimate cost of the Scheme to the Company will depend upon actual future events rather than the assumptions made. Many

of the assumptions made are unlikely to be borne out in practice and as such the cost of the Scheme may be higher, or lower, than

disclosed. In general, the risk to the Company is that assumptions underlying the disclosures, or the calculation of contribution

requirements, are not borne out in practice and the cost to the Company is higher than expected.

More specifically, the Scheme exposes the Company to actuarial risks such as:

• Interest rate risk – the present value of the defined benefit liability is calculated using a discount rate determined by reference

to market yields of corporate bonds whereas the Scheme holds a mixture of investments. A decrease in market yield on high

quality corporate bonds will increase the Company’s defined benefit liability, although it is expected that this would be offset

partially by an increase in the fair value of certain of the Scheme’s assets;

• Investment risk – the Scheme’s assets at 31 March 2022 are invested by an appointed fiduciary management company,

SEI Investments (Europe). The investment in various types of asset funds is intended to reduce risk while maintaining planned

returns;

• Longevity risk – the Company is required to provide benefits for life for the members of the Caffyns Pensions Scheme.

Increases in life expectancy of the members will increase the defined benefit liability;

• Inflation risk – a significant proportion of the defined benefit liability is linked to inflation. An increase in the inflation rate will

increase the Company’s liability. A portion of the Scheme’s assets are inflation-linked debt securities, which would mitigate some

of the effect of inflation.

The Company has applied IAS 19 Employee Benefits (Revised) to this scheme and the following disclosures relate to this

Standard. The Company recognises any remeasurement (actuarial gains and losses) in each period in the Statement of

ComprehensiveIncome.

Caffyns plc Annual Report 2022

Results of most recent actuarial valuation

The assumptions which have the most significant effect on the results of the valuation are those relating to rates of mortality, the

discount rate used to reflect the present value of scheme liabilities, and the rate of inflation. As at the year-end, the last available

actuarial valuation, as at 31 March 2020, showed that the market value of the assets of the Caffyns Pensions Scheme were

£80.8 million and that the actuarial value of those assets represented 79% of the value of the benefits that had accrued to

employees at that date. The deficit arising at 31 March 2020 of £21.9 million compared to a deficit of £9.4 million under IAS 19 and

was due to different assumptions being adopted for the triennial valuation. The payments agreed with the trustees of the Caffyns

Pensions Scheme under the recovery plan were for deficit-reduction cash payments to be made in the year ended 31 March 2022

of £750,000 with payments increasing from 1 April 2022 by 2.25% per annum. In addition, from the year ended 31 March 2022 until

the end of the present recovery plan, the monetary excess of any Ordinary dividends paid to shareholders in excess of 22½ pence

will be matched by a further equal contribution into the Scheme.

The costs and liabilities of the Caffyns Pensions Scheme are based on actuarial valuations. At the year-end, the latest available full

actuarial valuation, carried out at 31 March 2020, was updated to 31 March 2022 by Willis Towers Watson, independent qualified

actuaries, for the requirements of IAS 19. Details of the actuarial assumptions are as follows:

2022 2021

Mortality tables used: females 97% of SAPS series 2 97% of SAPS series 2

Mortality tables used: males 100% of SAPS series 2 100% of SAPS series 2

Future improvements in mortality CMI2021 + 1.25% CMI2020 + 1.25%

Discount rate 2.65% 1.95%

Inflation (CPI) 3.80% 2.75%

Pension increase for in-payment benefits (CPI max 5%) 3.20% 2.70%

The discount rate adopted is based upon the yields of high-quality corporate bonds of appropriate duration.

The sensitivities regarding the principal assumptions used to measure scheme liabilities are set out below:

Assumption Change in assumption

Impact on

scheme liabilities

Discount rate Increase/decrease by 0.1% +/- £1.4 million

Pension increases Increase/decrease by 0.1% +/- £0.9 million

Mortality Increase/decrease by 0.1% +/- £4.6 million

The fair value of assets of the Caffyns Pensions Scheme for each class of asset, all of which have a quoted market price in an active

market, are as follows:

Market value

2022

£’000

2021

£’000

LDI fund 18,862 16,896

Growth fund 72,991 72,181

Equity instruments 870 469

At 31 March 2022 92,723 89,546

A fiduciary manager, SEI Investments (Europe) operates with the objective of improving the performance of the assets of the Caffyns

Pensions Scheme. Assets of the Scheme (excluding cash in the trustees’ administrative bank account) at 31 March 2022 were

invested 26% (2021: 19%) in LDI funds, 73% (2021: 80%) in return enhancing growth funds and 1% (2021: 1%) in Caffyns plc

shares.

In accordance with the requirements of IAS 19 Employee Benefits, the expected return on assets is based on the discount rate

noted above of 2.65% and not the return on the underlying portfolio of investments. Consequently, the charge to the Income

Statement for the year ending 31 March 2023 is expected to be approximately £88,000.

Equity instruments include shares in Caffyns plc, which are detailed in note 28.

The assumptions used by the actuary are the best estimates based on market conditions chosen from a range of possible actuarial

assumptions which, due to the timescales covered, may not necessarily be borne out in practice.

Stock code CFYN

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Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

23. Retirement benefit scheme continued

Life expectancy at age 65 (in years):

2022

Male

2022

Female

2021

Male

2021

Female

Member currently aged 65 21.6 23.9 21.6 23.8

Member currently aged 45 22.9 25.4 22.9 25.4

A liability for the defined benefit pension scheme deficit is included in the Statement of Financial Position under the heading of

non-current liabilities.

Analysis of the movement in the net liability for defined benefit obligations recognised in the Statement of

Financial Position

2022

£’000

2021

£’000

At 1 April 2021 (9,434) (9,434)

Expense recognised in the Income Statement (189) (225)

Contributions paid by the Company 1,781 526

Net remeasurement recognised in other comprehensive income 5,045 (301)

At 31 March 2022 (2,797) (9,434)

Total expense recognised in the Income Statement

2022

£’000

2021

£’000

Interest cost 1,891 1,946

Interest income on Scheme assets (1,725) (1,744)

Interest – net (see note 7) 166 202

Current service cost 23 23

189 225

Changes in the present value of the defined benefit pension obligation

2022

£’000

2021

£’000

At 1 April 2021 98,980 90,515

Service cost 23 23

Interest cost 1,891 1,946

Actuarial gains - experience 2,670 (954)

Actuarial losses/(gains) – demographic assumptions 160 (198)

Actuarial (gains)/losses – financial assumptions (4,220) 11,811

Benefits paid (3,984) (4,163)

At 31 March 2022 95,520 98,980

In October 2018, the High Court issued a judgement which required pension schemes to equalise members’ benefits to address

the unequal effect of Guaranteed Minimum Pensions between genders. In assessing the present value of the pension liabilities, an

allowance for the liabilities to increase by 0.9% continues to be made for the estimated cost of this Guaranteed Minimum Pensions

equalisation process.

Caffyns plc Annual Report 2022

Movement in the fair value of scheme assets

2022

£’000

2021

£’000

At 1 April 2021 89,546 81,081

Interest income 1,725 1,745

Actuarial gains – financial assumptions 3,655 10,357

Contributions paid by the Company 1,781 526

Benefits paid (3,984) (4,163)

At 31 March 2022 92,723 89,546

Reconciliation of the impact of the asset ceiling

The Company has reviewed the implications of the guidance provided in IFRIC 14 and has concluded that it is not necessary

to make adjustments to the IAS 19 disclosures at 31 March 2022 as any scheme surplus would be available to the Company

unconditionally by way of a refund, assuming the gradual settlement of scheme liabilities over time until all members had left the

Caffyns Pensions Scheme.

24. Deferred tax

Group and Company

The following are the major deferred tax assets and liabilities recognised and the movements thereon during the current and prior

reporting period.

Accelerated

tax

depreciation

£’000

Unrealised

capital gains

£’000

Retirement

benefit

obligations

£’000

Tax

losses

£’000

Short-term

temporary

differences

£’000

Recoverable

ACT

£’000

Total

£’000

At 1 April 2020 (942) (1,690) 1,792 28 (23) 835 —

Change in tax rates and

prior year adjustments 1 — — (28) — — (27)

Timing differences 16 118 (57) — 4 301 382

Recognised in other

comprehensive income — — 57 — — — 57

At 31 March 2021 (925) (1,572) 1,792 — (19) 1,136 412

At 1 April 2021 (925) (1,572) 1,792 — (19) 1,136 412

Change in tax rates and

prior year adjustments (225) (428) (39) — 45 — (647)

Utilisation of ACT — — — — (599) (599)

Timing differences 210 216 (303) — 163 — 286

Recognised in other

comprehensive income — — (750) — — — (750)

At 31 March 2022 (940) (1,784) 700 — 189 537 (1,298)

The Finance Act 2021 introduced an increase in the main corporation tax rate to 25% from 1 April 2023.

The Company carries a balance of surplus unrelieved advanced corporation tax (“ACT”) which can be utilised to reduce corporation

tax payable subject to a restriction of 19% of taxable profits less shadow ACT calculated at 25% of shareholder ordinary dividends.

Shadow ACT has no effect on the corporation tax payable itself but any surplus shadow ACT on dividends must be fully absorbed

before surplus unrelieved ACT can be utilised. During the year the Shadow ACT was fully utilised allowing a partial utilisation

of the ACT, leaving the remaining value of surplus ACT available for utilisation in future periods at 31 March 2022 of £537,000

(2021:£1,136,000).

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

24. Deferred tax continued

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax

liabilities and it is considered that this requirement is fulfilled. The offset amounts are as follows:

2022

£’000

2021

£’000

Deferred tax liabilities (2,724) (2,516)

Deferred tax assets 1,426 2,928

At 31 March 2022 (1,298) 412

The unrealised capital gains include deferred tax on gains recognised on revaluing the land and buildings in 1995 and where

potentially taxable gains arising from the sale of properties have been rolled over into replacement assets. Such tax would become

payable only if such properties were sold without it being possible to claim rollover relief.

There were no trading losses available for use in future periods (2021: £Nil).

25. Called-up share capital

2022

£’000

2021

£’000

Authorised

500,000 7% Cumulative First Preference shares of £1 each 500 500

1,250,000 11% Cumulative Preference shares of £1 each 1,250 1,250

3,000,000 6% Cumulative Second Preference shares of 10 pence each 300 300

4,000,000 Ordinary shares of 50 pence each 2,000 2,000

At 31 March 2022 4,050 4,050

Allotted, called-up and fully paid

170,732 7% Cumulative First Preference shares of £1 each 171 171

441,401 11% Cumulative Preference shares of £1 each 441 441

2,000,000 6% Cumulative Second Preference shares of 10 pence each 200 200

Total preference shares recognised as a financial liability (see note below) 812 812

2,879,298 Ordinary shares of 50 pence each 1,439 1,439

At 31 March 2022 2,251 2,251

At 1 April 2021, the Company held 2,879,298 Ordinary shares with 183,922 shares held in treasury. During the year, 126 of these

shares were utilised for options exercised under the 2020 SAYE scheme. Shares held in treasury at 31 March 2022 were 183,796.

In the prior year, 586 treasury shares were utilised under the 2017 SAYE scheme. The remaining treasury shares are held to fulfil

the requirements of the current, and any future, Company Save As You Earn schemes for eligible employees. The market value of

these shares at 31 March 2022 was £1.0 million (2021: £0.6 million). Dividend income from, and voting rights on, the shares held in

treasury have been waived.

The 7% Cumulative First Preference shares have rights to a fixed dividend and, in the event of a winding-up, a priority to the

Ordinary shares for a capital repayment. The shares do not have voting rights.

The 11% Cumulative Preference shares have rights to a fixed dividend and, in the event of a winding-up, a priority to the Ordinary

shares for a capital repayment. The shares do not have voting rights.J81

The 6% Cumulative Second Preference shares continue to have voting rights (one vote per Second Preference share) except in

relation to matters which under the Listing Rules, as amended from time to time, are required to be voted on only by premium-listed

securities, being the Ordinary shares.

Although the Articles of Association of the Company give the directors discretion to pay the preference dividend only if they consider

there are adequate profits, such dividends are cumulative. For this reason, the directors consider that the preference shares have

the characteristic of a financial liability rather than equity, and consequently the preference shares are included as a non-current

liability. None of the preference shares have rights of conversion or rights to capital repayment.

Caffyns plc Annual Report 2022

26. Share-based payments

Year of grant

Exercise

price

Exercise

date

Number at

1 April

2020 Issued Cancelled

Number at

31 March

2021

2017 £3.99 September 2020 85,372 (586) (84,786) —

2020 £3.06 February 2024 — 101,926 — 101,926

Year of grant

Exercise

price

Exercise

date

Number at

1 April

2021 Issued Lapsed

Number at

31 March

2022

2020 £3.06 February 2024 101,926 (126) (7,475) 94,325

All grants made under the Company’s Save As You Earn schemes are for periods of three years and vest in Ordinary shares.

Themarket value of the shares at the date of the grant of the 2017 Save As You Earn scheme options was £4.99 and at the date of

the grant of the 2020 Save As You Earn scheme options was £3.85.

The fair value of the grants made under the SAYE scheme is charged to the Income Statement over the vesting period based on the

valuation derived from an adjusted Black-Scholes model. The volatility factor for movements in the Company’s share price used in

the valuation model was estimated at 65%.

At the exercise date of the 2017 grant, the exercise price was above the current market price of the Company’s Ordinary shares.

Asa result, only 586 options were exercised with the remaining options lapsing.

The total expense included within operating profit relating to share-based payments for the year was £53,000 (2021: £37,000), with

an associated tax credit to the Income Statement and Equity of £10,000 (2021: £7,000).

27. Notes to the cash flow statement

Group and Company

2022

£’000

2021

£’000

Profit before tax for the year 4,385 1,424

Adjustments for net finance expense 1,282 1,468

5,667 2,892

Adjustments for:

Depreciation of property, plant and equipment, investment properties and right-of-use assets 2,022 1,982

Impairment against investment properties — 184

Cash payments into the defined-benefit pension scheme (1,781) (526)

Loss on disposal of property, plant and equipment — 3

Share-based payments 53 37

Operating cash flows before movements in working capital 5,961 4,572

Decrease in inventories 9,016 3,484

Increase in receivables (94) (754)

(Decrease)/increase in payables (9,911) 697

Cash generated by operations 4,972 7,999

Tax paid, net of refunds (503) (31)

Interest paid (1,079) (1,244)

Net cash derived from operating activities 3,390 6,724

All interest payments are treated as operating cash movements as they arise from movements in working capital.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

27. Notes to the cash flow statement continued

Reconciliation of debt

Group and Company:

Bank

loans

£’000

Revolving

credit

facilities

£’000

Lease

liabilities

£’000

Preference

£’000

Liabilities

arising from

financing

activities

£’000

Bank

and cash

balances

£’000

Net

debt

£’000

At 1 April 2020 8,719 9,000 1,853 812 20,384 (1,478) 18,906

Cash movement (657) (1,000) (575) — (2,232) (4,257) (6,489)

At 31 March 2021 8,062 8,000 1,278 812 18,152 (5,735) 12,417

Current liabilities 875 3,000 495 — 4,370 (5,735) (1,365)

Non-current liabilities 7,187 5,000 783 812 13,782 — 13,782

At 31 March 2021 8,062 8,000 1,278 812 18,152 (5,735) 12,417

At 1 April 2021 8,062 8,000 1,278 812 18,152 (5,735) 12,417

Cash movement (875) (2,000) (539) — (3,414) 2,976 (438)

Non-cash movement — — 1,191 — 1,191 — 1,191

At 31 March 2022 7,187 6,000 1,930 812 15,929 (2,759) 13,170

Current liabilities 875 1,000 495 — 2,370 (2,759) (389)

Non-current liabilities 6,312 5,000 1,435 812 13,559 — 13,559

At 31 March 2022 7,187 6,000 1,930 812 15,929 (2,759) 13,170

Non-cash movements in lease liabilities relate to the reassessment of the expected duration of one existing lease and one new lease

that was entered into during the year.

28. Related parties

The remuneration of directors, who are key management personnel, is set out in note 5 for each of the categories specified in

IAS 24 Related Party Disclosures. Further information about the remuneration of individual directors is provided in the Directors’

Remuneration Report on pages 30 to 34.

The 2,000,000 6% Cumulative Second Preference shares have full voting rights along with the Ordinary shares, except in relation to

matters which under the Listing Rules, as amended from time to time, are required to be voted on only by premium-listed securities,

being the Ordinary shares. These Cumulative Second Preference shares are beneficially owned by Caffyn Family Holdings Limited

(“Holdings”). Mr S G M Caffyn and Ms S J Caffyn are directors of Holdings. The whole of the issued share capital of Holdings is held

by close relatives of those directors. Holdings controls directly 42.6% (2021: 42.6%) of the voting rights of Caffyns plc. The directors

and shareholders of Holdings are also beneficial holders of 542,481 (2021: 535,481) Ordinary shares in Caffyns plc representing a

further 11.6% (2021: 11.4%) of the voting rights. It is therefore considered that the Caffyn family is the ultimate controlling party. As

required under the Stock Exchange Listing Rules, the Company entered into a Relationship Agreement with Holdings on

6 November 2014 whereby Holdings undertakes to the Company that it shall exercise its voting rights and shall exercise all its

powers to ensure, so far as it is properly able to do so, that its associates shall exercise their respective voting rights and exercise all

their respective powers to ensure, to the extent that they are able by the exercise of such rights to procure, that:

a. transactions and arrangements between any member of the Company and Holdings (and/or any of its associates) will be

conducted at arm’s length and on normal commercial terms;

b. neither Holdings nor any of its associates will take any action that would have the effect of preventing the Company from

complying with its obligations under the Listing Rules; and

c. neither Holdings nor any of its associates will propose or procure the proposal of a shareholder resolution which is intended or

appears to be intended to circumvent the proper application of the Listing Rules.

Directors of the Company and their immediate relatives control 14.3% (2021: 14.0%) of the issued Ordinary share capital of the

Company. Dividends of £11,000 were paid to directors in the year (2021: £Nil).

Caffyns plc Annual Report 2022

Caffyns Pension Scheme

Details of contributions are disclosed in note 23.

The Caffyns Pension Scheme held the following investments in the Company:

Fair value

2022

£’000

2021

£’000

Shares held:

125,570 (2021: 125,570) Ordinary shares of 50 pence each 691 439

12,862 (2021: 12,862) 11% Cumulative Preference shares of £1 each 20 20

At 31 March 2022 711 459

During the year to 31 March 2022, the Company paid management fees of £338,000 (2021: £410,000) on behalf of the Caffyns

Pension Scheme. These costs comprised the Pension Protection Fund levy, actuarial advisory fees and external administration fees.

29. Leases as a lessor

The Group’s interest in leases

At 31 March 2022, the Company had an interest in a single lease. The total future minimum lease receipts payable are:

Group and Company

2022

£’000

2021

£’000

Within one year 185 185

In two to three years 185 185

In three to four years 185 185

In four to five years 78 185

Beyond five years — 78

633 818

The finance income on the net investment in the lease was £12,000 (2021: £7,000).

Group and Company

2022

£’000

2021

£’000

Gross undiscounted cash flows 633 818

Unearned finance income (76) (88)

Net investment in lease 557 730

The Group as lessor – operating leases

The Company’s gross property rental income earned during the year from the direct lease of three (2021: three) investment

properties owned by the Group was £336,000 (2021: £710,000). No contingent rents were recognised in income (2021: £Nil).

At 31 March 2022, there were contracts for land and buildings with tenants for the following lease rentals receivable:

Group and Company

2022

£’000

2021

£’000

Within one year 265 311

In two to three years 251 237

In three to four years 238 237

In four to five years 209 209

Beyond five years 1,361 1,570

2,324 2,564

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Notes to the Financial Statements continued

for the year ended 31 March 2022

30. Capital commitments

Neither the Group nor the Company had any capital commitments at 31 March 2022 (2021: £Nil).

31. Legal contingent liability

Since 2015, the Company has been named as co-defendant in a number of legal actions that have been initiated against certain

of the vehicle manufacturers which it represents. These actions contend that customers have been unfairly treated as a result of

their vehicles having been fitted with software which is suggested by the claimant law firms to have operated such that when the

vehicles were experiencing test conditions, the emission levels of nitrogen oxides (“NOx”) were affected. The vehicles remain safe

and roadworthy.

These claims on behalf of multiple claimants, arising out of or in relation to their purchase or acquisition on finance of a vehicle

affected by the NOx issue, have been brought against a number of Jaguar Land Rover, Vauxhall, Volkswagen Audi, SEAT and

Skoda group entities and dealers, including the Company. The Company has been named as a defendant on a number of claim

forms alleging fraudulent misrepresentation, breach of contract, breach of statutory duty, breach of the Consumer Credit Act 1974

and a breach of the Consumer Protection from Unfair Trading Regulations 2008, although not all of these causes of action are being

brought against the Company specifically.

In all cases brought to date, the relevant vehicle manufacturers listed above have agreed to indemnify the Company for the

reasonable legal costs of defending the litigation and any damages and adverse legal costs that Caffyns may be liable to pay to

the claimants as a result of these legal actions. The possibility, therefore, of an economic cost to the Company resulting from the

defence of these legal actions is remote.

At present, no timetable can be determined for the resolution of these cases and the relevant issues of liability, loss and causation

have not yet been decided. It is therefore too early to assess reliably the merit of any claim and so we cannot confirm that any future

outflow of resources is probable.

Accordingly, no provision for liability has been made in these financial statements.

32. Critical accounting judgements and estimates when applying the Company’s accounting policies

Judgements and estimates are continually evaluated and are based on historical experience and other factors, including

expectations of future events that are believed to be reasonable under the circumstances.

Certain critical accounting estimates in applying the Company’s accounting policies are listed below.

Retirement benefit obligation

The Company has a defined benefit pension scheme. The obligations under this scheme are recognised in the balance sheet and

represent the present value of the obligation calculated by independent actuaries, with input from management. These actuarial

valuations include assumptions such as discount rates, return on assets and mortality rates. These assumptions vary from time to

time depending on prevailing economic conditions. Details of the assumptions used are provided in note 23. At 31 March 2022, the

net liability included in the Statement of Financial Position was £2.8 million (2021: £9.4 million).

Impairment

The carrying value of property, plant and equipment and goodwill are tested annually for impairment as described in notes 11, 12,

13 and 15. For the purposes of the annual impairment testing, the directors recognise Cash Generating Units (CGUs) to be those

assets attributable to an individual dealership, which represents the smallest group of assets which generate cash inflows that are

independent from other assets or CGUs. The recoverable amount of each CGU is based on the higher of its fair value less costs

to sell and its value in use. The fair value less costs to sell of each CGU is based upon the market value of any property contained

within it and is determined by an independent valuer, and its value in use is determined through discounting future cash inflows (as

described in detail in note 15). As a result of this review, the directors considered that no impairments were required to the carrying

value of its property assets (2021: £184,000 to a single property asset) (see notes 11, 12, 13 and 15).

Caffyns plc Annual Report 2022

Surplus ACT recoverable

The Company carries a balance of surplus unrelieved advanced corporation tax (“ACT”) which can be utilised to reduce corporation

tax payable subject to a restriction to 19% of taxable profits less shadow ACT calculated at 25% of dividends. Uncertainty arises

due to the estimation of future levels of profitability, levels of dividends payable and the reversal of deferred tax liabilities in respect of

accelerated capital allowances and on unrealised capital gains. For example, a reduction in the Company’s profitability could result

in a delay in the utilisation of surplus unrelieved ACT. However, based on the Company’s current projections, the directors have a

reasonable expectation that the surplus ACT will be fully relieved against future corporation tax liabilities by 31 March 2024.

Support arrangements

On occasion, the Company can be assisted in the relocation, development and support of certain of its businesses. On receipt of

these payments the Company forms a judgement whether the payment is capital in nature, in which case the payment is deducted

from the capital cost of the development in question, or revenue in nature, in which case the payment is amortised over a two-year

period from the date or relocation.

In November 2018, the Company received a contribution of £255,000 from a brand partner towards the cost of developing its

Angmering dealership. The contribution agreement was not specific as to whether the amount contributed was in respect of the

capital expenditure incurred by the Company, or in respect of other operating activities (such as marketing) that the Company

was required to undertake as part of the relocation. Consequently, the directors needed to apply judgement in determining the

appropriate accounting treatment. Having considered all information available, including the contribution agreement and past

correspondence with the brand partner, the directors determined it appropriate to account for the contribution as capital in

nature, and deducted the amount received from the carrying amount of property, plant and equipment assets associated with the

Angmering dealership.

The directors considered an alternative treatment, including recognising the amount received over the rolling two-year term of the

franchise agreement. This would have resulted in an increase in profit of £96,000 during the year ended 31 March 2019 and an

increase in net assets of the same amount as at 31 March 2019, with the remaining £159,000 standing to be recognised over the

remaining contractual period as follows: year ended 31 March 2020: £127,500, year ending 31 March 2021: £31,500.

In December 2019, the Company separately received a contribution of £225,000 from a brand partner as support for establishing a

new franchise business. In the judgement of the directors, and having considered all information available, the directors determined

it appropriate to account for the contribution as revenue in nature, with the support to be allocated on a straight-line basis over

the first 24 months of operation of the new business. The launch of the new business was delayed by the covid-19 pandemic with

the business unable to commence trading until car showrooms were allowed to re-open in June 2020. As a result, £93,750 of the

£225,000 support package was recognised in the Income Statement for the prior year with a further £112,500 being recognised in

the Income Statement for the current year. It is expected that the remaining £18,750 will be recognised in the Income Statement for

the year ending 31 March 2023.

Stock code CFYN

www.caffyns.co.uk

Financials Other informationGovernanceOur Business Financials

Five Year Review

unaudited

2018

£’000

2019

£’000

2020

£’000

2021

£’000

2022

£’000

Income Statement

Revenue 215,868 209,246 195,787 165,085 223,928

Underlying operating profit 2,325 2,626 1,633 3,142 5,690

Finance expense (935) (1,181) (1,382) (1,266) (1,116)

Underlying profit before tax 1,390 1,445 251 1,876 4,574

Non-underlying items (225) (1,873) (148) (452) (189)

Profit/(loss) before tax 1,165 (428) 103 1,424 4,385

Profit/(loss) after tax 1,030 (566) (252) 1,410 2,999

Basic earnings/(deficit) per Ordinary share 38.2p (21.0)p (9.4)p 52.4p 111.3p

Underlying earnings/(deficit) per Ordinary share 45.6p 35.3p (4.9)p 66.0p 117.0p

Dividend per Ordinary share payable in respect of the year 22.50p 22.50p 7.50p 0.00p 22.50p

As at year-end

Shareholders’ funds 27,913 27,975 26,380 27,586 34,731

Property, plant and equipment* 46,957 47,394 46,835 45,375 46,621

Bank overdrafts and loans (net) 14,000 13,592 16,241 10,327 10,428

Bank overdrafts and loans/shareholders’ funds (gearing) 50% 49% 62% 37% 30%

Retirement benefit liability 9,497 8,576 9,434 9,434 2,797

* Represents property, plant and equipment and investment properties

Caffyns plc Annual Report 2022

Our dealerships

AUDI

BRIGHTON:

EASTBOURNE:

WORTHING:

200 Dyke Road, Brighton, BN1 5AT (01273 553061)

Edward Road, Eastbourne, BN23 8AS (01323 525700)

Roundstone Lane, Worthing, BN16 4BD (01903 231111)

ASHFORD:

Monument Way, Orbital Park, Ashford, TN24 0HB (01233 504620)

LEVC

EASTBOURNE:

Lottbridge Drove, Eastbourne, BN23 6PJ (01323 418312)

LOTUS

KENT:

SUSSEX:

Monument Way, Orbital Park, Ashford, TN24 0HB (01233 504630)

Brooks Road, Lewes, BN7 2DN (01903 444148)

SEAT

TUNBRIDGE WELLS:

North Farm Industrial Estate, Tunbridge Wells, TN2 3EL (01892 515700)

SKODA

ASHFORD:

TUNBRIDGE WELLS:

The Boulevard, Ashford, TN24 0GA (01233 504600)

North Farm Industrial Estate, Tunbridge Wells, TN2 3EL (01892 515700)

VAUXHALL

ASHFORD:

Monument Way, Orbital Park, Ashford, TN24 0HB (01233 504604)

VOLKSWAGEN

BRIGHTON:

EASTBOURNE:

HAYWARDS HEATH:

WORTHING:

Victoria Road, Portslade, BN41 1YD (01273 425600)

Lottbridge Drove, Eastbourne, BN23 6PW (01323 647141)

Market Place, Haywards Heath, RH16 1DB (01444 451511)

Nightingale Avenue, Worthing, BN12 6FH (01903 837878)

VOLVO

EASTBOURNE:

WORTHING:

Lottbridge Drove, Eastbourne, BN23 6PJ (01323 418300)

Palatine Road, Worthing, BN12 6JH (01903 507124)

MOTORSTORE

ASHFORD:

Monument Way, Orbital Park, Ashford, TN24 0HB (01233 504624)

HEAD OFFICE

EASTBOURNE:

Meads Road, Eastbourne, BN20 7DR (01323 730201)

Stock code CFYN

www.caffyns.co.uk

Our Business FinancialsGovernance Other information

Caffyns plc

Meads Road

Eastbourne

East Sussex

BN20 7DR

www.caffyns.co.uk

Caffyns plc Annual Report 2022