Caffyns plc Annual Report 2024
Annual Report for the year ended
31 March 2024
Contents
Our Business
Results at a Glance 1
Operational and Business Review 2
Strategic Report 7
Governance
Board of Directors 20
Chairman’s Statement
on Corporate Governance 21
Directors’ Remuneration Report 28
Report of the Directors 42
Directors’ Responsibilities Statement 46
Financials
Report of the Independent Auditor 47
Income Statement 54
Statement of Comprehensive Income 55
Statement of Financial Position 56
Statement of Changes in Equity 57
Cash Flow Statement 58
Material Accounting Policies 59
Notes to the Financial Statements 65
Other Information
Five-year Review 92
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Caffyns plc Annual Report 2024
Overview
£262.1m 5%
Revenue
(£’000)
Revenue up 4% to £262.1 million
(2023: £251.4 million)
New car unit deliveries up by 5%
262,084
251,426
223,928
165,085
195,787
20
21
22
23
24
2% £28.5m
Underlying (LBT)/PBT
(£’000)
Used car unit sales up by 2% Aftersales revenues up by 5%
to £28.5 million
(2023: £27.0 million)
(566)
3,140
4,574
1,876
251
20
21
22
23
24
Underlying EBITDA
(£’000)
Final dividend of 5.0 pence per
Ordinary share
(2023: 15.0 pence per
Ordinary share)
4,212
6,955
7,712
5,124
3,428
20
21
22
23
24
£11.3m £10.7m
Underlying earnings/
(deficit) per
ordinary share
(pence)
(17.3)
95.1
117
66
(4.9)
20
21
22
23
24
Net bank borrowings at
31 March 2024 of £11.3 million
(2023: £8.1 million),
as disclosed in note 22
Property portfolio valuation
at 31 March 2024 showed a
reduced surplus to net book
value of £10.7 million (2023:
£11.5 million) due to a general
softening in the commercial
property market. This surplus is
not recognised in these accounts.
1
www.caffyns.co.uk
Our Business FinancialsGovernance Other information
Stock code CFYN
Summary
Turnover in the financial year ended
31 March 2024 (the “year”) increased
by 4% to £262.1 million (2023: £251.4
million) as trading for new cars and
aftersales remained robust. However,
the used car market suffered a
significant price correction in the final
calendar quarter of 2023, which had a
very detrimental impact on our second
half performance. The challenges to
profitability faced by the Company,
and, indeed, the wider motor retail
sector, from an overall weakening in the
trading environment, which resulted in a
reduction of £1.9 million in gross profits.
With interest rates and energy costs
at elevated levels, and with inflationary
pressures on the cost base remaining
high, the Company recorded a loss for
the year.
Underlying operating profits reduced
to £2.1 million (2023: £4.8 million),
with an underlying loss before tax of
£0.6 million for the year compared to
an underlying profit of £3.1 million in the
prior year.
Statutory losses before tax for the
year were £1.5 million (2023: profits
of £3.1 million). In addition to the
trading losses incurred in the year,
the Company incurred certain
non-underlying costs, primarily
associated with the financing and
service costs of its defined-benefit
pension scheme and from
property impairment charges.
Actuarial adjustments arising on its
defined-benefit pension scheme
have been taken direct to reserves.
Basic losses per share for the year
were 44.3 pence (2023: earnings of
93.6 pence). Underlying losses per
share for the year were 17.3 pence
(2023: earnings of 95.1 pence).
The Company’s defined benefit
pension scheme deficit, calculated
in accordance with the requirements
of IAS 19 Pensions, increased to
£10.0 million at 31 March 2024
(2023: £8.8 million). The investment
performance of the scheme’s
investments was adversely affected
during the year by volatile market
movements.
The Company continues to own all but
two of the freeholds of the dealership
premises from which it operates,
and this provides the dual strengths
of a strong asset base and minimal
exposure to rent reviews.
The board declared an interim
dividend of 5.0 pence per Ordinary
share (2023: 7.5 pence), which was
paid in January 2024. Although the
financial performance of the Company
in the second half of the financial
year worsened and was loss making,
the board remains confident in the
prospects of the Company and declared
a final dividend for the year of 5.0 pence
per Ordinary share (2023: 15.0 pence).
Net bank borrowings at 31 March 2024
were £11.3 million (2023: £8.1 million),
which equated to gearing of 39%
(2023: 26%).
“Although the financial
performance of the
Company in the second
half of the financial
year worsened and was
loss-making, the board
remains confident in
the prospects of the
Company and declared
a final dividend for the
year of 5.0 pence per
Ordinary share.”
2 Caffyns plc Annual Report 2024
Operational and Business Review
New and used car sales
The Company’s total revenues
increased by £10.7 million over the
previous year, of which £9.4 million
arose from the sale of new and
used cars.
Total UK new car registrations in the
year increased by 16% to 1.95 million
as the major car manufacturers were
able to lift new car production levels.
However, the conflict in Ukraine
continued to place strains on supply
chains and the growing cost-of-living
pressures have made customers more
careful of discretionary spending. Within
this total, new car registrations in the
private and small business sector, in
which we principally operate, actually fell
by 3%. Our own retail new car deliveries
rose by 5%, a better outcome than for
the comparable motor retail sector.
Our volume of used cars sales rose in
the year by 2%. Although not a perfect
match, used car data from the Society
of Motor Manufacturers and Traders
showed the number of used cars being
transacted in the UK rose by 5% in the
2023 calendar year. Our performance
in the year was held back by falling
volumes at our Motorstore non-
franchised businesses in Ashford and
Lewes. The used car market suffered
a significant price correction in the final
quarter of 2023 and, as a result, our
unit margins in the year fell significantly
from their level in the prior year. Lower
volumes of new car registrations over
the last four years have also reduced
the number of less than three-year-old
used cars available in the market. In
recognition of this scarcity, procedures
have been strengthened to broaden our
sources for replenishing inventory but
the sourcing of good-quality, well-priced
used cars remains very challenging.
Great efforts have been made over the
last twelve months to further enhance
and develop our omni-channel used
car offering for our customers, which
allows customers to interact with us
in the way that suits them best, from
the traditional showroom discussion
through to a fully online sales process,
and any combination in between. We
continue to see our used car offering
providing a major opportunity for
stronger growth. With market conditions
volatile, we continue to actively monitor
and control used car stock turn and
yield. The number of used cars sold in
the year, again, exceeded the number
of new cars sold, although by a reduced
multiple than in the prior year.
Aftersales
Our aftersales business performed well
during the year with service revenues
rising by 4%. 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 6% from the previous year.
Our people
I am very grateful for the dedication
of our employees and their efforts
throughout the year to provide our
customers with a first-class experience.
The Company benefits from a dedicated
workforce with more than a quarter
of employees having more than ten
years’ service. As a result of their hard
work and professionalism, the business
remains in a strong position in the
competitive retail environment in which
we operate, and we continue to be an
employer of choice in Kent and Sussex.
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.
Due to our apprentice numbers,
we continued to fully utilise our
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 current year, which will assist the
Company to continue to grow.
3
www.caffyns.co.uk
Stock code CFYN
Our Business FinancialsGovernance Other information
Operations
Our Audi businesses produced a
satisfactory financial performance in
the year, although with profits much
reduced from the prior year. The
franchise continues to be boosted by
the strength of the brand, the excellent
model range and exciting new products.
Our Volkswagen businesses
underperformed in the year, partly as a
result of operational issues at one of our
four dealerships, but also due to supply
constraints on certain new car model
ranges. However, the manufacturer is
the market leader in the UK and we
expect a markedly improved financial
performance in the coming year.
Our Volvo businesses had a transitional
year, with our Worthing business being
redeveloped and the manufacturer
moving from supplying cars to its
dealer network under the traditional
wholesale transactional model to an
agency model where the manufacturer
sells direct to the consumer whilst the
dealer facilitates delivery of the car. This
transition has presented a number of
challenges to both the manufacturer
and the dealer network, many of which
remain as work in progress. However,
the brand enjoys an excellent model
range of cars, which continue to be
positively received by customers.
Our combined SEAT/Skoda businesses
continued to perform satisfactorily,
despite a lack of availability of new
car product, and will be boosted in
the coming year by the addition of
the CUPRA brand to our dealership in
Tunbridge Wells.
Our MG business in Ashford, which
opened in the summer of 2021,
moved into its third year of operation.
The business was able to generate
significant growth in the year, reflecting
the increasing market share of the
brand, and performed well.
Our Vauxhall business in Ashford
underperformed in the year. However,
Stellantis, its parent company, have
publicly announced plans to restructure
and slim down their dealer networks, of
which we will be a part, so we anticipate
a brighter future for this brand.
The performance of our two Lotus
businesses, in Ashford and Lewes,
continued to be constrained by a lack
of new car product in the year, although
recent delivery levels of the Emera and
Eletre models have shown signs of
improvement.
Trading at Caffyns Motorstore, our used
car businesses in Ashford and Lewes,
remained subdued as the business
struggled to source high-quality
used cars. However, the concept
continues to be well received by our
customers, who particularly value the
Caffyns brand.
Group-wide projects
We remain focused on generating
further improvements in the levels of
used car sales, used car finance income
and service labour sales. These three
areas will be key to achieving increases
in profitability in the coming years. In
addition, we continue to make very
good progress utilising technology
to enhance customers’ experience
throughout their buying journey, as well
as improving our aftersales retention.
Zero-emission vehicle
(“ZEV”) targets
With effect from 1 January 2024, the
Government announced that vehicle
manufacturers will be required to meet
annual minimum registration targets for
ZEV cars, with the target for the 2024
calendar year set at 22% of registrations.
Failure to achieve the set target would
result in potential financial penalties being
levied on the manufacturer. Registrations
of ZEV cars in the first calendar quarter
of 2024 amounted to 16% of the market,
some way below the stipulated minimum
of 22%. However, the manufacturers
that we represent are placed to meet
the challenges of the transition to
zero-emission vehicles.
Climate-related emissions
The board is acutely aware of
the impact that the Company’s
operations have on the environment,
its responsibility to minimise these
wherever possible, and to supporting
the Government’s efforts to transition
towards net-zero carbon emissions.
To assist with this process, an
Environmental, Sustainability and
Efficiency Committee, headed by
a senior operational manager who
reports directly to the Chief Executive,
operated during the year, with the
remit of scrutinising and reducing
the Company’s energy usage. The
Committee was able to achieve
year-on-year savings in electricity and
gas usage of some 5% in the 2023
calendar year. Investments were made
in the year to improve the efficiency of
lighting and heating equipment, and
further energy savings are expected in
future periods.
4 Caffyns plc Annual Report 2024
Operational and Business Review continued
Property
We operate, primarily, from freehold
sites, which provides additional stability
to our business model. As in previous
years, our freehold premises were valued
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 2024
was £10.7 million (2023: £11.5 million).
The reduction in the valuation in the
year reflected the general softening of
the commercial property market, which
also necessitated impairment charges
in the year of £0.6 million (2023: £Nil). In
accordance with our accounting policies,
this surplus of £10.7 million has not been
incorporated into our accounts.
During the year, we incurred
capital expenditure of £2.6 million
(2023: £0.9 million). This, primarily,
reflected the redevelopment of our
Volvo premises in Worthing to the
manufacturer’s latest standards, along
with replacement spend on existing
assets and further installations of
electric charging points.
The board is progressing the sale
process of our freehold premises in
Lewes, which is currently being utilised
for Lotus Sussex and Motorstore
Performance, as well as being
partially tenanted. Completion of this
process will be dependent, among
other matters, on the agreement of
mutually acceptable terms with certain
prospective purchasers. The board
expects further progress towards a
sale in the coming year. Due to the
uncertainty of a successful outcome,
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 two leased
vehicle storage compounds, which
are shown on the balance sheet
as right-of-use assets. During the year,
the lease for one of those premises
was extended for a further five years.
As a result, the valuation of that lease
increased by £0.4 million, equal and
opposite to an increase in its lease liability.
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 come
up for their periodic review in March
2026. HSBC also provides an overdraft
facility of £3.5 million, reviewed annually.
The Company continues to enjoy a
supportive relationship with HSBC.
In addition to its facilities with HSBC,
the Company also has a revolving
credit facility of £4.0 million provided by
Volkswagen Bank, reviewed annually.
During the year, the final repayment
instalment was made to clear a term
loan with Volkswagen Bank, originally of
£5.0 million.
The term loan and revolving credit
facilities provided by HSBC include
certain covenant tests, covering
interest, borrowing and security levels.
The covenant test relating to security
levels were passed at 31 March 2024.
In the light of the underlying trading
losses incurred in the year and, prior to
the year end, HSBC agreed to waive
the covenant tests covering interest and
borrowing levels. For the coming year, a
new covenant test has been introduced,
which will require the Company to
achieve certain EBITDA hurdles in the
coming financial year. The existing
covenant tests relating to interest and
borrowing levels will then be reapplied
with effect from 30 June 2025. Any
failure of a covenant test could result,
at the option of HSBC, in the borrowing
becoming repayable on demand.
During the year, cash generated by
operating activities was £0.1 million (2023:
£4.2 million), reflecting the challenging
trading conditions in the year. Changes
in net working capital were minimal,
although inventories and payables both
increased as levels of new cars held
on consignment from manufacturers
continued to return to more normal
levels. Other significant cash movements
in the year included capital expenditure
of £2.6 million (2023: £0.9 million),
repayment of bank term loans of
£0.9 million (2023: £0.9 million) and
dividends paid to shareholders of
£0.5 million (2023: £0.6 million). Cash
balances held at 31 March 2024 were
£0.4 million, a reduction of £3.8 million
from the previous year end.
Bank borrowings, net of cash balances,
at 31 March 2024 were £11.3 million
(2023: £8.1 million) and, as a proportion
of shareholders’ funds at 31 March
2024, were 39% (2023: 26%). This
increase in gearing level reflected
cash absorbed by operating activities
combined with a high requirement for
capital expenditure in the year and an
adverse movement in the deficit for the
Company’s defined-benefit pension
scheme. In addition to the year-end
cash balances available, but undrawn,
banking facilities with HSBC and
Volkswagen Bank at 31 March 2024
were £7.5 million (2023: £7.5 million).
Taxation
The year produced a tax credit of
£0.3 million against losses incurred
(2023: charge of £0.6 million).
The effective tax rate for the year
was higher than the standard rate of
corporation tax in force for the year
of 25% due to the effect of items
disallowable for corporation tax
and from the change to the rate of
corporation tax in the prior year.
The Company has outstanding trading
losses of £1.3 million (2023: £Nil)
available for relief against profits in
future accounting periods. There are
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, amounted to £5.9 million
(2023: £6.8 million), which could
equate to a future potential tax liability
of £1.5 million (2023: £1.7 million).
The Company was unable to utilise any
of its Advanced Corporation Tax in the
year, leaving an unchanged amount
carried forward to future trading periods
of £0.3 million (2023: £0.3 million).
5
www.caffyns.co.uk
Stock code CFYN
Our Business FinancialsGovernance Other information
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 movements in yields of
gilts and bonds can have a significant
impact on the net funding position of
the scheme. At 31 March 2024, the
deficit of the scheme was £10.0 million
(2023: £8.8 million). The deficit, net
of deferred tax, was £7.5 million
(2023: £6.6 million). The investment
performance of the scheme’s asset was
adversely affected during the year by
volatile market movements.
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 £0.4 million in the year
(2023: £0.1 million).
The latest triennial valuation, as at
31 March 2023, remains ongoing.
Therefore, the most recent completed
triennial valuation of the Scheme was
as at 31 March 2020, which was
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
was set at a base level of £0.75
million for the year ended 31 March
2022, along with an additional one-off
contribution of £1.0 million, which was
paid in the prior year. The recurring
annual recovery plan payment for each
subsequent year thereafter would then
increase by 2.25%, until superseded
by any future new recovery plan to be
agreed between the Company and
the trustees. In accordance with the
recovery plan, the Company made
deficit reduction contributions into the
Scheme, during the year, of £0.8 million
(2023: £1.8 million).
A revised recovery plan to deal with
the Scheme’s deficit position is being
negotiated with the Scheme’s trustees
and this, and the formal triennial
actuarial valuation of the Scheme as
at 31 March 2023, need to be agreed
with the trustees and submitted to the
Pensions Regulator by 30 June 2024.
The Board remains confident of meeting
this submission deadline.
Dividend
The board declared an interim
dividend of 5.0 pence per Ordinary
share (2023: 7.5 pence), which was
paid in January 2024. Although the
financial performance of the Company
in the second half of the financial
year worsened and was loss making,
the board remains confident in the
prospects of the Company and declared
a final dividend for the year of 5.0 pence
per Ordinary share (2023: 15.0 pence).
This will be paid on 9 August 2024 to
shareholders on the register at close of
business on 12 July 2024. The Ordinary
shares will be marked ex-dividend on
11 July 2024.
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 sectors 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 1 August 2024 and will be an open
meeting, to which shareholders will be
invited to attend in person.
Outlook
The Company has a strong new
car forward-order book, but trading
conditions in the early part of the
current financial year have remained
challenging, with inflationary pressures
and high interest rates continuing to
impact on our cost base, and on our
customers’ confidence levels.
The current financial year will see
certain manufacturers continue their
transition to new agency arrangements
for their dealer networks, which may
result in some short-term disruption to
the market.
Enquiry rates from retail customers
for electric cars continue to remain
subdued. However, our manufacturers
are well placed for the future with a
pipeline of market-leading electric new
car products due to come to market
over the next few years.
Our businesses enjoy an exceptional
workforce who represent excellent
brands. We also continue to enjoy
supportive relationships with our
banking partners, HSBC and
Volkswagen Bank, with undrawn
facilities of £7.5 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 benefit from future business
opportunities.
S G M Caffyn
Chief Executive
6 June 2024
“We remain confident
in the prospects of the
Company and are ready
to benefit from future
business opportunities.”
6 Caffyns plc Annual Report 2024
Operational and Business Review continued
Business performance
New and used cars
Our new unit deliveries increased by
5% in the year, against a challenging
economic background. Although
total UK new car registrations rose by
16% over the twelve-month period,
within this, the private and small
business sector, to which we have
most exposure, fell by 3%. New car
registrations to the fleet market in the
year rose significantly, by 35%. Overall,
we were satisfied with the level of new
car deliveries achieved for the year.
Our used unit sales also increased by
2%, despite a reduction in cars sold
through our Motorstore non-franchised
used car businesses. Transaction
data released by the Society of Motor
Manufacturers and Traders reported
nationwide used car transactions were
up by 5% for the 2023 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 disruptions
caused to manufacturers’ production
levels from the global shortage of
semiconductors since 2020. 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
5%, aided by further enhancements to
our aftersales marketing and retention
procedures, which continue to benefit
this area of the business.
EBITDA
EBITDA saw a substantial reduction
during the year despite positive
trading across both new car sales and
aftersales. The used car market suffered
a significant price correction in the
final quarter of 2023, which adversely
affected profits from used car trading.
In addition, very high levels of gas and
electricity prices, along with increases to
business rates, resulted in significantly
higher costs, which adversely impacted
EBITDA in the year.
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, CUPRA, 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 Company’s operations.
7
www.caffyns.co.uk
Stock code CFYN
Our Business FinancialsGovernance Other information
Strategic Report
Corporate social
responsibility, community
issues, human rights
and diversity
Caffyns has a long-standing Corporate
and Social Responsibility agenda,
including its approach to its employees,
the environment, health and safety, and
the communities in which it operates.
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. 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 Company does not comply with
the Listing Rule on diversity as less
than 40% of the directors are women,
as neither of the posts of Chair, Chief
Executive, Senior Independent Director
nor Finance Director are held by a
woman, and as at least one individual
on the board of directors should be
from a minority ethnic background.
There are no vacant board positions,
with the last appointment having been
made in June 2019. The board will
remain mindful of its responsibilities
under Listing Rules as and when future
appointments are made.
Number
of board
members
Percentage of
the board
Number of
senior positions
on the board
Number in
executive
management
Percentage
of executive
management
Men 5 83% 4 9 90%
Women 1 17% – 1 10%
6 100% 4 10 100%
Number
of board
members
Percentage of
the board
Number of
senior positions
on the board
Number in
executive
management
Percentage
of executive
management
White British or Other White 6 100% 4 10 100%
Mixed/Multiple Ethnic Groups – – – – –
Asian/Asian British – – – – –
Black/African/Caribbean/Black British – – – – –
Other ethnic group, including Arab – – – – –
6 100% 4 10 100%
Executive Management represents
an Operations Board, which is
attended by the three executive board
directors and ten senior operational
management employees, and there
are no vacant positions. The Company
seeks to promote talent from within,
whenever that is possible. The average
employment tenure of these senior
operational management employees is
23 years, with the most recent external
appointment being in 2012.
The individuals who constitute the
tables above self-identified as to their
gender and ethnicity. The Company
does not ask about, nor record, the
ethnicity of its general workforce.
The table on the right gives the total
number of our employees in each
category, by gender, at 31 March 2024.
Female Male Total
Director 1 5 6
Executive
management 1 9 10
All other
employees 96 343 439
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 an 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.
8 Caffyns plc Annual Report 2024
Strategic Report continued
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. It
is our policy, wherever practicable, to
provide continuing employment under
normal terms and conditions and to
provide training, career development
and promotion wherever appropriate.
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.
Whilst 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 26 and those in
note 22 to the financial statements.
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 a pandemic-level infection, interest rates,
unemployment, fuel prices, inflation, indirect taxation,
the availability and cost of credit and other factors that
could affect the level of consumer confidence.
Monitoring of key macroeconomic
indicators against internal performance
leads to the 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.
Conflicts in
Ukraine, Yemen
and Gaza
The conflicts in Ukraine, Yemen and Gaza continue to
be a source of volatility in energy prices, particularly
for gas, as well as placing additional strain on
manufacturers’ parts supply chains. A sustained period
of high energy prices would have an effect on the
Company’s 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 this
particular 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’s current fixed-price
contracts for gas and electricity expire
in September 2024. 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
underperformance. The Company is not aware of any
existing breaches of these agreements.
Diversification 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.
9
www.caffyns.co.uk
Stock code CFYN
Our Business FinancialsGovernance Other information
Principal risks Potential impact/material risk Key controls and mitigating factors
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 car and used car sales.
Transition to
electric vehicle
powertrains
Government announcements have indicated that
solus petrol and diesel powertrains will no longer be
permitted in new vehicles sold after 2035. This change
may result in disruption to the supply and demand for
new cars in the run up to 2035, and to the used car
market.
Ensuring that our premises are
developed to be able to adapt to
the expected future shift towards
battery-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
legislation
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
22. 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.
10 Caffyns plc Annual Report 2024
Strategic Report continued
Principal risks Potential impact/material risk Key controls and mitigating factors
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.
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.
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 Remuneration Committee. The
Company continues to review possible
options to mitigate the risk of underlying
volatility causing an increase in the
deficit.
Political
uncertainties
The requirement for a general election in the United
Kingdom in the coming year, alongside numerous
global developments, such as the conflicts in Ukraine,
Yemen and Gaza, means that a degree of uncertainty
exists in the economic outlook. 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, and 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 loyal
base, and to maintaining our close
working relationship with our nine
manufacturers.
11
www.caffyns.co.uk
Stock code CFYN
Our Business FinancialsGovernance Other information
Environment and
climate change
The Taskforce on Climate-related
Financial Disclosures (“TCFD”) has
published four “pillars” relating to
disclosures, categorised under the
headings of Governance, Strategy, Risk
Management and Metrics and Targets.
This Annual Report contains certain of
the recommended disclosures, although
constraints on available resources mean
that we are still in the early stages of
this journey and that more time will be
required to allow for a full consideration
of the issues and outcomes. Regulatory
guidance continues to emerge in this
area, which will be considered as part
of our remaining work. We expect to be
able to widen our disclosures in future
Annual Reports.
In accordance with Listing Rule
9.8.6R(8), we have disclosed in the
tables below certain climate-related
financial disclosures aligned to the four
“pillars” listed above and the eleven
recommended disclosures contained
within the TCFD additional guidance
(Implementing the Recommendations
of the Task Force on Climate-Related
Financial Disclosures (2021 TCFD
Annex)). For each of the recommended
disclosures we have laid out whether
our disclosures, are fully or partial
compliant, or non-compliant with the
recommendations of the TCFD and
the future steps planned to be taken to
ensure our disclosures are compliant in
the future, including relevant timeframes.
At 31 March 2024, the Company
considers that it is fully compliant
for the disclosures required for both
recommendations under Governance,
is compliant for one of the three
recommendations under Strategy,
but is non-compliant for two of the
recommendations. Compliance has
been achieved for all recommendations
under Risk Management. For Metrics
and Targets, partial compliance
has been achieved for two
recommendations, whilst the Company
remains non-compliant for the remaining
recommendation.
The recommendations, for which the
Company is currently unable to be fully
compliant, require more time before
full implementation can be achieved.
It is expected that full implementation
of these TCFD recommendations will
require up to a further 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.
For the four “pillars” relating to disclosures, the Company’s current position is as follows:
Recommended
disclosures
Summary
of progress
Disclosure
compliance
GOVERNANCE RECOMMENDATION
Disclosure of the board’s governance around climate-related risks and opportunities
a) Describe the
board’s oversight
of climate-related
risks and
opportunities
The board of directors retains ultimate responsibility for the Company’s
environmental policies and for seeking to minimise the effect of our operations
on the environment. This includes the development of 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. Through the establishment of an Environmental,
Sustainability and Efficiency Committee (see below) the climate-related risks and
opportunities relevant to the Company have been identified. The Board receives
climate-related energy consumption reports from management on a monthly
basis throughout the year and can use the Environmental, Sustainability and
Efficiency Committee as a conduit to both receive climate-based information and
disseminate guidance and instructions to branch-based management. During the
year, the board formally accepted oversight of climate-related issues.
Compliant.
b) Describe
management’s
role in assessing
and managing
climate-related
risks and
opportunities
In August 2022, an Environmental, Sustainability and Efficiency Committee was
established under the leadership of a senior manager to assist with the process
of identifying climate-related risks and opportunities and to review the company’s
environmental footprint, including its energy usage. The Committee aims to meet
twice each year. The risks and opportunities identified and agreed are set out
later in this report on pages 15 and 16. This Committee reports directly to the
Chief Executive, who then reports on its work to the board.
Since its implementation, the Committee has also identified and implemented
several energy-saving measures and continues to develop plans for further
reductions, which are expected to yield results in the next reporting period.
The board continues to consider whether any external assistance would be
beneficial to review and quantify our carbon emissions.
Compliant.
12 Caffyns plc Annual Report 2024
Strategic Report continued
Recommended
disclosures
Summary
of progress
Disclosure
compliance
STRATEGY RECOMMENDATION
Disclosure of the actual and potential impacts of climate-related risks and opportunities on the
Company’s business, strategy and financial planning, where such information is material
a) Describe the
climate-related risks
and opportunities
the organisation has
faced over the short,
medium and long
term.
The actual and potential impacts from climate change are described on pages
15 and 16. The Company has assessed short-term as being between 0 and
3 years from the balance sheet date, with medium term being within 3 and 10
years and long term more than ten years from the balance sheet date.
The most 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.
Compliant.
b) Describe
the impact of
climate-related risks
and opportunities on
the organisation’s
businesses, strategy
and financial
planning.
The board considers climate-related factors when determining its future
strategy for the business and in assessing major plans of action.
However, no specific goals and targets have yet been set. The board monitors
energy usage on a monthly basis and, once targets can be set and adopted,
will monitor progress being made in regard to their achievement.
At the current time, it is envisaged that the net impact on future revenues
and profits from the climate-related risks and opportunities so far identified is
unlikely to be significant.
Non-compliant
with further
work required
to set targets
for reductions in
carbon emissions.
This is expected
to be completed
within the next two
years.
c) Describe the
resilience of the
organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario.
Limited work has been able to be completed in determining the resilience
of our strategy under different climate-related scenarios and further work is
required in this area.
Non-compliant.
This is expected
to be completed
within the next
three years.
Recommended
disclosures
Summary
of progress
Disclosure
compliance
RISK MANAGEMENT RECOMMENDATION
Disclosure of how the Company identifies, assesses and manages climate-related risks
a) Describe the
risk management
processes
for identifying
and assessing
climate-related risks.
The Company’s Environmental, Sustainability and Efficiency Committee has
worked with the executive directors in order to identify risks arising from
climate-related change and these are detailed later in this report on pages 15
and 16. Information published by industry-specific bodies such as the National
Franchised Dealers Association and the Society of Motor Manufacturers and
Traders, as well as the Business Development Groups run by the vehicle
manufacturers that the Company represents and Government publications have
all been used in order to assist in the identification and assessment of climate-
related risks. The review of existing risks and consideration of potential new risks
is a standing agenda item for the board on at least two of the eight meetings
scheduled to be held during each year.
Compliant.
13
www.caffyns.co.uk
Stock code CFYN
Our Business FinancialsGovernance Other information
Recommended
disclosures
Summary
of progress
Disclosure
compliance
RISK MANAGEMENT RECOMMENDATION
Disclosure of how the Company identifies, assesses and manages climate-related risks
b) Describe the
organisation’s
processes
for managing
climate-related
risks.
Identified risks for all areas of the business are subject to regular review and
assessment to ensure that they remain accurate, relevant and comprehensive.
Where appropriate, this includes discussions with external third parties such
as insurers and finance providers. The Company’s Risk Register is based on
a grid-based system where risks are assessed for their potential impact on
the business and likelihood of occurring to produce a combined significance
ranking. At the biannual meetings, during which the risk register is reviewed and
updated, discussions are directed, primarily, at those risks deemed to be the
most significant. Information provided by the Environmental, Sustainability and
Efficiency Committee is incorporated into the review process.
Compliant.
c) Describe how
processes for
identifying, assessing,
and managing
climate-related risks
are integrated into the
organisation’s overall
risk management.
The Company’s Environmental, Sustainability and Efficiency Committee will
continue to identify, assess and manage climate-related risks which may impact
on our operations. The Risk Register maintained by the board covers all identified
business risks and includes those arising from climate change.
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 our diversity of manufacturer representation.
Compliant.
Recommended
disclosures
Summary
of progress
Disclosure
compliance
METRICS AND TARGETS RECOMMENDATION
Disclose the metrics used by the organisation to assess and manage climate-related risks
and opportunities, where such information is material.
a) Disclose the
metrics used by
the organisation
to assess
climate-related risks
and opportunities in
line with its strategy
and risk management
process.
Our identification of climate-related risks and opportunities is shown on
pages 15 and 16. Certain metrics covering electricity and gas consumption
levels were introduced in the year, being an aftersales energy efficiency ratio
of aftersales turnover as a proportion of energy consumed in kWhs in a given
rolling 12-month period and a property efficiency ratio of energy consumed in
kWhs in a given rolling 12-month period to the square meterage of buildings.
The Company’s dealership operations are then ranked against these two
metrics. Further work continues to identify additional specific metrics in relation
to (a) climate change; (ii) land use and ecological sensitivity; (iii) solid waste and
single use plastics; and (iv) product diversification, which would be beneficial in
order to promote best practice in energy usage across the Company.
Partial compliance.
This is expected
to be completed
within the next two
years.
b) Disclose Scope
1, Scope 2, and, if
appropriate, Scope
3 greenhouse gas
(GHG) emissions, and
the related risks.
We disclose, on page 17, our Scope 1 and Scope 2 emissions caused by
activities in the financial year.
We do not currently disclose our Scope 3 emissions (being other indirect
emissions from the extraction and production of purchased materials and fuels
for which the Company does not own or control) as further clarity is required
as to what emissions are applicable for the Company, and how that data
would be practicably obtained without imposing a disproportionate burden on
the effective operation of our businesses.
Partial compliance,
except for the
disclosure
of Scope 3
emissions. No
timeframe can
currently be set for
the completion of
this task.
14 Caffyns plc Annual Report 2024
Strategic Report continued
Recommended
disclosures
Summary
of progress
Disclosure
compliance
METRICS AND TARGETS RECOMMENDATION
Disclose the metrics used by the organisation to assess and manage climate-related risks
and opportunities, where such information is material.
c) Describe the
targets used by
the organisation
to manage
climate-related risks
and opportunities and
performance against
targets.
Further work is required in order to allow targets to be set in relation to (a)
climate change; (ii) land use and ecological sensitivity; (iii) solid waste and
single use plastics; and (iv) product diversification.
The Company’s aim remains to consistently reduce its energy usage and,
hence, the amount of CO
2
it emits from its business activities, and to
contribute towards worldwide efforts to limit global warming to 1.5% above
pre-industrial levels.
Non-compliant.
This is expected
to be completed
within the next two
years.
Key climate-related risks
Description
of the risk
Potential
financial impact
Timescale,
likelihood and magnitude
The transition from cars powered by internal
combustion engines to battery-electric
powertrains will be a profound technological
change and the initial projected direction of
change may not prove to be the ultimate
destination. Such changes will also place
significant pressures on supply chains,
potentially restricting the availability of new
car supply.
Residual values of existing battery-electric
vehicles have already proved volatile so
stock-holding risks will increase whilst this
transition occurs. A limited investment has
been made in workshop equipment to
facilitate the servicing of battery-electric
vehicles and the value of this equipment
could be compromised if the technology
were to change. Lack of availability of new
car supply would impact on revenues.
Highly likely to occur over
the medium term (defined as
between 3 and 10 years) with
the potential of the magnitude
to be severe.
Battery-electric vehicles currently cost
more than the equivalent models powered
by internal combustion engines. Although
this price differential is expected to fall over
time as production methods improve, it
is unlikely to be eliminated entirely due to
the expense of battery components. High
energy prices mean that the running cost
savings of battery-electric vehicles has been
significantly reduced.
Customers’ preferences for the early
adoption of new battery-electric
technologies might be adversely impacted
by cost considerations. This might result
in over-supply to the market and market
disruption in order to bring supply and
demand back into equilibrium.
Likelihood of occurring is
considered possible over the
short and medium terms,
defined as between 0 and 10
years, with the potential of the
magnitude to be major.
Battery-electric vehicles are comprised of
fewer parts, will use less fluids and should
suffer less brake degradation due to
regenerative braking methods, all of which
would result in less aftersales revenue.
However, these vehicles are also likely to
require more high-skilled and complex
diagnostic work.
On balance, overall aftersales revenues are
expected to reduce during the transition
phase, although the existing fleet of cars
powered by internal combustion engines
will remain on UK roads for many years to
come.
Highly likely to occur over
the medium term with the
potential of the magnitude to
be major.
Increased prevalence of battery-electric
vehicles will require a significant investment
in charging infrastructure, including potential
upgrades to the levels of electrical supplies
to our dealership premises. Once installed,
this charging infrastructure will also result in
higher ongoing operating costs due to the
increases in electricity prices.
The investment in capital assets might
be at risk if the pace or direction of the
technological changes associated with
battery-electric vehicles were to change
and higher operating costs could only be
mitigated by external reductions in energy
prices.
Likelihood of occurring is
considered likely over the
short and medium terms with
the potential of the magnitude
to be major.
15
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Stock code CFYN
Our Business FinancialsGovernance Other information
Description
of the risk
Potential
financial impact
Timescale,
likelihood and magnitude
Increasing variability in the UK climate and
increasing frequency of more extreme
climate events increase the risk of more
potentially damaging events to buildings and
associated infrastructure.
Costs of insuring the Company’s buildings
and associated infrastructure may increase
and costs of lower-level repairs which are
not covered by insurance might increase.
Likely to occur over the
medium term with the
potential of the magnitude to
be moderate.
The transition from cars powered by internal
combustion engines to battery-electric
powertrains will present a major opportunity
for additional new car sales as it provides
a heightened reason for companies and
individuals to more quickly adopt to the new
technologies.
Additional new car revenues, as well as
those from associated revenue streams.
Likely to occur over the
medium term (defined as
between 3 and 10 years) with
the potential of the magnitude
to be major.
Closer scrutiny of energy use, particularly for
heating, ventilation and air-conditioning, and
for equipment in our aftersales workshops,
should allow for the identification of further
savings in energy usage.
Lower and more stable operating costs. Highly likely to occur over
the short and medium terms,
defined as between 0 and 10
years with the potential of the
magnitude to be moderate.
Climate-related actions
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
our activities on the environment.
We also seek to reduce our energy
and water consumption and our use
of plastic materials, particularly those
of single-use plastics. Use of the
latest building materials is made in
the construction of new sites and the
refurbishment of existing locations.
Audit processes are in place to measure
energy and materials usage and make
recommendations for improvements.
A regime to periodically test electrical
systems is in place throughout the
Company’s premises.
The Company has mapped out its
journey towards net-zero carbon
emissions by the Government’s current
target date of 2050. This journey
comprises four main strands, being
electricity, gas, transport and other
energy usage.
The Company uses significant amounts
of electricity in its operations, which
it purchases under fixed-price term
contracts, normally for two-year
periods. The Company purchases all
its electricity from sources that are
certified as generating 100% renewable
electricity. Whilst the electricity that
the Company consumes come
direct from the national grid and,
therefore, is associated with carbon
emissions, an amount equivalent to the
Company’s usage would not produce
any emissions in its generation so, in
practical terms, its purchased electricity
is emissions free. Our electricity usage
in 2023 was 2.2 million kWhs (2022:
2.3 million kWhs) and comprised some
two-thirds of our annual energy usage.
The Company also uses significant
amounts of gas in its operations, with
usage in 2023 amounting to 1.1 million
kWhs (2022: 1.2 million kWhs), being
approximately 30% of its energy usage.
As for electricity, purchases are made
under fixed-price term contracts,
normally for two-year periods. The
primary use of gas is for central heating
purposes through gas boilers, which
are at various stages in their life cycle.
The original production of these gas
boilers would, itself, have been energy
intensive, so the Company’s approach
is to ensure that these boilers continue
in use until they reach the end of their
economic life. The gas boilers have an
estimated life span of between ten and
fifteen years, so the Company does
not intend to install any new gas boilers
after 2035. Between now and 2035, the
Company is committed to investigating
alternative heating sources, such as air-
and ground-source heat pumps, as and
when gas boilers need replacement.
Where these alternatives are practically
and commercially viable, the Company
will seek to avoid the purchase of
replacement gas boilers.
The third strand to the Company’s
usage is its own fleet of demonstrator
and courtesy cars, which equate to
some 6% of its energy usage. The
manufacturers that the Company
16 Caffyns plc Annual Report 2024
Strategic Report continued
represents are all in various stages of
transitioning their new car offerings
away from cars powered by internal
combustion engines and towards hybrid
and battery-electric powertrains. In the
2023 calendar year, battery-electric
cars comprised 17% of all new car
registrations in the United Kingdom,
whilst hybrid cars made up a further
39% of new car registrations. New cars
powered solely by internal combustion
engines, therefore, represented less
than half of new car registrations in
2023. The Government has stipulated
no new cars that use an internal
combustion engine will be able to be
sold in the United Kingdom after the
end of 2035. As our manufacturers
transition away from petrol and diesel-
powered cars, our own fleet of vehicles
increasingly reflects that movement.
At 31 March 2024, 28% of our own
demonstrator, courtesy and staff car
fleet comprised either alternatively-
fuelled or battery-electric cars, up from
23% at the previous year end.
The final strand to the Company’s
energy usage is its water usage. As
water will always be required in order
to operate the Company’s premises
and the preparation of clean water is
unlikely to become totally carbon-free,
it is anticipated that our emissions in
this area will, ultimately, need to be
covered through a carbon-offsetting
arrangement.
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 whilst, 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.
Streamlined energy
and carbon reporting
This section includes our mandatory
reporting of greenhouse gas
emissions for the period 1 January to
31 December 2023, 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 2023 calendar year, our businesses emitted 701 tonnes of carbon dioxide (“CO
2
”) (2022: 709 tonnes).
Our emissions are, principally, of CO
2
and are from the following sources:
Greenhouse gas emissions data
Tonnes of CO
2
2023
Tonnes of CO
2
2022
Tonnes of CO
2
2021
Scope 1
Gas consumption 195.5 213.2 278.9
Owned transport 52.4 55.0 39.4
Water supply 3.0 4.4 4.1
Scope 2
Purchased electricity (location-based emissions) 454.4 442.2 479.1
Purchased electricity (market-based emissions) 0.0* 310.4 479.1
Generated electricity (4.4) (5.5) (5.5)
Statutory total 700.9 709.3 796.0
Revenue (£million) 275.7 235.3 201.4
*
The Company purchases its electricity from a supplier that was able to certificate that an equivalent amount of electricity has been generated by wind and hydro
assets matched to renewable energy guarantees of origin, enabling zero emission reporting.
17www.caffyns.co.uk
Stock code CFYN
Our Business FinancialsGovernance Other information
Scope 1 and Scope 2 energy
consumption and greenhouse gas
emissions data has been calculated in
line with the Greenhouse Gas (“GHG”)
protocol methodology. Emission
Factor Databases have been used,
which are consistent with the UK
Government environmental reporting
guidance, utilising the current published
kWh gross calorific value and CO
2
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.
2021 intensity ratio: 4.0 tonnes of CO
2
per £million of revenue
2022 intensity ratio: 3.0 tonnes of CO
2
per £million of revenue
2023 intensity ratio: 2.5 tonnes of
CO
2
per £million of revenue
The Company’s total energy
consumption for the period 1 January
to 31 December 2023 was 3.5 million
kWh (2022: 3.6 million kWh). 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 (“CO
2
e”) data
are 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
2
e.
Waste in 2023 was 434.5 tonnes
(2022: 567.4 tonnes) of which 80% was
recycled (2022: 95%) with the balance
incinerated to generate electricity. We
continue to work with our recycling
partners to maximise waste that can be
recycled.
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 2035
onwards. Previous indications were
that the ban would be enforced from
2030 but this end date was relaxed in
September 2023 to the end of 2035.
Hybrid vehicles, which are powered
by a combination of a battery and an
internal combustion engine, will also
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.
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 Health, 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, 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 Health
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
18 Caffyns plc Annual Report 2024
Strategic Report continued
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 27;
• The Company’s employees are
recognised as vital to its success
and employee relations are
considered in more detail on pages
3, 8 and 43. The Chief Executive
regularly visits the Company’s sites,
speaking to staff whilst he is there
and reporting to the board on the
outcome of those visits. The board
continues to review its methods of
engagement with its employees. 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
2024. 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 periodically reviews its
policies covering anti-corruption and
anti-bribery, equal opportunities and
whistleblowing.
During the year under review, ended
31 March 2024, the key decisions taken
by the board included:
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
£4.20 in dividends per Ordinary share
over the last two decades. The financial
performance of the business in the first
half of the year was challenging and
reported profits fell from underlying
profits of £1.6 million to just £0.3
million. Despite this reduction, the
board declared an interim dividend of
5.0 pence to holders of the Ordinary
shares. The financial performance of
the Company in the second half of
the financial year worsened and was
loss-making. However, the board
remains confident in the prospects
of the Company and declared a final
dividend for the year of 5.0 pence per
Ordinary share.
Pension scheme triennial valuation:
The latest triennial valuation of the
Company’s defined benefit pension
scheme was effective from 31 March
2023. 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
2020. The board remains 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 Company has
worked collaboratively with the trustees
of the Scheme during the year and is
confident that a recovery plan will be
agreed and submitted to the regulator
before the submission deadline of
30 June 2024.
Redevelopment of premises at 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 have been encouraged
with the level of trading in the early
years of operation and originally
intended to relocate the operation
to a new-build facility in Angmering,
adjacent to its existing Audi operation.
However, after further consultations,
and with the full agreement of the
manufacturer, the directors decided that
the dealership premises in Worthing
should be significantly upgraded to the
manufacturer’s latest standards. This
upgrade was commissioned in the year
and completed in December 2023.
Additional manufacturer
representation: The board continues
to seek new opportunities to maximise
the effectiveness of its existing property
portfolio and was pleased to be able to
add the CUPRA brand to its premises
in Tunbridge Wells, alongside existing
operations for SEAT and Skoda. The
Company has also received approval
to add the Skoda brand to its existing
Volkswagen operations in Eastbourne
and expects to commence trading in
the final quarter of 2024.
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. The
board is progressing the sale process,
although completion of this process
will be dependent on the agreement of
mutually acceptable terms with certain
prospective purchasers and, potentially,
on the approval of our shareholders.
The board expects further progress
towards a sale in the coming year.
The final sale of the freehold would not
be expected to complete until 2025 at
the earliest.
By order of the board
S G M Caffyn
Chief Executive
6 June 2024
19
www.caffyns.co.uk
Stock code CFYN
Our Business FinancialsGovernance Other information
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
STEPHEN G BELLAMY BCom CA(NZ)
Non-executive
and senior independent director
NIGEL T GOURLAY BSc
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
Governance
Board of Directors 20
Chairman’s Statement on Corporate
Governance 21
Directors’ Remuneration Report 28
Report of the Directors 42
Directors’ Responsibilities Statement 46
20
Caffyns plc Annual Report 2024
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 2024, except
for Provisions 10, 11, 19, 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 to the board on
1 November 2011, so exceeded
nine years’ service in a previous
financial year. Mr N T Gourlay was
appointed as a non-executive
director on 26 September 2013, so
exceeded nine years’ service in the
previous financial year. The board
is satisfied that both Mr R C Wright
and Mr N T Gourlay will continue to
act independently and to robustly
challenge the executive, where
appropriate. Mr S G Bellamy was
appointed in June 2019 and remains
independent;
• Provision 11 requires that at
least half the board, excluding
the Chairman, should consist
of independent non-executive
directors. The board is satisfied the
composition of the board and the
committees reflects 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 19 requires that the
Chairman should not remain in
post beyond nine years from the
date of their appointment. Mr R C
Wright was appointed as Chairman
on 26 July 2012 so has exceeded
nine years’ service in the role as
Chairman. The board is satisfied that
Mr R C Wright will continue to chair
the board in an appropriate manner;
• 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 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 37;
• 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;
• 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 32
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
• Health and safety policy;
• Business strategy;
• Approval of significant capital
projects and other investments;
• Principal terms of agreement 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;
• Changes in employee share
incentives;
• Reviewing the overall corporate
governance arrangements;
• Appointments to the board and its
committees;
21
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
Chairman’s Statement on Corporate Governance
• 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
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
on pages 23 and 24 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
as its Audit & Risk and Remuneration
committees, and its individual directors,
which is carried out in each financial
year. 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
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
At 6 June 2024, 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.
22 Caffyns plc Annual Report 2024
Chairman’s Statement on Corporate Governance
continued
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 S G Bellamy 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 except for Mr R C Wright who
was unable to attend one meeting, in
May 2023.
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
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 & Risk Committee
Our Audit & Risk Committee comprises
two non-executive directors and the
Chairman. The members are:
S G Bellamy (chairman)
R C Wright
N T Gourlay
The Committee is chaired by
Mr S G Bellamy. 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 & 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;
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• 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 and all directors were in attendance
at all the meetings with the exception
of Mr R C Wright, who was unable to
attend one meeting, in May 2023. 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.
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 any requirement for potential
impairments against the book
value of property, plant and
equipment, investment property
and goodwill relating to poorly
performing locations. Management
then follow up with detailed action
plans to either 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, management
fully discusses with the external
Auditor the identification of
cash-generating units (“CGUs”) for
the purposes of impairment testing.
The Committee is satisfied that only
two impairments were required in
relation to the 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) and
the Company’s most recent trading
results, and include a range of
possible downside scenarios.
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 assets and
liabilities of the scheme and is
satisfied that these are reasonable.
Mr S G Bellamy will attend the 2024
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 require prior
approval from the Audit & Risk
Committee based on an assessment
against permissible services and
associated fee levels. The only
non-audit service provided in the year
by the Auditors was the interim review.
The Committee ensures that the
Auditor’s objectivity and independence
are safeguarded by ensuring that the
level of fees is not material to either
24 Caffyns plc Annual Report 2024
Chairman’s Statement on Corporate Governance
continued
the Company or to the Auditor. The
report from BDO LLP confirming their
independence and objectivity was
reviewed by the chairman of the Audit
& Risk Committee and the Finance
Director. Fees payable to the Auditor
are set out in note 4 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 fifth 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.
The Company maintains an internal
audit function, which reports to the
Audit & Risk Committee. During the
year, the Committee reviewed the work
of the internal audit function and was
satisfied that it remained effective and
appropriate for the Company’s needs.
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
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 associated with the term loan
and revolving credit facilities provided
by HSBC, which cover levels of interest,
borrowing and freehold property
security. The covenant tests relating to
security levels were easily passed at
31 March 2024 and, prior to the year
end, HSBC agreed to waive the tests
covering interest and borrowing levels.
For the coming year, agreement was
reached to implement a new covenant
test, which will require the Company
to achieve minimum cumulative Senior
EBITDA hurdles, which are £Nil for
the quarter ending 30 June 2024,
£1.0 million for the half-year ending
30 September, £1.5 million for the nine
months ending 31 December 2024 and
£3.0 million for the full financial year
ending 31 March 2025. The test on
31 March 2025 will be the final test to
be carried out within the twelve-month
period from the anniversary of the
signing of these financial statements.
Based on expected borrowing levels
and levels of interest rates in the coming
twelve months, the covenant hurdle for
the full financial year ending 31 March
2025 equates broadly to an underlying
break-even position for the Company.
The existing covenant tests relating to
interest and borrowing levels will then
be reapplied with effect from 30 June
2025. Any failure of a covenant test
would render the borrowing facilities
from HSBC to become repayable on
demand, at the option of the lender.
Under the Company’s interest cover
covenant test, to be reapplied from
30 June 2025, it will be 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 borrowings 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. When this
covenant test is reapplied on 30 June
2025, the covenant multiple will be
increased from 375% to 400%.
The Company’s final covenant test over
its levels of freehold property security
requires that the level of its bank
borrowings do not exceed 70% of the
independently assessed value of its
charged freehold properties. This test
was passed at 31 March 2024 and will
remain in place throughout the coming
financial year. Property values would
need to reduce by some two-thirds
before this covenant test became at risk
of failure.
Once reapplied on 30 June 2025, these
covenants will then continue to be
tested quarterly. Financial modelling for
the coming twelve-month period has
allowed the directors to conclude that
there is satisfactory headroom in the
Company’s banking covenants.
The directors have also given
consideration to the current
uncertainties in the state of the UK
economy, as well as to cost pressures,
which have impacted businesses such
as increases to staffing costs from
the rise in the National Minimum and
National Living Wages, from business
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rates and from increases to funding
costs from high interest base rates.
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 £5.4 million and
a revolving credit facility of £6.0 million
from HSBC, its primary bankers, with
both facilities being next renewable
in March 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 short-term revolving-credit facility of
£4.0 million, which is renewed annually
each August, from Volkswagen Bank.
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. At 31 March 2024, the
Company held cash in hand balances of
£0.4 million and had undrawn borrowing
facilities of £7.5 million, all of which
would be immediately available.
Information concerning the Company’s
liquidity and financing risk are set
out on page 10 and note 22 to the
financial statements.
The directors have a reasonable
expectation that the Company has
adequate resources and headroom
against the covenant tests to be able
to 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 2027 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 as explained in the Report
of the Directors.
The Company’s primary borrowing
facilities will next come up for periodic
review within that three-year period,
in March 2026. The Company has a
strong relationships with its funding
banks and the directors are satisfied
that these facilities will be renewable at
their current levels and on acceptable
commercial terms.
During the year to 31 March 2024, the
board carried out a robust assessment
of the emerging and 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, taking into account the
Company’s current position and subject
to the principal risks faced by the
business, the board has a reasonable
expectation that the Company will be
able to continue in operation and to
meet its liabilities as they fall due in the
period up to 31 March 2027.
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 & Risk
26 Caffyns plc Annual Report 2024
Chairman’s Statement on Corporate Governance
continued
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, CUPRA, 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-seven days
(2023: twenty-seven days).
By order of the board
R C Wright
Chairman
6 June 2024
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Financials Other informationGovernanceOur Business
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
2024. 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
3 August 2023. 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 2024.
The information set out on pages 28 to
41, which comprise of the remuneration
disclosures are, where stated, subject
to audit in accordance with the relevant
statutory requirements.
Remuneration outcomes
for the financial year ended
31 March 2024
Annual bonus opportunities for the
directors are based on the achievement
of an underlying profit before tax
target, subject to the discretion of
the Remuneration Committee. The
necessary profit target was not
achieved in relation to the financial year
ended 31 March 2024. As a result,
no bonuses were awarded to the
executive directors.
Key remuneration
decisions for the
forthcoming financial year
ending 31 March 2025
Under the Company’s annual salary
review, no changes were made to the
base salaries for both the executive and
non-executive directors at 1 April 2024.
Salaries for employees, in general, were
increased by an overall average of 4.3%
from that date.
Conclusion
The directors’ remuneration policy,
which 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 2024.
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
N T Gourlay
Chairman of the Remuneration
Committee
6 June 2024
28 Caffyns plc Annual Report 2024
Directors’ Remuneration Report
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 3 August 2023 and became effective from that date. The full policy was disclosed in the 2023
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 carefully
considers 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 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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Financials Other informationGovernanceOur Business
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 37 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.
30 Caffyns plc Annual Report 2024
Directors’ Remuneration Report continued
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 2025 are 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 would carefully consider
any shareholder feedback and any
actions to be taken would be built
into the Committee’s business for
the ensuing period. This, and any
additional feedback received from
shareholders from time to time, would
be 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.
31
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
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.
32 Caffyns plc Annual Report 2024
Directors’ Remuneration Report continued
Provision Policy Details
Contractual
provisions on a
change of control of
the Company
Other provisions
in specific service
contracts
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.
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.
33
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
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 2024
R C Wright 27 July 2024 26 July 2027 40 months
N T Gourlay 26 September 2022 25 September 2025 18 months
S G Bellamy 18 June 2022 17 June 2025 15 months
Copies of directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office.
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 2025
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% £636,000
20% £398,000
£318,000
50%
80%
100%
M Warren
Below threshold
Target
Outperformance
50% £326,000
20% £204,000
£163,000
50%
80%
100%
S J Caffyn
Below threshold
Target
Outperformance
50% £104,000
20% £65,000
£52,000
50%
80%
100%
Fixed
Annual bonus
34 Caffyns plc Annual Report 2024
Directors’ Remuneration Report continued
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 118% 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 directors’ 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 year under review and the
following year. No prescribed
maximum annual increase.
None.
When reviewing the level of fees paid to non-executive directors, care is taken to ensure that no conflicts of interest arise and
no non-executive director would take part in discussions concerning their own fees.
35
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
Annual report on remuneration
Total single figure of remuneration for the year ended 31 March 2024 (audited)
The following table shows a total single figure of remuneration in respect of qualifying services for the year ended
31 March 2024, for each director, together with comparative figures for the year ended 31 March 2023. The information
provided in this part of the Directors’ Remuneration Report is subject to audit.
Salary and fees
£’000
Taxable benefits
£’000
Annual bonus
£’000
In lieu of pension
contributions
£’000
Total single figure
£’000
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
Executive
S G M Caffyn 318 306 16 21 – 113 10 13 344 453
M Warren 163 157 6 6 – 58 4 6 173 227
S J Caffyn 50 50 6 6 – 18 2 2 58 76
Total 531 513 28 33 – 189 16 21 575 756
Non-executive
R C Wright 73 70 – – – – – – 73 70
N T Gourlay 36 35 – – – – – – 36 35
S G Bellamy 36 35 – – – – – – 36 35
Total 145 140 – – – – – – 145 140
676 653 28 33 – 189 16 21 720 896
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.
Remuneration received by the directors can be analysed between Fixed and Variable sums as follows:
Total Fixed sums
£’000
Total
Variable sums
£’000
Total single figure
£’000
2024 2023 2024 2023 2024 2023
Executive
S G M Caffyn 344 340 – 113 344 453
M Warren 173 169 – 58 173 227
S J Caffyn 58 58 – 18 58 76
Total 575 567 – 189 575 756
Non-executive
R C Wright 73 70 – – 73 70
N T Gourlay 36 35 – – 36 35
S G Bellamy 36 35 – – 36 35
Total 145 140 – – 145 140
720 707 – 189 720 896
Annual bonus (audited)
Bonuses are earned by reference to the financial year and paid in May or June following the end of the financial year and after
completion of the external audit. Any bonuses accruing to the executive directors in respect of the year ended 31 March 2024
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 2024 2023 2024 2023 2024 2023
Underlying result before
tax (£’million)* £1.83 £2.09 £4.00 £(0.57) 100% 0% 100% 0% 100% 0%
Bonus receivable 15% 25% 100% 0% 0% 0% 0% 0% 0% 0%
*
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.
36 Caffyns plc Annual Report 2024
Directors’ Remuneration Report continued
Pension entitlements and cash allowances (audited)
One executive director, the Company Secretary, was a deferred member of the Company’s closed defined benefit pension
scheme at 31 March 2024 (2023: 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
(2023: 5%) simple, except where the Company consents to early retirement between 60 and 65 when no discount would be
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 would be made to 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 2024
£’000
Total annual accrued
defined benefit
pension at
31 March 2023
£’000
S J Caffyn 12 December 2033 41 38
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 2024, one of the executive directors was a member of the Company’s defined contribution pension
scheme (2023: one).
The non-executive directors are not members of the Company’s defined contribution pension scheme (2023: none).
Directors’ interests in shares (audited)
The interests of the directors and their families in the shares of the Company are as follows:
As at 31 March 2024 As at 31 March 2023
Ordinary
11%
Preference
7%
Preference Ordinary
11%
Preference
7%
Preference
R C Wright 7,500 – – 7,500 – –
S G M Caffyn 78,199 1,600 200 76,988 1,600 200
M Warren 8,036 – – 6,825 – –
S J Caffyn 48,323 1,655 – 46,323 1,655 –
N T Gourlay 4,893 – – 4,893 – –
S G Bellamy 5,000 – – 5,000 – –
In March 2024, Mr S G M Caffyn and Mr M Warren were both granted 1,211 shares under the Company’s 2020 savings-related
share option scheme. The shares were granted at an exercise price of £3.06. 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.
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 2024, all directors
held a direct interest in the Ordinary shares of the Company.
All-employee share scheme (audited)
At 31 March 2024, no share options were held by any director.
37
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
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.
25.0
50.0
75.0
100.0
125.0
150.0
175.0
FTSE Small Cap TSR Caffyns TSR
31/03/2016 31/03/2017 31/03/2018 31/03/2019 31/03/2020 31/03/2021 31/03/2022 31/03/2023 31/03/2024
Chief Executive’s remuneration
The table below sets out the total remuneration delivered to the Chief Executive over each of the last ten years, valued using the
same methodology as applied to the total single figure of remuneration.
Chief Executive: S G M Caffyn
Financial years ended 31 March 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Total single remuneration figure (£’000) 389 410 388 302 364 319 281 576 453 344
Annual bonus as percentage of
maximum opportunity 39% 43% 31% 0% 19% 0% 0% 83% 37% 0%
38 Caffyns plc Annual Report 2024
Directors’ Remuneration Report continued
Annual percentage change in remuneration of directors and employees
The table below shows the percentage increases/(decreases) in the directors’ salary, taxable benefits and annual bonus over the
relevant reporting periods noted in the table compared to the average of all employees.
S G M
Caffyn
(Chief
Executive)
S J Caffyn
(Company
Secretary)
M Warren
(Finance
Director)
R C
Wright
(Non-
executive
Chairman
S G
Bellamy
(Non-
executive
director)
N T
Gourlay
(Non-
executive
director)
All
employees
% change Year to
31 March 2021
Salary/fees (13.1)% (4.7)% (6.9)% (8.9)% (5.0)% (5.0)% (4.2)%
Benefits 3.5% 43.7% (45.4)% 0.0% 0.0% 0.0% 13.6%
Annual bonus 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 62.3%
% change Year to
31 March 2022
Salary/fees 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Benefits (1.1)% 47.2% (24.8)% 0.0% 0.0% 0.0% 4.9%
Annual bonus ∞ ∞ ∞ 0.0% 0.0% 0.0% 64.0%
% change Year to
31 March 2023
Salary/fees 3.5% 3.5% 3.5% 3.5% 15.5% 15.5% 4.4%
Benefits 0.1% (22.2)% 9.5% 0.0% 0.0% 0.0% 4.9%
Annual bonus (53.8)% (53.8)% (53.8)% 0.0% 0.0% 0.0% (10.8)%
% change Year to
31 March 2024
Salary/fees 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Benefits (25.6)% 2.9% (9.0)% 0.0% 0.0% 0.0% (3.8)
Annual bonus (100.0)% (100.0)% (100.0)% 0.0% 0.0% 0.0% (24.0)%
The underlying package of benefits 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 monetary values involved in each year.
Comparison of the pay of the Chief Executive to other employees
The table below shows the ratio of the single figure annual remuneration of Mr S G M Caffyn, the Chief Executive, to the median,
25th and 75th percentile paid employee. Their total remuneration includes wages and salaries, taxable benefits, commissions
and bonuses, and pension benefits.
Methodology Population
25th
percentile Median
75th
percentile
Year to 31 March 2024 Option A Employee salary £22,000 £31,000 £34,000
Employee total remuneration £22,000 £32,000 £43,000
CEO to employee pay ratio 20:1 14:1 10:1
Year to 31 March 2023 22:1 15:1 10:1
Year to 31 March 2022 25:1 17:1 13:1
Year to 31 March 2021 13:1 9:1 7:1
Year to 31 March 2020 17:1 11:1 8:1
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 2024, 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 2024.
39
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
Change in remuneration of the Chief Executive
The base salary of the Chief Executive increased by 4.0% between 31 March 2023 and 31 March 2024, 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 did not receive a bonus for the year under review
compared to a bonus of 37% of salary in the prior year. The bonuses earned by the comparator group reduced by 64%
compared to the prior year. 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 2024 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 2024
£’000
Spend
in 2023
£’000 Change %
Spend on staff pay (including directors) 15,830 15,839 0.0%
Profit distributed by way of dividend 539 606 (11.1)%
A final dividend of 5.0 pence per Ordinary share has been declared for the year ended 31 March 2024, in addition to an interim
dividend of 5.0 pence that was paid during the year. The total dividend payable in respect of the year to 31 March 2024 will,
therefore, be £270,000 (2023: £606,000).
Implementation of the remuneration policy for the coming financial year ending
31 March 2025
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.
2025
salary/fees
£’000
2024
salary/fees
£’000
Increase
%
S G M Caffyn 318 318 0.0
M Warren 163 163 0.0
S J Caffyn 52 52 0.0
R C Wright 73 73 0.0
N T Gourlay 36 36 0.0
S G Bellamy 36 36 0.0
The basis for determining annual bonus payments for the financial year ending 31 March 2025 is set out in the policy table in the
Directors’ Remuneration Report on page 30. 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 2025 Annual Report.
40 Caffyns plc Annual Report 2024
Directors’ Remuneration Report continued
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 2024 were Mr N T Gourlay (Chairman), Mr R C Wright and Mr S G Bellamy.
Mr S G Bellamy was an independent non-executive director throughout the year. The Committee met three times during the year
and all members were present except for Mr R C Wright, who was unable to attend one meeting, in May 2023.
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 2024
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 N T Gourlay and Mr S G Bellamy
only; and
• setting the annual performance targets in line with the Company’s plan for the coming financial year ending 31 March 2025
and determining the amounts that may potentially have been payable for the financial year under review ended
31 March 2024.
Statement of voting at the 2023 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 %
2,652,631 99.96 800 0.03 100 0.01
Statement of voting at the 2023 Annual General Meeting
A shareholder vote on the directors’ remuneration policy is required at least every third year. The policy was last voted on at the
2023 Annual General Meeting and will be voted on again at the 2026 Annual General Meeting. Votes at the 2023 meeting on the
directors’ remuneration policy were cast as follows:
Votes for % Votes against % Withheld %
2,652,631 99.96 800 0.03 100 0.01
Mr N T Gourlay will attend the 2024 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
N T Gourlay
Chairman of the Remuneration Committee
6 June 2024
41
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
The directors present their report and
the financial statements for the year
ended 31 March 2024. The corporate
governance statement on pages 21 to
27 forms part of this Directors’ report.
Results and dividends
The results of the Company for the year
are set out in the financial statements
on pages 54 to 91. An interim dividend
of 5.0 pence per share was paid to
shareholders on 12 January 2024. The
board is recommending a final dividend
of 5.0 pence per share (2023: 15.0
pence) making a total of 10.0 pence per
share (2023: 22.5 pence). Total Ordinary
dividends paid in the year amounted to
£539,000. Dividends paid in the year to
preference shareholders were £72,000
(2023: £72,000) as set out in note 11 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 22 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 22.
Directors
Details of the directors who served
during the year and who remained
in office at 31 March 2024 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.
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
currently also an advisor to mid-market
private equity firms and is currently a
non-executive director of Empresaria
Group plc, an AIM-quoted global
staffing group. He is a New Zealand
Chartered Accountant and worked at
Coopers & Lybrand (now PwC), both in
New Zealand and New York.
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 over 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.
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.
42 Caffyns plc Annual Report 2024
Report of the Directors
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, commenced in December 2020
with share options for 101,926 Ordinary
shares being subscribed. The scheme
matured in February 2024 when the
share options became exercisable upon
expiry of a three-year savings contract
at a pre-determined price of £3.06
per share. As a result, 71,899 shares
were issued to employees in March
2024 with 505 share options remaining
outstanding at the year end. These
remaining shares were, subsequently,
issued in April 2024.
Mr S G M Caffyn and Ms S J Caffyn
are directors of Caffyn Family Holdings
Limited, which owns all of 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 2024 was
£4.50 and the range of market prices
during the year was £4.50 to £5.80.
Compensation for
loss of office
In the event of his 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.
Greenhouse gas emissions
Information on greenhouse gas
emissions is set out in the Strategic
Report on page 17.
Employees
Employees are encouraged to discuss
with management any matters which
they are concerned about and issues
affecting the Company. The Chief
Executive regularly visits the Company’s
sites, speaking to staff whilst he is there.
He reports to the board on the outcome
of these visits. 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, including those who are
disabled, is set out in the Strategic
Report on page 8 and the Section 172
statement on pages 18 and 19.
Share capital and the rights
and obligations attaching to
shares
As at 31 March 2024, 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 26 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 10 pence 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 10 pence, 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 2024 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.
43
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
Property
The Company valued its portfolio of
freehold premises as at 31 March 2024.
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 £10.7 million (2023:
£11.5 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, whilst 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.
44 Caffyns plc Annual Report 2024
Report of the Directors continued
Significant direct or indirect shareholdings
At 5 June 2024, 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) 550,000 20.2
Charles Stanley 230,579 8.5
HSBC Republic Bank Suisse SA 128,349 4.7
Caffyns Pension Fund 125,570 4.6
Armstrong Investments (Nortrust Nominees) 115,000 4.2
A W Caffyn/B Lees 107,409 3.9
GAM Exempt UK Opportunities Fund 107,325 3.9
Interactive Investor Services Nominees Ltd 106,217 3.9
K E Caffyn 104,804 3.8
M I Caffyn 103,495 3.8
Fostering relationships with
stakeholders
Details of the Company’s engagement
with stakeholders are explained in more
detail on pages 18 and 19.
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.
Political donations
The Company made no donations to
political parties in either the current or
previous financial year.
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 2024.
All of the directors, as at the date of this
report, have taken all the steps that they
ought to have taken as a director to
make themselves aware of any relevant
audit information and to establish that
the Company’s auditors are aware of
that information. The directors are not
aware of any relevant audit information
of which the Company’s Auditor is
unaware.
By order of the board
S J Caffyn
Company Secretary
6 June 2024
45
www.caffyns.co.uk
Stock code CFYN
Financials Other informationGovernanceOur Business
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
both the state of affairs and of the profit
or loss for the group and company 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; and
• 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’s 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
6 June 2024
46 Caffyns plc Annual Report 2024
Directors’ Responsibilities Statement
Report of the
Independent
Auditor
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 2024 and of the Group’s
loss 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 as applied in
accordance with the provisions of
the Companies Act 2006; 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
2024 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 and Risk Committee.
Independence
Following the recommendation of the
Audit and 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 five years,
covering the years ended 31 March
2020 to 31 March 2024. 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.
Financials
Report of the Independent Auditor 47
Income Statement 54
Statement of Comprehensive Income 55
Statement of Financial Position 56
Statement of Changes in Equity 57
Cash Flow Statement 58
Material Accounting Policies 59
Notes to the Financial Statements 65
47
www.caffyns.co.uk
Stock code CFYN
Other informationOur Business Governance Financials
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 30 June 2025 including
assessing and challenging the
assumptions underlying the
forecasts by reference to our own
knowledge of the industry and the
also commentary and forecasts
made by industry experts (eg:
SMMT, CAP);
• As part of the 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; and
• We considered the likelihood of the
sensitised forecasts happening.
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 at least
twelve months 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.
Overview
Coverage
100% (2023: 100%) of Group (loss)/profit before tax
100% (2023: 100%) of Group revenue
100% (2023: 100%) of Group total assets
Key audit matters
No changes made to the identified key audit matters during the year.
Materiality
Group financial statements as a whole
£685,000 (2023: £315,000) based on 0.26% (2023: 0.125%) of revenue.
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.
Climate change
Our work on the assessment of
potential impacts on climate-related
risks on the Group’s operations and
financial statements included:
• Enquiries and challenge of
management to understand the
actions they have taken to identify
climate-related risks and their
potential impacts on the financial
statements and adequately disclose
climate-related risks within the
annual report;
• Our own qualitative risk assessment
taking into consideration the sector
in which the Group operates and
how climate change affects this
particular sector; and
• Review of the minutes of Board
and Audit and Risk Committee
meeting and other papers related to
climate change and performed a risk
assessment as to how the impact
of the Group’s commitment as set
out in the Strategic Report may
affect the financial statements and
our audit.
We challenged the extent to which
climate-related considerations, including
have been reflected, where appropriate,
in management’s going concern
assessment and viability assessment.
48 Caffyns plc Annual Report 2024
Report of the Independent Auditor
continued
We also assessed the consistency of management’s disclosures included as Statutory Other Information on pages 12 to 17 with
the financial statements and with our knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any Key audit matters materially impacted by
climate-related risks.
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 24
and accounting
policy on page 61.
The Group operates a defined benefit pension
scheme, which is accounted for in accordance
with IAS19 (Revised) Employee Benefits. There
is a risk that the policy adopted does not
comply with the requirements of IAS19 and that
it is not consistently applied.
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 sensitive to movements into the key
inputs involved in valuing the liability, as well as
the asset.
The valuation of the liability is therefore
considered a significant risk and a key audit
matter.
We performed an assessment of whether the
Group’s accounting policy for the defined benefit
pension scheme complied with IAS19 Employee
Benefits and tests 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
and objectivity 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.
49
www.caffyns.co.uk
Stock code CFYN
Other informationOur Business Governance Financials
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.
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
2024
£
2023
£
2024
£
2023
£
Materiality 685,000 315,000 680,000 315,000
Basis for determining
materiality 0.26% of revenue 0.125% of revenue 0.26% of revenue 0.125% of revenue
Rationale for the
benchmark applied
We applied
professional
judgement to
determine 0.26%
of revenue to be a
relevant measure to
assess the Group,
relevant to the size of
its operation.
We applied professional
judgement to determine
0.125% of revenue to
be a relevant measure
to assess the Group,
relevant to the size of its
operation.
We applied
professional
judgement to
determine 0.26%
of revenue to be a
relevant measure to
assess the Group,
relevant to the size of
its operation.
We applied professional
judgement to determine
0.125% of revenue to
be a relevant measure
to assess the Group,
relevant to the size of its
operation.
Performance materiality 513,750 235,000 510,000 235,000
Basis for determining
performance materiality 75% of materiality. 75% of materiality. 75% of materiality. 75% of materiality.
Rationale for the
percentage applied for
performance materiality
On the basis of our
risk assessment,
together with our
assessment of the
Group’s control
environment,
previous low level
of misstatements
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 Group’s
control environment,
previous low level of
misstatements 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
Company’s control
environment,
previous low level
of misstatements
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 Company’s
control environment,
previous low level of
misstatements our
judgement is that
performance materiality
for the financial
statements should be
75% of materiality.
Reporting threshold
We agreed with the Audit and Risk Committee that we would report to them all individual audit differences in excess of
£34,000 (2023: £12,600). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
50 Caffyns plc Annual Report 2024
Report of the Independent Auditor
continued
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’s 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 pages 25 and 26; 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 26.
Other Code
provisions
• Directors’ statement on fair, balanced and understandable set out on page 27;
• Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 26;
• The section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 26; and
• The section describing the work of the Audit and Risk Committee set out on pages 23 and 24.
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.
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.
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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.
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.
Non-compliance with laws
and regulations
Based on:
• Our understanding of the Group and
the industry in which it operates;
• Discussion with management and
those charged with governance,
including the Audit and Risk
Committee;
• Obtaining and understanding of the
Group’s policies and procedures
regarding compliance with laws and
regulations;
We considered the significant laws
and regulations to be the applicable
accounting framework, UK tax
legislation and the UK Listing Rules.
The Group is also subject to laws and
regulations where the consequence of
non-compliance could have a material
effect on the amount or disclosures in
the financial statements, for example
through the imposition of fines or
litigations. We identified such laws and
regulations to be FCA legislation.
Our procedures in respect of the above
included:
• Review of minutes of meetings of
those charged with governance for
any instances of non-compliance
with laws and regulations;
• Review of correspondence with
regulatory and tax authorities for any
instances of non-compliance with
laws and regulations;
• Review of financial statement
disclosures and agreeing to
supporting documentation;
• Involvement of tax specialists in the
audit; and
• Review of legal expenditure
accounts to understand the nature
of expenditure incurred.
Fraud
We assessed the susceptibility of
the financial statements to material
misstatement, including fraud. Our risk
assessment procedures included:
• 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;
• Communicating 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;
• Assessing 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
• 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).
52 Caffyns plc Annual Report 2024
Report of the Independent Auditor
continued
Based on our risk assessment, we
considered the areas most susceptible
to fraud to be revenue recognition and
management override.
Our procedures in respect of the above
included:
• Testing all unexpected journals to
revenue;
• Testing vehicle revenue cut-off; and
• Assessing significant estimates
made by management for bias.
We also communicated relevant
identified laws and regulations and
potential fraud risks to all engagement
team members who were all deemed
to have appropriate competence and
capabilities and remained alert to any
indications of fraud or non-compliance
with laws and regulations throughout
the audit.
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).
6 June 2024
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Other informationOur Business Governance Financials
Group and Company
Note
2024
£’000
2023
£’000
Revenue 2 262,084 251,426
Cost of sales (230,389 ) (217,844 )
Gross profit 31,695 33,582
Operating expenses
Distribution costs (19,913 ) (19,009 )
Administration expenses (10,605 ) (10,076 )
Operating profit before other income 1,177 4,497
Other income 5 356 344
Operating profit 1,533 4,841
Operating profit before non-underlying items 2,114 4,827
Non-underlying items within operating profit 3 (581 ) 14
Operating profit 4 1,533 4,841
Finance expense 7 (2,680 ) (1,687 )
Finance expense on pension scheme 8 (398 ) (64 )
Net finance expense (3,078 ) (1,751 )
(Loss)/profit before taxation (1,545 ) 3,090
(Loss)/profit before tax and non-underlying items (566 ) 3,140
Non-underlying items within operating profit 3 (581 ) 14
Non-underlying items within finance expense on pension scheme 3 (398 ) (64 )
(Loss)/profit before taxation (1,545 ) 3,090
Taxation 9 341 (566 )
(Loss)/profit for the year attributable to the owners of the parent (1,204 ) 2,524
(Deficit)/earnings per share
Basic 10 (44.3 )p 93.6 p
Diluted 10 (44.3 )p 92.4 p
Underlying (deficit)/earnings per share
Basic 10 (17.3 )p 95.1 p
Diluted 10 (17.3 )p 93.9 p
See accompanying notes to the financial statements.
54 Caffyns plc Annual Report 2024
Income Statement
for the year ended 31 March 2024
Group and Company
Note
2024
£’000
2023
£’000
(Loss)/profit for the year (1,204 ) 2,524
Items that will not be reclassified subsequently to profit and loss:
Remeasurement of net defined benefit liability 24 (1,652 ) (6,715 )
Deferred tax on remeasurement 25 413 1,679
Effect of change in deferred tax rate – –
Total other comprehensive expense, net of taxation (1,239 ) (5,036 )
Total comprehensive expense for the year (2,443 ) (2,512 )
See accompanying notes to the financial statements.
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Other informationOur Business Governance Financials
Statement of Comprehensive Income
for the year ended 31 March 2024
The financial statements were approved by the board of directors and authorised for issue on 6 June 2024 and were signed
on its behalf by:
S G M Caffyn M Warren
Chief Executive Finance Director
See accompanying notes to the financial statements. Company number: 105664
56 Caffyns plc Annual Report 2024
Statement of Financial Position
at 31 March 2024
Group and Company
Note
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Non-
distributable
reserve
£’000
Retained
Earnings
£’000
Total
£’000
At 1 April 2023 1,439 272 707 1,724 27,520 31,662
Total comprehensive expense
Loss for the year – – – – (1,204 ) (1,204 )
Other comprehensive expense – – – – (1,239 ) (1,239 )
Total comprehensive expense
for the year (2,443 ) (2,443 )
Transactions with owners: – – – –
Dividends 11 – – – – (539 ) (539 )
Issue of shares – SAYE 27 – – – – 220 220
Purchase of own shares 26 – – – – (195 ) (195 )
Share-based payment 27 – – – – 31 31
At 31 March 2024 1,439 272 707 1,724 24,594 28,736
for the year ended 31 March 2023
Group and Company
Note
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Non-
distributable
reserve
£’000
Retained
Earnings
£’000
Total
£’000
At 1 April 2022 1,439 272 707 1,724 30,589 34,731
Total comprehensive Income/
(expense)
Profit for the year – – – – 2,524 2,524
Other comprehensive expense – – – – (5,036 ) (5,036 )
Total comprehensive expense
for the year (2,512 ) (2,512 )
Transactions with owners: – – – –
Dividends 11 – – – – (606 ) (606 )
Issue of shares – SAYE 27 – – – – 3 3
Share-based payment 26 – – – – 46 46
At 31 March 2023 1,439 272 707 1,724 27,520 31,662
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Statement of Changes in Equity
for the year ended 31 March 2024
Group and Company
Note
2024
£’000
2023
£’000
Net cash inflow from operating activities 28 119 4,237
Investing activities
Proceeds on disposal of property, plant and equipment 57 1
Purchases of property, plant and equipment (2,575 ) (902 )
Receipt from investment in lease 185 185
Net cash outflow from investing activities (2,333 ) (716 )
Financing activities
Revolving credit facility utilised 1,000 –
Revolving credit facility repaid (1,000 ) –
Secured loans repaid (875 ) (875 )
Unsecured loan received 350 –
Unsecured loan repaid (35 ) –
Issue of shares – SAYE scheme 220 3
Purchase of own shares for treasury (195 ) –
Dividends paid (539 ) (606 )
Repayment of capital element of lease liabilities (500 ) (576 )
Net cash outflow from financing activities (1,574 ) (2,054 )
Net (decrease)/increase in cash and cash equivalents (3,788 ) 1,467
Cash and cash equivalents at beginning of year 4,226 2,759
Cash and cash equivalents at end of year 438 4,226
See accompanying notes to the financial statements.
58 Caffyns plc Annual Report 2024
Cash Flow Statement
for the year ended 31 March 2024
Basis of preparation and
statement of compliance
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 1.
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.
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60 Caffyns plc Annual Report 2024
Material Accounting Policies
continued
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 reported
within cost of sales.
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.
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.
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62 Caffyns plc Annual Report 2024
Material Accounting Policies
continued
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Other informationOur Business Governance Financials
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.
64 Caffyns plc Annual Report 2024
Material Accounting Policies
continued
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Other informationOur Business Governance Financials
Notes to the Financial Statements
for the year ended 31 March 2024
2. General information
Sales of motor vehicles, parts and aftersales services
The Group’s full revenue recognition policy is set out in the section on Material 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 facilitating the delivery of new cars under an agency sales model as well as 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 20 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.
66 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
2. General information continued
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.
3. Non-underlying items
2024
£’000
2023
£’000
Net gain on disposal of property, plant and equipment 41 –
Other income, net – 37
Within operating expenses:
Service cost on pension scheme (18) (23)
Property impairments (604) –
(622) (23)
Non-underlying items within operating profit (581) 14
Net finance expense on pension scheme (398) (64)
Non-underlying items within net finance expense (398) (64)
Total non-underlying items before taxation (979) (50)
Taxation credit on non-underlying items 245 10
Total non-underlying items after taxation (734) (40)
Underlying results exclude items that, in the judgement of the directors, have non-trading attributes due to their size, nature or
incidence. These include disposals of fixed assets, receipts of non-trading income, impairments to freehold properties and the
service and finance costs of the Company’s defined-benefit pension scheme.
In the prior financial year, the Company received a final distribution of £37,000 from the liquidators of MG Rover Group Limited.
4. Operating profit
Operating profit has been arrived at after charging/(crediting):
2024
£’000
2023
£’000
Employee benefit expense 18,017 17,934
Net gain on disposal of property, plant and equipment (41) –
Short-term lease rentals payable – land and buildings 112 106
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.
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4. Operating profit continued
Operating profit has been arrived at after charging:
The Company’s Statutory Auditor is BDO LLP.
The statutory audit of the Caffyns Pension Scheme is performed by Cooper Parry LLP.
A description of the work of the Audit & Risk Committee is set out in the Chairman’s Statement on Corporate Governance on
pages 23 and 24 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:
2024
£’000
2023
£’000
(Loss)/profit for the year (1,204) 2,524
Tax (credit)/charge (note 9) (341) 566
(Loss)/profit before tax (1,545) 3,090
Net finance expense (notes 7 and 8) 3,078 1,751
Non-underlying items within operating profit (note 3) 581 (14)
Depreciation charged on property, plant and equipment, right-of-use assets and
investment properties (notes 12, 13 and 14) 2,098 2,128
Underlying earnings before interest, tax, depreciation and amortisation (“EBITDA”) 4,212 6,955
5. Other income
2024
£’000
2023
£’000
Rent receivable 315 307
Liquidation distribution received – 37
Gain on disposal of tangible fixed assets 41 –
Other income 356 344
During the prior year, the Company received a final distribution from the liquidator to MG Rover Group Limited.
68 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
6. Employee benefit expense
Directors’ emoluments were:
2024
£’000
2023
£’000
Salaries and short-term employee benefits 720 896
Details of the directors’ remuneration are provided in the Directors’ Remuneration Report on pages 28 to 41.
7. Finance expense
2024
£’000
2023
£’000
Preference dividends (see note 11) 72 72
Finance expense 2,680 1,687
8. Finance expense on pension scheme
2024
£’000
2023
£’000
Defined benefit pension scheme net finance expense (see note 24) 398 64
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Other informationOur Business Governance Financials
9. Tax
Factors affecting future tax charges
The Company has unrelieved trading losses of £1.3 million (2023: £Nil), which will be available for offset against profits made in
future periods. A deferred tax asset totalling £0.3m (2023: £Nil) has been accounted for in deferred tax (see note 25).
The Company also has unrelieved advance corporation tax of £0.3 million (2023: £0.3 million), which is available to be utilised
against future mainstream corporation tax liabilities and is accounted for in deferred tax (see note 25).
70 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
11. Dividends
2024
£’000
2023
£’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 7) 72 72
Ordinary shares
Interim dividend of 5.0 pence per Ordinary share paid in respect
of the current year (2023: 7.5 pence) 135 202
Final dividend paid of 15.0 pence per Ordinary share in respect
of the March 2023 year end (2022: 15.0 pence) 404 404
539 606
A final dividend of 5.0 pence per Ordinary share has been declared in respect of the year ended 31 March 2024.
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12. Right-of-use assets
Group and Company £’000
Deemed cost
At 1 April 2022 2,323
Additions 1,308
At 31 March 2023 3,631
Deemed cost
At 1 April 2023 3,631
Additions 393
At 31 March 2024 4,024
Accumulated depreciation
At 1 April 2022 910
Depreciation for the year 373
At 31 March 2023 1,283
Accumulated depreciation
At 1 April 2023 1,283
Depreciation for the year 398
At 31 March 2024 1,681
Net book value
At 31 March 2024 2,343
At 31 March 2023 2,348
The right-of-use assets above represent four long-term property leases for premises from which the Company operates
a Volkswagen dealership in Brighton, a Volvo dealership in Worthing and two car storage compounds in Eastbourne and
Tunbridge Wells.
Depreciation charges of £398,000 (2023: £373,000) in respect of right-of-use assets were recognised within Administration
Expenses in the Income Statement.
The interest expense on the associated lease liability of £133,000 (2023: £51,000) is disclosed in note 7. Payments made in the
year on the above leases were £448,000 (2023: £391,000).
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 £112,000 (2023: £106,000) are disclosed in note 4.
72 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
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Other informationOur Business Governance Financials
16. Goodwill
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 2023 and 2024.
74 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
16. Goodwill continued
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 13. 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.
The two CGUs noted below both relate to leasehold premises and, therefore, only the value-in-use calculation is appropriate.
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 2024 to 31 March 2029. 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 2025. 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 -189% (2023: 1%) to 34% (2023: 12%) have been used to forecast cash flows for a further four
years beyond the budget period, through to 31 March 2029. 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
£1.4 million (2023: £1.4 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 2024 to 31 March 2029. 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 2025. 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 -940% (2023: -25%) to 8% (2023: 9%) have been used to forecast cash flows for a further four years
beyond the budget period, through to 31 March 2029. 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 £0.5 million
(2023: £2.4 million) before an impairment would be necessary.
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% (2023: 12.4%).
75
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Other informationOur Business Governance Financials
15. Net investment in lease continued
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% (2023: 0.5%). Terminal growth rates are based on management’s estimate
of future long-term average growth rates.
Conclusion
At 31 March 2024, no impairment charge in respect of goodwill was identified (2023: 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.
76 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
19. Trade and other receivables
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20. Trade and other payables
78 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
79
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Other informationOur Business Governance Financials
22. Financial instruments continued
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, whilst 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 £28.7 million (2023: £31.7 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 39% at 31 March 2024 (2023: 26%). 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 a negative 2.0% (2023: positive return of 9.9%).
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.
Interest rate management
The objective of the Group’s interest rate policy is to minimise interest costs, whilst 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 £194,000 (2023: £156,000) before tax relief.
80 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
22. Financial instruments continued
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.
Group and Company
2024
carrying
value &
fair value
£’000
2023
carrying
value &
fair value
£’000
Bank balances and cash equivalents 438 4,226
The net bank borrowings of the Company at 31 March 2024 were £11.3 million (2023: £8.1 million).
2024
£’000
2023
£’000
Interest-bearing overdrafts and loans due within one year 1,445 1,875
Interest-bearing bank loans due after more than one year 10,308 10,437
Less: Cash and cash equivalents (438) (4,226)
At 31 March 11,315 8,086
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 2024
are set out in the following table:
Carrying value
& fair value Classification
Interest
classification
Interest rate
range
Current: within one year or on demand
Bank revolving-credit facility 1,000 Amortised cost Floating VBBR* + 2.64%
Bank term loan 375 Amortised cost Floating SONIA** + 2.75%
Other loan 70 Amortised cost Fixed 1.54%
Trade and other payables 44,289 Amortised cost – –
Carrying value
& fair value Classification
Interest
classification
Interest rate
range
Not repayable within one year
Term loan 5,063 Amortised cost Floating SONIA** + 2.75%
Revolving credit facility 5,000 Amortised cost Floating SONIA** + 2.75%
Other loan 245 Amortised cost Fixed 1.54%
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.
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Other informationOur Business Governance Financials
22. Financial instruments continued
The maturity of non-current borrowings is as follows:
Borrowings Leases Preference shares Total
Group and Company
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
Between one and two years 10,133 375 441 470 — — 10,749 845
Between two and five years 175 10,062 1,101 980 — — 1,101 11,042
Over five years — — 564 753 812 812 1,376 1,565
At 31 March 10,308 10,437 2,106 2,203 812 812 13,226 13,452
Maturities include amounts drawn under bank term loans and revolving credit facilities, manufacturer loans, lease liabilities and
preference shares. The Company’s revolving credit facility with HSBC can continue to be drawn in whole, or part, at any time,
under a facility that continues until March 2026. The maturities of the bank borrowings represent the final payment dates for
those drawn facilities as at 31 March 2024. The maturities of lease liabilities represent the undiscounted future repayments on
those leases. The preference shares are not redeemable so have no set repayment date. In the table below, cash flows from
preference shares have been restricted to the total borrowing outstanding at the balance sheet date. If the bank revolving
credit facilities 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, contractual payments over the next five years on an
undiscounted basis would be:
Borrowings Leases Preference shares Total
Group and Company
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
Within one year 2,321 1,685 642 632 60 60 3,023 2,377
Between one and two years 11,016 1,136 547 579 60 60 11,623 1,775
Between two and three years 71 1,109 451 447 60 60 582 1,616
Between three and four years 71 9,747 448 351 60 60 579 10,158
Between four and five years 35 — 348 348 60 60 408 408
Over five years — — 562 894 512 512 1,074 1,406
Contractual cash flows within five
years of the balance sheet date 13,514 13,677 2,998 3,251 812 812 17,289 17,740
The Group has a term loan with HSBC, first entered into in March 2018 with a loan advance 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 March 2026, and is repayable over 20 years.
The balance outstanding on this term loan at 31 March 2024 was £5.4 million (2023: £5.8 million) with capital repayments in the
year of £0.4 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 March 2026. The balance drawn as at 31 March 2024 was £5.0
million (2023: £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. The covenant test covering debt/freehold property values was passed
at 31 March 2024 whilst the remaining two covenant tests covering interest cover and borrowing levels were waived. The failure
of a covenant test would render these facilities repayable on demand at the option of the lender.
The Group also had a bank term loan from Volkswagen Bank United Kingdom Branch, which carried a rate of interest of 1.75%
above VBBR. The loan was fully repaid 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 2024.
The Group also had £7.5 million of combined annual overdraft and revolving credit facilities (2023: £7.5 million) from HSBC and
Volkswagen Bank United Kingdom Branch and these facilities are next due for renewal in August 2024. 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 2.75% above UK bank base rate and 2.64% above VBBR, respectively.
82 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
22. Financial instruments continued
23. Lease liabilities
Group and Company
2024
£’000
2023
£’000
Deemed liability
At 1 April 2,714 1,930
Additions in the year 393 1,308
Interest charge for the year 133 52
Lease payments (633) (576)
At 31 March 2,607 2,714
Due in less than one year 501 511
Due after more than one year 2,106 2,203
At 31 March 2,607 2,714
24. Retirement benefit scheme
Group and Company
Description of scheme
The Company operates a pension scheme, the Caffyns Pensions Scheme (“CPS”), which provides 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 independent 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 2024, the Company contributed £831,000
(2023: £800,000) to fund the existing deficit.
Over the year to 31 March 2025, the Company expects to contribute a minimum of £802,000 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 60 or so years. The average duration of the liabilities is approximately 12 years. Expected benefit payments in the
year to 31 March 2025 are £4,977,000.
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Other informationOur Business Governance Financials
24. Retirement benefit scheme continued
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 2024 are invested by an appointed fiduciary management company,
SEI Investments (Europe). The investment in various types of asset funds is intended to reduce risk, whilst 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.
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, thereafter, 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 2024 by Willis Towers Watson, independent
qualified actuaries, for the requirements of IAS 19. Details of the actuarial assumptions are as follows:
2024 2023
Mortality tables used: females 104% of SAPS series 2 97% of SAPS series 2
Mortality tables used: males 109% of SAPS series 2 100% of SAPS series 2
Future improvements in mortality CMI2021 + 1.25% CMI2021 + 1.25%
Discount rate 4.80% 4.75%
Inflation (CPI) 2.85% 2.95%
Pension increase for in-payment benefits (CPI max 5%) 2.85% 2.90%
The discount rate adopted is based upon the yields of high-quality corporate bonds of appropriate duration.
84 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
24. Retirement benefit scheme continued
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% +/- £0.8 million
Pension increases Increase/decrease by 0.1% +/- £0.6 million
Mortality Increase/decrease by 0.1% +/- £2.8 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
2024
£’000
2023
£’000
LDI fund 20,957 22,858
Growth fund 37,159 37,924
Equity instruments 653 744
At 31 March 58,769 61,526
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
2024 were invested 36% (2023: 37%) in LDI funds, 63% (2023: 62%) in return enhancing growth funds and 1% (2023: 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 4.8% and not the return on the underlying portfolio of investments. Consequently, the charge to the Income
Statement for the year ending 31 March 2025 is expected to be approximately £480,000.
Equity instruments include shares in Caffyns plc, which are detailed in note 29.
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.
Life expectancy at age 65 (in years):
2024
Male
2024
Female
2023
Male
2023
Female
Member currently aged 65 20.8 23.6 21.3 23.6
Member currently aged 45 22.1 25.1 22.6 25.2
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
2024
£’000
2023
£’000
At 1 April (8,799) (2,797)
Expense recognised in the Income Statement (416) (87)
Contributions paid by the Company 831 800
Net remeasurement recognised in other comprehensive income (1,652) (6,715)
At 31 March (10,036) (8,799)
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24. Retirement benefit scheme continued
Total expense recognised in the Income Statement
2024
£’000
2023
£’000
Interest cost 3,236 2,474
Interest income on Scheme assets (2,838) (2,410)
Interest – net (see note 8) 398 64
Current service cost 18 23
416 87
Changes in the present value of the defined benefit pension obligation
2024
£’000
2023
£’000
At 1 April 70,325 95,520
Service cost 18 23
Interest cost 3,236 2,474
Actuarial losses – experience 596 3,069
Actuarial losses/(gains) – demographic assumptions 98 (1,237)
Actuarial gains – financial assumptions (1,073) (25,197)
Benefits paid (4,395) (4,327)
At 31 March 68,805 70,325
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.
Movement in the fair value of scheme assets
2024
£’000
2023
£’000
At 1 April 61,526 92,723
Interest income 2,838 2,410
Actuarial losses – financial assumptions (2,031) (30,080)
Contributions paid by the Company 831 800
Benefits paid (4,395) (4,327)
At 31 March 58,769 61,526
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 2024 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.
86 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
25. 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
Short-term
temporary
differences
£’000
Trading
Losses
£’000
Recoverable
ACT
£’000
Total
£’000
At 1 April 2022 (940) (1,784) 700 189 – 537 (1,298)
Change in tax rates and
prior year adjustments (252) – – – – 280 28
Utilisation of ACT – – – – – (475) (475)
Timing differences 202 94 (179) (85) – – 32
Recognised in other
comprehensive income – – 1,679 – –
– 1,679
At 31 March 2023 (990) (1,690) 2,200 104 – 342 (34)
At 1 April 2023 (990) (1,690) 2,200 104 – 342 (34)
Change in tax rates and
prior year adjustments 23 – – – – 1 24
Timing differences (157) 225 (104) (125) 326 – 165
Recognised in other
comprehensive income – – 413 – – – 413
At 31 March 2024 (1,124) (1,465) 2,509 (21) 326 343 568
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 25% 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. At the commencement of the financial year under review
on 1 April 2023, there was no Shadow ACT outstanding. During the year, Shadow ACT generated by the payment of dividends
was unable to be utilised, so no surplus ACT could be utilised in the year. The remaining value of surplus ACT available for
utilisation in future periods at 31 March 2024 was £343,000 (2023: £342,000). Shadow ACT carried forward at 31 March 2024
was £135,000 (2023: £Nil).
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:
2024
£’000
2023
£’000
Deferred tax liabilities (2,610) (2,680)
Deferred tax assets 3,178 2,646
At 31 March 568 (34)
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.
Trading losses available for use in future periods amounted to £1.3 million (2023: £Nil). Based on forecasts prepared, the
Directors conclude that these losses will reverse against future profitability.
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Other informationOur Business Governance Financials
26. Called-up share capital
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.
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.
During the year, the Company purchased 42,078 Ordinary shares at an average price of £4.62. The total consideration paid was
£195,000. These shares have been placed into treasury and will be held to facilitate any future Save As You Earn scheme. The
consideration paid was charged to reserves in the Statement of Changes to Equity.
88 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
27. Share-based payments
All grants made under the Company’s Save As You Earn (“SAYE”) 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 2020 SAYE 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%.
The total expense included within operating profit relating to share-based payments for the year was £31,000 (2023: £46,000),
with an associated tax credit to the Income Statement and Equity of £8,000 (2023: £9,000).
28. Notes to the cash flow statement
Group and Company
2024
£’000
2023
£’000
(Loss)/profit before tax for the year (1,545) 3,090
Adjustments for net finance expense 3,078 1,751
1,533 4,841
Adjustments for:
Depreciation and impairments of property, plant and equipment, investment
properties and right-of-use assets 2,702 2,128
Cash payments into the defined benefit pension scheme (831) (800)
Profit on disposal of property, plant and equipment (41) –
Share-based payments 31 46
Operating cash flows before movements in working capital 3,394 6,215
Increase in inventories (2,262) (12,444)
Increase in receivables (189) (1,857)
Increase in payables 1,944 14,296
Cash generated by operations 2,887 6,210
Tax paid, net of refunds (68) (320)
Interest paid (2,700) (1,653)
Net cash derived from operating activities 119 4,237
All interest payments are treated as operating cash movements as they arise from movements in working capital.
89
www.caffyns.co.uk
Stock code CFYN
Other informationOur Business Governance Financials
28. Notes to the cash flow statement continued
Reconciliation of debt
Group and Company:
Bank
and other
loans
£’000
Revolving
credit
facilities
£’000
Lease
liabilities
£’000
Preference
shares
£’000
Liabilities
arising from
financing
activities
£’000
Bank
and cash
balances
£’000
Net
debt
£’000
At 1 April 2022 7,187 6,000 1,930 812 15,929 (2,759) 13,170
Cash movement (875) – (576) – (1,451) (1,467) (2,918)
Non-cash movement – – 1,360 – 1,360 – 1,360
At 31 March 2023 6,312 6,000 2,714 812 15,838 (4,226) 11,612
Current liabilities 875 1,000 511 – 2,386 (4,226) (1,840)
Non-current liabilities 5,437 5,000 2,203 812 13,452 – 13,452
At 31 March 2023 6,312 6,000 2,714 812 15,838 (4,226) 11,612
At 1 April 2023 6,312 6,000 2,714 812 15,838 (4,226) 11,612
Cash movement (559) – (633) – (1,192) 3,788 2,596
Non-cash movement – – 526 – 526 – 526
At 31 March 2024 5,753 6,000 2,607 812 15,172 (438) 14,734
Current liabilities 445 1,000 501 – 1,946 (438) 1,508
Non-current liabilities 5,308 5,000 2,106 812 13,226 – 13,226
At 31 March 2024 5,753 6,000 2,607 812 15,172 (438) 14,734
Non-cash movements in lease liabilities relate to an extension in the year of an existing lease and the interest charge.
90 Caffyns plc Annual Report 2024
Notes to the Financial Statements continued
for the year ended 31 March 2024
29. Related parties continued
30. Leases as a lessor
The Group’s interest in leases
At 31 March 2024, the Company had an interest in a single lease. The total future minimum lease receipts payable are:
Group and Company
2024
£’000
2023
£’000
Within one year 185 185
In two to three years 78 185
In three to four years – 78
In four to five years – –
Beyond five years – –
263 448
Finance income on the net investment in the lease was £21,000 (2023: £17,000).
Group and Company
2024
£’000
2023
£’000
Gross undiscounted cash flows 263 448
Unearned finance income (38) (59)
Net investment in lease 225 389
The Group as lessor – operating leases
The Company’s gross property rental income earned during the year from the direct lease of three (2023: three) investment
properties owned by the Group was £315,000 (2023: £307,000). No contingent rents were recognised in income (2023: £Nil).
At 31 March 2024, there were contracts for land and buildings with tenants for the following lease rentals receivable:
Group and Company
2024
£’000
2023
£’000
Within one year 311 297
In two to three years 255 237
In three to four years 209 209
In four to five years 209 209
Beyond five years 944 1,153
1,928 2,105
91
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Stock code CFYN
Other informationOur Business Governance Financials
Five Year Review
(unaudited)
2020
£’000
2021
£’000
2022
£’000
2023
£’000
2024
£’000
Income Statement
Revenue 195,787 165,085 223,928 251,426 262,084
Underlying operating profit 1,633 3,142 5,690 4,827 2,114
Finance expense (1,382) (1,266) (1,116) (1,687) (2,680)
Underlying profit/(loss) before tax 251 1,876 4,574 3,140 (566)
Non-underlying items (148) (452) (189) (50) (979)
Profit/(loss) before tax 103 1,424 4,385 3,090 (1,545)
Profit/(loss) after tax (252) 1,410 2,999 2,524 (1,204)
EBITDA 3,428 5,124 7,712 6,955 4,212
Basic earnings/(deficit) per Ordinary share (9.4)p 52.4p 111.3p 93.6p (44.3)p
Underlying earnings/(deficit) per Ordinary share (4.9)p 66.0p 117.0p 95.1p (17.3)p
Dividend per Ordinary share payable in respect of the year 7.50p 0.00p 22.50p 22.50p 10.00p
2020
£’000
2021
£’000
2022
£’000
2023
£’000
2024
£’000
As at year-end
Shareholders’ funds 26,380 27,586 34,731 31,662 28,736
Property, plant and equipment* 46,835 45,375 46,621 45,676 45,930
Bank overdrafts and loans (net) 16,241 10,327 10,428 8,086 11,315
Bank overdrafts and loans/shareholders’ funds (gearing) 62% 37% 30% 26% 39%
Retirement benefit liability 9,434 9,434 2,797 8,799 10,036
* Represents property, plant and equipment and investment properties.
92 Caffyns plc Annual Report 2024
The production of this report supports the work of the
Woodland Trust, the UK’s leading woodland conservation
charity. Each tree planted will grow into a vital carbon store,
helping to reduce environmental impact as well as creating
natural havens for wildlife and people.
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)
MG
ASHFORD:
Monument Way, Orbital Park, Ashford TN24 0HB (01233 504620)
CUPRA
TUNBRIDGE WELLS:
North Farm Industrial Estate, Tunbridge Wells TN2 3EL (01892 515700)
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:
LEWES:
Monument Way, Orbital Park, Ashford TN24 0HB (01233 504624)
Brooks Road, Lewes BN7 2DN (01903 444148)
HEAD OFFICE
EASTBOURNE:
Meads Road, Eastbourne BN20 7DR (01323 730201
www.caffyns.co.uk
Stock code CFYN
Our Business Governance Financials Other information
Caffyns plc Annual Report 2024
www.caffyns.co.uk