31619 27 June 2023 9:51 am V1
Annual Report for the year ended
31 March 2023
31619 27 June 2023 9:51 am V1
Heading
Summary
2023
£’000
2022
£’000
Revenue 251,426 223,928
Underlying EBITDA (see note A below and note 3) 6,955 7,712
Underlying profit before tax (see note A) 3,140 4,574
Profit before tax 3,090 4,385
pence pence
Underlying earnings per share (see note 9) 95.1 117.0
Earnings per share 93.6 111.3
Proposed final dividend per Ordinary share 15.0 15.0
Dividend per Ordinary share for the year 22.5 22.5
Note A: Underlying results exclude items that have non-trading attributes due to their size, nature
or incidence. Non-underlying items for the year totalled a charge of £50,000 (2022: £189,000) and
are detailed in Note 2 to these consolidated financial statements. Underlying EBITDA of £6,955,000
(2022: £7,712,000) represents operating profit before non-underlying items of £4,827,000
(2022: £5,690,000) adding back depreciation and amortisation of £2,128,000 (2022: £2,022,000).
Results at a Glance
C Caffyns plc Annual Report 2023
Visit us online
www.caffyns.co.uk
Contents
Our Business
Results at a Glance 01
Operational and Business Review 02
Strategic Report 07
Governance
Board of Directors 20
Chairman’s Statement on
Corporate Governance 21
Directors’ Remuneration Report 27
Report of the Directors 40
Directors’ Responsibilities
Statement 44
Financials
Report of the Independent Auditor 45
Income Statement 52
Statement of Comprehensive
Income 53
Statement of Financial Position 54
Statement of Changes in Equity 55
Principal Accounting Policies 57
Notes to the Financial Statements 63
Other Information
Five-year Review 88
31619 27 June 2023 9:51 am V1
Overview
£251.4m
Revenue up 12% to £251.4
million (2022: £223.9 million)
34%
Like-for-like new car unit deliveries
up by 34%
(4)%
Like-for-like used car unit sales
down by 4%
£27.0m
Like-for-like aftersales revenues
up by 9% to £27.0 million
£3.1m
Underlying profit before tax of
£3.1 million (2022: £4.6 million)
15.0p
Final dividend of 15.0 pence per
Ordinary share (2022: 15.0 pence)
£8.1m
Net bank borrowings at 31 March
2023 of £8.1 million (2022: £10.4
million), as disclosed in note 21
£11.5m
Property portfolio revaluation at
31 March 2023 showing a reduced
surplus to net book value of
£11.5 million (2022: £13.3 million)
due to a general softening in the
property market. This surplus is not
recognised in these accounts
Like-for-like comparisons exclude the impact of
the Lotus and MG businesses at Ashford, both
of which were opened during the prior year and
the Lotus business, which was opened in Lewes
during the year under review. All other businesses
operated for the full twelve-month period in
both years.
Revenue
(£’000)
Underlying PBT
(£’000)
Underlying EBITDA
(£’000)
Underlying earnings/
(deficit) per ordinary
share (pence)
20
21
22
23
19
165,085
223,928
251,426
209,246
195,787
20
21
22
23
19
1,876
4,574
3,140
1,445
251
20
21
22
23
19
5,124
7,712
6,955
3,982
3,428
20
21
22
23
19
66.0
117.0
95.1
35.3
(4.9)
Our Business Financials Other informationGovernance
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Operational and Business Review
Summary
Trading levels in the financial year ended
31 March 2023 (the “year”) were robust,
generating higher levels of sales and
gross profits. However, profitability was
constrained by significant upward cost
pressures in areas such as business
rates and funding and other overhead
costs in an inflationary environment.
Full-year turnover increased by 12% to
£251.4 million (2022: £223.9 million),
predominantly due to significantly higher
levels of car deliveries and car price
inflation. Operating profit was £4.8
million (2022: £5.7 million).
Underlying profit before tax for the
year of £3.1 million, whilst lower than
the £4.6 million recorded for the prior
year, still remained significantly ahead
of that reported in the years running
up to the covid-19 pandemic, and was
achieved without the positive impact
from Government support measures
on business rates and the rebound in
trading that followed the reopening of
business after the covid-19 lockdowns.
Basic earnings per share for the year
were 93.6 pence (2022: 111.3 pence).
Underlying earnings per share for the
year were 95.1 pence (2022: 117.0
pence).
The Company’s defined benefit
pension scheme deficit, calculated in
accordance with the requirements of
IAS 19 Pensions, increased significantly
to £8.8 million at 31 March 2023 (2022:
£2.8 million). Although higher interest
rates led to significant reductions in
the net present value of the Scheme’s
liabilities, they also resulted in sharp falls
in the value of certain of the Scheme’s
investments, and the investment
performance during the year was
adversely affected 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 7.5 pence per Ordinary share (2022:
7.5 pence), which was paid in January
2023, and is proposing a final dividend
for the year of 15.0 pence per Ordinary
share (2022: 15.0 pence).
Net bank borrowings at 31 March 2023
were £8.1 million (2022: £10.4 million),
which equated to gearing of 26%
(2022: 30%).
Omni-channel retailing
Our omni-channel offering 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
learnt a great deal during the lockdown
periods of the pandemic and were
able to introduce new options which
significantly advanced our online
selling capabilities. These were further
enhanced in the year allowing us to
provide our customers with a full
omni-channel approach to purchasing
their vehicle.
Our people
I am very grateful for the dedication
of our employees and the effort they
applied throughout the year to provide
our customers with a first-class
“Underlying profit before
tax for the year of £3.1
million, whilst lower than
the £4.6 million recorded
for the prior year, was
a strong result and still
remained significantly
ahead of that reported in
the years running up to
the covid-19 pandemic”
02 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V130620 27 June 2023 9:51 am Proof 5
experience. As a result of the hard
work and professionalism shown by
everyone involved, 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 our Kent and Sussex area of
operations.
The Company has a long tradition of
investing in apprenticeship programmes.
Despite the pressures on the business,
we have kept our apprenticeship
numbers at a high level and continue
to see the benefits flow through the
business as more apprentices complete
their training and become fully qualified.
Due to our apprentice numbers, we
continued to fully utilise our Government
apprenticeship levy payments within the
stipulated time limits.
We remain firmly committed to the long-
term benefits of apprenticeships and
our recruitment programme continues
with the aim of maintaining a healthy
complement in the current year, which
will assist the Company to continue
to grow.
New and used car sales
The Company’s total revenues
increased by £27 million over the
previous year, of which £25 million arose
from the sale of new and used cars.
Total UK new car registrations in the
year increased by 3% to 1.69 million as
the impacts from the global shortage
of semiconductors began to wane.
However, the continuing conflict in
Ukraine added additional strains to
supply chains and growing cost-of-
living pressures have made customers
more careful of spending. Within this
total, new car registrations in the private
and small business sector, in which we
principally operate, actually fell by 1%.
Our own retail new car deliveries rose
by 5% on a like-for-like basis, which
was better than the movement for those
manufacturers that we represent, whilst
our Audi corporate agency business
doubled the registrations it achieved for
the year. In total, our new car deliveries
for the year increased by 34%.
Our volume of used cars sales fell in
the year by 4% on a like-for-like basis.
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 fell by 9% in the 2022
calendar year, so our performance
exceeded that of the general market.
Our unit margins in the year fell from
the exceptional levels achieved in the
covid-impacted prior year, although the
continuing constraints on the supply of
new car product to the market helped
to buoy used car prices. Lower levels
of new car registrations over the last
three years have also reduced the
number of less than 3-year-old used
cars, again helping to shore up prices.
Great efforts have been made over the
last twelve months to further enhance
and develop our omni-channel offering
for our customers and we continue to
see this providing a major opportunity
for further growth. The number of used
cars sold again exceeded the number of
new cars sold in the year, although by a
reduced amount than in the prior year.
Procedures have been strengthened to
monitor and control used car stock turn
and yield and to broaden our sources
for replenishing inventory.
Aftersales
Our aftersales business performed
strongly during the year with service
revenues rising by 9% on a like-for-
like basis. We continue to place great
emphasis on our customer retention
programmes and in growing sales of
service plans. Our parts business also
reported higher sales, up by 9% on a
like-for-like basis from the previous year.
Operations
Our Audi and Volkswagen businesses
produced very strong financial
performances in the year, with both
growing their new car deliveries. Sales
of used cars were broadly in line with
last year. Both franchises continue to be
boosted by the strength of the brands,
the excellent model range, and exciting
new products.
Our Volvo businesses had a transitional
year, with the redevelopment of our
Eastbourne business completing in
“Our Audi and
Volkswagen businesses
produced very strong
financial performances in
the year. Both franchises
continue to be boosted
by the strength of the
brands, the excellent
model range, and
exciting new products”
Our Business Financials Other informationGovernance
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Operational and Business Review continued
the year and that at Worthing about to
commence. The brand continues to
reap the benefits of an excellent model
range of cars, which are being positively
received by customers.
Our combined SEAT/Skoda businesses
continued to perform well, despite a
lack of availability of new car product,
and will be boosted in the coming year
by the addition of the CUPRA brand.
Our Vauxhall business in Ashford
under-performed 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.
During the year, we opened an
additional business for Lotus, in Lewes,
to operate alongside our original
Lotus business at Ashford in Kent.
The business was constrained from
a lack of new car product in the year
but deliveries of the Emera began in
earnest in March 2023. Lotus’ second
new model, the Eletre, was launched
to much acclaim and, with deliveries
expected in the current year, the
board remains encouraged with the
opportunity for this brand.
Trading at Caffyns Motorstore, our
used car business in Ashford, remained
subdued as the business struggled to
source used cars. However, we remain
reassured that the concept continues to
be well received by our customers, who
particularly value the reassurance of the
Caffyns brand. A second Performance
Motorstore was opened during the year,
alongside our Lotus business in Lewes.
Groupwide projects
We remain focused on generating
further improvements in used car sales,
used car finance and service labour
sales. These three areas will be key to
achieving increases in profitability in the
coming years. In addition, we continue
to make very good progress utilising
technology to enhance the customer-
buying experiences from their first point
of contact right through the buying
process, as well as improving aftersales
retention.
New brands and models
We continue to invest in enhanced
facilities to allow us to sell and service
our manufacturers’ ever-increasing
range of electric and hybrid vehicles.
During the year, we extended our
representation for Lotus, part of the
Zhejiang Geely group that also owns
Volvo, with the opening of a new
dealership in Lewes and expect shortly
to commence the redevelopment
of our Volvo premises in Worthing.
However, with effect from 31 March
2023, we relinquished the franchise
for The London Electric Vehicle
Company, LEVC.
Zero-emission vehicle
(“ZEV”) targets
With effect from 1 January 2024, the
Government has announced that
vehicle manufacturers will be required
to meet minimum annual registration
targets for ZEV cars, with the target
for the 2024 calendar year to be set at
22% of registrations. Failure to achieve
the set target would result in potential
financial penalties being levied on the
manufacturer. We have reviewed our
franchise relationships in the light of
these announcements and are satisfied
that we remain well placed based on
the manufacturers that we represent.
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 was constituted in
the year, headed by a senior operational
manager who reports directly to the
Chief Executive. The Committee
started its work in August 2022 with
the aim of scrutinising and reducing
the Company’s energy usage and was
able to achieve savings in electricity and
gas usage in the year. Investments are
being made to improve the efficiency
of lighting and heating equipment and
further progress in making energy
savings is expected in future periods.
Property
We operate primarily from freehold sites,
which provides additional stability to our
business model. As in previous years,
our freehold premises were revalued
at the balance sheet date by chartered
surveyors CBRE Limited, based on an
existing use valuation. The excess of
the valuation over net book value of our
freehold properties at 31 March 2023
was £11.5 million (2022: £13.3 million).
The reduction in the valuation in the year
“We remain focused
on generating further
improvements in used
car sales, used car
finance and service
labour sales. These
three areas will be key
to achieving increases in
profitability in the coming
years.”
04 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V1
reflected the general softening of the
property market. In accordance with our
accounting policies, this surplus has not
been incorporated into our accounts.
During the year, we incurred capital
expenditure of £0.9 million (2022: £2.9
million). This reflected a mixture of
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. Completion
of this process will be dependent both
on the potential purchaser gaining
an appropriate planning consent
and, potentially, the approval of our
shareholders. The board expects this
process will take at least two years.
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 £1.2 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
become renewable in April 2026.
HSBC also provides an overdraft facility
of £3.5 million, renewable annually.
The Company continues to enjoy a
supportive relationship with HSBC and
successfully refinanced its borrowings in
the prior year, twelve months in advance
of the scheduled review date for the
facilities.
In addition to its facilities with HSBC,
the Company also has a revolving
credit facility of £4.0 million provided by
Volkswagen Bank, renewable annually,
together with a term loan, originally
of £5.0 million, which is repayable
by instalments over the ten years to
March 2024.
The term loan and revolving credit
facilities provided by HSBC include
certain covenant tests which were
comfortably passed at the year-end
on 31 March 2023. Any failure of a
covenant test would render these
facilities repayable on demand at the
option of the lender.
During the year, cash generated
by operating activities was
£4.2 million (2022: £3.4 million),
reflecting profitable trading in the year.
Changes in net working capital were
minimal, although inventories and
payables both increased significantly as
levels of new cars held on consignment
from manufacturers increased as the
global shortage of semiconductors
began to wane, allowing car production
levels to increase. Other significant cash
movements in the year included capital
expenditure of £0.9 million (2022: £2.8
million), repayment of bank term loans,
also of £0.9 million (2022: £2.9 million)
and dividends paid to shareholders of
£0.6 million (2022: £0.2 million). Cash
balances held at 31 March 2023 were
£4.2 million, an increase of £1.5 million
from the previous year-end.
Bank borrowings, net of cash
balances, at 31 March 2023 were
£8.1 million (2022: £10.4 million) and as
a proportion of shareholders’ funds at
31 March 2023 were 26% (2022: 30%).
This reduction in gearing level reflected
cash generated from operating activities
combined with a lower requirement
for capital expenditure in the year. In
addition to the year-end cash balances,
available but undrawn facilities with
HSBC and Volkswagen Bank at
31 March 2023 were £7.5 million
(2022: £7.5 million).
Taxation
The year ended 31 March 2023
produced a tax charge against profits
of £0.6 million (2022: £1.4 million). The
effective tax rate for the year was similar
to the standard rate of corporation tax
in force for the year of 19%.
The Company has no current
outstanding trading losses awaiting
relief (2022: £Nil). There are also no
capital losses awaiting relief. Capital
gains which remain unrealised, where
potentially taxable gains arising from
the sale of properties and goodwill
have been rolled over into replacement
assets, amounted to £6.8 million (2022:
£7.1 million) which could equate to a
future potential tax liability of £1.7 million
(2022: £1.8 million). The Company
was able to utilise £0.5 million of its
Advanced Corporation Tax in the year,
leaving an amount carried forward to
future trading periods of £0.3 million
(2022: £0.8 million).
Pension scheme
The Company’s defined benefit scheme
was closed to future accrual in 2010.
The board has little control over the
key assumptions in the valuation
calculations as required by accounting
standards and movements in yields of
gilts and bonds can have a significant
impact on the net funding position of
the scheme. At 31 March 2023, the
deficit of the scheme was £8.8 million
(2022: £2.8 million). The deficit, net of
deferred tax, was £6.6 million (2022:
£2.1 million). Although higher interest
rates led to significant reductions in
the net present value of the Scheme’s
liabilities they also resulted in sharp falls
in the value of certain of the Scheme’s
investments, and the investment
performance during the year was
adversely affected by volatile market
movements.
The Scheme operates with a fiduciary
manager and the board, together
with the independent pension fund
Our Business Financials Other informationGovernance
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Stock code CFYN
31619 27 June 2023 9:51 am V1
Operational and Business Review continued
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 £0.1 million in the year
(2022: £0.2 million).
The most recent completed triennial
valuation of the Scheme was as at 31
March 2020 and 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 (2022: £1.8
million).
A formal triennial valuation of the
Scheme will be carried out as at
31 March 2023, to be agreed with the
trustees and submitted to the Pensions
Regulator by 30 June 2024.
Dividend
The board declared an interim dividend
of 7.5 pence per Ordinary share
(2022: 7.5 pence). The board is also
declaring a final dividend for the year of
15.0 pence per Ordinary share
(2022: 15.0 pence), which will be
paid on 11 August 2023 to those
shareholders on the register at close
of business on 14 July 2023, subject
to shareholder approval at the 2023
Annual General Meeting. The Ordinary
shares will be marked ex-dividend on
13 July 2023.
Strategy
Our continuing strategy is to focus
on growing our loyal customer base
through representing premium and
premium-volume franchises, maximising
opportunities for premium used cars
and delivering an excellent after sales
service. We recognise that we operate
in a rapidly changing environment
and continue to carefully monitor the
appropriateness of this strategy. We
continue to seek opportunities to invest
in the future growth of our business.
We are concentrating on business
opportunities in stronger markets to
deliver higher returns from fewer but
bigger sites. We continue to seek to
deliver performance improvement, in
particular in our used car and aftersales
operations, and to enhance both the
purchasing and aftersales experience
for our customers.
Annual General Meeting
The Annual General Meeting will be held
on 3 August 2023 and will be an open
meeting, to which shareholders will be
invited to attend in person.
Outlook
We have started the new financial year
with a strong new car forward-order
book, although we are mindful of the
challenges that inflationary pressures
and higher interest rates will have on
our cost base and on our customers’
confidence levels. We are also actively
aware of other cost increases that
will arise in the coming year such as
business rates and utility costs.
The current financial year will see certain
manufacturers begin their transition
to new agency arrangements for their
dealer networks, which might result
in some short-term disruption to the
market.
In recent months enquiry rates for
electric cars have fallen since the
removal of government incentives for
retail customers and with increases
in electricity prices. However, our
manufacturers are well placed for the
future with a pipeline of market-leading
electric new car product 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 cash in hand
balances at the year-end of £4.2 million
and available but 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 exploit
future business opportunities.
S G M Caffyn
Chief Executive
1 June 2023
06 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V1
Strategic Report
Business model
Caffyns is one of the leading motor retail and aftersales companies in the south-east of England. The Company’s principal
activities are the sale and maintenance of motor vehicles, including the sale of tyres, oil, parts and accessories. T he Operational
and Business Review, which forms part of the Strategic Report, principally covers the development and performance of the
business and the external environment and is set out on pages 2 to 6. The main Key Performance Indicators are:
Financial 2023 2022
Revenue (£ million) 251.43 223.93
Underlying EBITDA (£ million) 6.96 7.71
Profit for the year before tax (£ million) 3.09 4.39
Underlying earnings per share (pence) 95.1 117.0
Earnings per share (pence) 93.6 111.3
Bank overdrafts and loans (net of cash in hand balances) (£ million) 8.09 10.43
Gearing (%) 25.6 30.0
Note: Underlying results exclude items that have non-trading attributes due to their size, nature or incidence.
Other and non-financial 2023 2022
UK new car market – total registrations (million) 1.69 1.64
UK new car market – retail and small business sector registrations (million) 0.87 0.88
Caffyns new car unit sales (‘000) 5.29 3.95
Caffyns used car unit sales (‘000) 5.53 5.58
Caffyns aftersales revenues (excluding internal sales) (£ million) 20.49 19.26
Company employees (full-time equivalents) 402 402
Source of UK market registrations: Society of Motor Manufacturers and Traders (“SMMT”).
Business Performance
New and used cars
Our new unit deliveries were up by 34%
on a like-for-like basis, with deliveries
significantly boosted by growth in
our lower margin corporate agency
business. Over the twelve-month
period, total UK new car registrations
rose by 3% whilst, within this, the
private and small business sector in
which we have most exposure actually
fell by 1%. New car registrations to the
fleet market in the year rose by 8%.
Overall, we were satisfied with the level
of new car deliveries we achieved for
the year.
Our used unit sales reduced by 1%
in total and by 4% on a like-for-like
basis, despite robust levels of trading.
Transaction data released by the
Society of Motor Manufacturers and
Traders reported used car transactions
in the UK down by 9% for the 2022
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
9%, on a like-for-like basis, aided by
further enhancements to our aftersales
marketing and retention procedures
which continue to benefit this area of
the business.
EBITDA
EBITDA has seen a substantial
reduction during the year despite
buoyant trading across both car sales
and aftersales. Although this buoyant
trading resulted in higher levels of
gross profit being generated this was
more than offset by significant upwards
pressures on the Company’s cost base.
The Government-funded holiday from
business rates finished on the first day
of the financial year whilst interest rates
started the year at 75 bps before rising
to finish the year at 425 bps. As a result,
the Company’s borrowing costs for the
year increased by more than half.
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.
On 31 March 2023, the Company
ceased representation of the LEVC
brand by mutual agreement with the
manufacturer. We generally operate
from our own freehold properties,
which we believe offers better
long-term returns and greater flexibility.
Proceeds from disposals of properties
are generally reinvested in the property
portfolio.
Our Business Financials Other informationGovernance
07www.caffyns.co.uk
Stock code CFYN
31619 27 June 2023 9:51 am V1
Strategic Report continued
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 in that
less than 40% of the directors are
women, neither the posts of Chair, Chief
Executive, Senior Independent Director
nor Finance Director are held by a
woman, nor that at least one individual
on the board of directors is from a
minority ethnic background. There are
no vacant board positions and the last
appointment was made in June 2019.
The board will remain mindful of its
responsibilities under Listing Rules as
and when future appointments become
necessary.
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, wherever
possible. The average employment
tenure of these senior operational
management employees is
twenty-two 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 opposite gives the total
number of our employees in each
category, by gender, at 31 March 2023.
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.
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
08 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V1
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 21 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 resurgence of covid-19
infections, 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.
The monitoring of key macroeconomic
indicators against internal performance
leads to anticipation of, and mitigation
for, expected volatilities. The Company
is not responsible for the importation
of new cars into the UK and is not
exposed to border frictions.
Conflict in
Ukraine
The conflict in Ukraine has resulted in significantly higher
levels of volatility in energy prices, particularly for gas, as
well as placing additional strain on manufacturers’ parts
supply chains. A sustained increase in energy prices could
have an effect on the Company’s future cost base and
profitability whilst disrupted supply chains could adversely
impact the receipt of an adequate supply of new cars from
the manufacturers that the Company represents. Whilst
currently confined to Ukrainian territory, the future progress of
the conflict is highly unpredictable and could spread to other
territories.
The Company purchases its electricity
and gas under long-term fixed-priced
contracts, shielding it from short-
term movements in market prices.
The Company’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.
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.
Our Business Financials Other informationGovernance
09www.caffyns.co.uk
Stock code CFYN
31619 27 June 2023 9:51 am V1
Strategic Report continued
Principal risks Potential impact/material risk Key controls and mitigating factors
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 2030. This change may result in disruption
to the supply and demand for new cars in the run up to 2030,
and to the used car market.
Ensuring that our premises are
developed to be able to adapt to the
expected future shift towards electric
vehicles and that our representation
of manufacturers is broad based to
spread risk.
Aftersales
revenues
The maintenance of battery-electric propulsion systems
is expected to be less labour intensive and require fewer
replacement 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 21. These negotiated facilities
provide sufficient liquidity and funding.
We do not presently hedge against
interest rate movements, but the
position is kept under regular review.
Regulatory
compliance
The Company is subject to regulatory compliance risk which
could arise from a failure to comply fully with applicable laws,
regulations or codes.
Non-compliance could lead to fines, cessation of certain
business activities or public reprimand.
The direction of new regulatory policy
is monitored through close contact
with relevant trade and representative
bodies and these are carefully
considered when developing strategy.
Information
systems
The Company is dependent upon certain business-critical
systems which, if interrupted for any considerable length of
time, could have a material effect on the efficient running of
our businesses.
A series of contingency plans are in
place that would enable the resumption
of operations within a short space of
time, thus mitigating the likelihood of
material loss.
10 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V1
Principal risks Potential impact/material risk Key controls and mitigating factors
Competition Caffyns competes with other franchised vehicle dealerships,
private buyers and sellers, internet-based dealers,
independent service and repair shops and manufacturers that
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 United Kingdom’s departure from the European Union,
coupled with wider global developments such as the conflict
in Ukraine, means that a degree of uncertainty 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.
Our Business Financials Other informationGovernance
11www.caffyns.co.uk
Stock code CFYN
31619 27 June 2023 9:51 am V1
Strategic Report continued
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
a lack of available resources means
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 2023, the Company
considers that it is fully compliant for
the disclosures required for one of
the eleven recommendations, under
Strategy (a) and non-compliant for
seven of the recommendations, under
Strategy (b) and (c), Risk Management
(a), (b) and (c) and Metrics and Targets
(a) and (c). The Company has been able
to make certain disclosures to achieve
partial compliance on the remaining
three recommendations.
The areas in which we are currently
unable to fully comply will require
more time to implement the TCFD
recommendations. It is expected that
full implementation of these TCFD
recommendations will require between
two and three years, except for the
measurement of Scope 3 emissions
where no time frame can currently be
determined, as further clarity is required
to identify which emissions would be
applicable for the Company to have to
measure.
For the four “pillars” relating to
disclosures, the Company’s current
position is as follows:
Recommendation
Recommended
disclosures Summary of progress
Disclosure
compliance
GOVERNANCE
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 although
further work is required to integrate these risks and
opportunities into the Company’s environmental approach
in order to allow the board to be able to have complete
oversight of how climate-related issues potentially
impact our strategy and financial plans. Lack of available
resources meant this work could not be completed in the
year, but it is expected to have been completed by
31 March 2024.
Partial
compliance, with
the remaining
aspects
expected to be
completed by
31 March 2024.
12 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V1
Recommendation
Recommended
disclosures Summary of progress
Disclosure
compliance
GOVERNANCE
continued
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 met three
times during the year and expects to meet twice each
year. The risks and opportunities identified and agreed
are set out later in this report on pages 16 and 17. This
Committee reports directly to the Chief Executive, who
then reports on its work to the board, although further
work remains outstanding with regard to the board’s
ability to formalise and strengthen its ability to review and
challenge environment and climate-related reporting.
These final steps are expected to have been completed by
31 March 2024.
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.
Partial
compliance.
Risks and
opportunities
have been
identified but
further work
is required
with regards
to the board’s
oversight. This is
expected to be
completed by
31 March 2024.
STRATEGY
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 16 and 17. 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 being 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 increasingly considers climate-related factors
when determining its future strategy for the business and
in assessing major plans of action but further work is
required to formalise the linking of risks and opportunities
to strategic and financial planning decisions.
Once specific goals and targets can be set, the board will
oversee and monitor the 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
formally link risks
and opportunities
to strategic and
financial planning
decisions. This
is expected to
be completed
within the next
two years.
Our Business Financials Other informationGovernance
13www.caffyns.co.uk
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31619 27 June 2023 9:51 am V1
Strategic Report continued
Recommendation
Recommended
disclosures Summary of progress
Disclosure
compliance
STRATEGY
continued
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 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.
RISK MANAGEMENT
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 consider risks arising from climate-
related change and these are detailed later in this report
on pages 16 and 17. It is intended that, within the coming
year, review of existing risks and consideration of potential
new risks will become a standing agenda item for the
board on at least four of the eight meetings scheduled to
be held during each year. Due to lack of resources further
work is required to more accurately determine the relative
significance of the identified risks and it is expected this
work will be completed by 31 March 2024.
Non-compliant.
This is expected
to be completed
within the
coming year.
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. Further enhancements
in this area are expected over the coming year to
strengthen the board’s ability to review and challenge the
identified risks from climate-related change. Due to lack
of resources further work is required to more accurately
determine the relative significance of the identified risks
and it is expected this work will be completed by
31 March 2024.
Non-compliant.
This is expected
to be completed
within the
coming year.
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 that may impact on our
operations.
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. Further enhancements in this area
are expected over the coming year to strengthen the
board’s oversight of the process in reviewing, assessing
and managing the identified risks from climate-related
change. Due to lack of resources further work is required
to more accurately determine the relative significance
of the identified risks and it is expected this work will be
completed by 31 March 2024.
Non-compliant.
This is expected
to be completed
within the
coming year.
14 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V1
Recommendation
Recommended
disclosures Summary of progress
Disclosure
compliance
METRICS AND TARGETS
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 16 and 17. Further work is required to
identify specific metrics in relation to: (i) climate change;
(ii) land use and ecological sensitivity; (iii) solid waste and
single use plastics; and (iv) product diversification.
Non-compliant.
This is expected
to be completed
within the next
three years.
b) Disclose Scope
1, Scope 2, and,
if appropriate,
Scope 3
greenhouse gas
(GHG) emissions,
and the
related risks.
We disclose on page 18 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.
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: (i) 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
we emit from
our 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
three years.
Our Business Financials Other informationGovernance
15www.caffyns.co.uk
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31619 27 June 2023 9:51 am V1
Strategic Report continued
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
was 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 early adoption
of the 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 occurrence 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 occurrence is
considered likely over the
short and medium terms with
the potential of the magnitude
to be major.
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.
16 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V1
Key climate-related opportunities
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 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 businesses.
As our manufacturers transition away
from petrol and diesel-powered cars our
own fleet of vehicles increasingly reflects
that movement. At 31 March 2023,
23% of our own demonstrator, courtesy
and staff car fleet comprised either
alternatively-fuelled or battery-electric
cars, up from 17% at the previous
year-end.
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 2022, 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.
Our Business Financials Other informationGovernance
17www.caffyns.co.uk
Stock code CFYN
31619 27 June 2023 9:51 am V1
Strategic Report continued
In the 2022 calendar year, our businesses emitted 748 tonnes of carbon dioxide (“CO
2
”) (2021: 796 tonnes). Our emissions are
principally of CO
2
and are from the following sources:
Greenhouse gas emissions data
Tonnes of
CO
2
2022
Tonnes of
CO
2
2021
Tonnes of
CO
2
2020
Scope 1
Gas consumption 213.2 278.9 250.8
Owned transport 55.0 39.4 27.4
Water supply 4.4 4.1 4.4
Scope 2
Purchased electricity 442.2 479.1 920.8
Generated electricity (5.5) (5.5) (6.3)
Statutory total 709.3 796.0 1,197.1
Revenue (£million) 235.3 201.4 176.1
Scope 1 and Scope 2 energy
consumption and greenhouse gas
emissions data has been calculated
in line with the UK Government
environmental reporting guidance.
Emission Factor Databases, consistent
with the UK Government environmental
reporting guidance, have been
used, utilising the current published
kWh gross calorific value and CO
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.
2020 intensity ratio: 6.8 tonnes of
CO
2
per £million of revenue
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
The Company’s total energy
consumption for the period 1 January
to 31 December 2022 was 3.6
million kWh (2021: 3.9 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’s 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 2022 was 567.4 tonnes (2021:
509.1 tonnes), of which 95% was
recycled (2021: 95%).
Future emissions legislative
changes
The Government has indicated that
the sale of vehicles powered solely by
an internal combustion engine will be
banned from the end of 2030 onwards.
Hybrid vehicles, which are powered
by a combination of a battery and an
internal combustion engine, will still
be allowed to be sold up to the end
of 2035. After that time, all vehicles
will need to be powered without the
use of an internal combustion engine.
The implementation of this intended
legislation will bring significant change
to the motor retail industry, and we are
working with our manufacturers to more
fully develop our transitional plans. We
have already installed electric charging
points in all our dealerships, although
further installations will be required in
the coming years. A number of the
other actions we have already taken
are detailed below and we anticipate
fuller disclosures of our plans, and their
possible impact on the business, will be
made in future Annual Reports.
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
18 Caffyns plc Annual Report 2023
31619 27 June 2023 9:51 am V1
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
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 26;
• The Company’s employees are
recognised as vital to its success
and employee relations are
considered in more detail on pages
2, 8 and 41. 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 2023. As
required, the Company Secretary
provides support to the board
to help ensure that sufficient
consideration is given to issues
relating to the matters set out in
s172(1)(a)-(f);
• The board regularly reviews the
Company’s principal stakeholders
and how it engages with them. This
is achieved through information
provided by management and
also by direct engagement with
stakeholders themselves; and
• We aim to work responsibly
with our stakeholders, including
suppliers. The board has recently
reviewed its anti-corruption and
anti-bribery, equal opportunities,
and whistleblowing policies.
During the year under review, ended
31 March 2023, 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 £4.00 in dividends per Ordinary
share over the last two decades. At the
half-year stage, in September 2022,
the board declared an interim dividend
of 7.5 pence to holders of the Ordinary
shares. The financial performance of
the Company in the financial year has
been strong, allowing the board to also
declare a final dividend for the year, of
15.0 pence per Ordinary share.
Pension scheme triennial valuation:
The next triennial valuation of the
Company’s defined benefit pension
scheme will be 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.
Relocation of Volvo Worthing:
The Company was able to extend
its representation for Volvo in June
2020 through the provision of a new
dealer agreement for a West Sussex
territory based in Worthing. The
directors 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 have now decided
that the premises in Worthing that
the business operates from will be
significantly upgraded. It is expected
that this upgrade will be completed by
September 2023.
Additional manufacturer
representation: The board continues
to seek new opportunities to maximise
the effectiveness of its property
portfolio and was pleased to receive
an offer to extend its representation for
Lotus through an additional territory in
Sussex, geographically adjacent to its
existing territory in Kent, and the new
business opened in June 2022. Lotus
Cars are part of the Zhejiang Geely
group and are developing several new
electric-vehicle models, including the
Evija, an electric-powered supercar.
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 will be dependent
both on the potential purchaser gaining
an appropriate planning consent
and, potentially, the approval of our
shareholders. The final sale of the
freehold would not be expected to
complete until 2025 at the earliest.
By order of the board
SGM Caffyn
Chief Executive
1 June 2023
Our Business Financials Other informationGovernance
19www.caffyns.co.uk
Stock code CFYN
31619 27 June 2023 9:51 am V1
Board of Directors
Governance
Board of Directors 20
Chairman’s Statement on Corporate Governance 21
Directors’ Remuneration Report 27
Report of the Directors 40
Directors’ Responsibilities Statement 44
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 director
Bankers
HSBC BANK PLC
1 Centenary Square, Birmingham B1 1HQ
VOLKSWAGEN BANK
Brunswick Court, Yeomans Drive, Blakelands, Milton Keynes MK14 5LR
Independent Auditor
BDO LLP
Statutory Auditor
Arcadia House, Maritime Walk, Ocean Village, Southampton SO14 3TL
Company Secretary
SARAH J CAFFYN BSc FCIPD AICSA FIMI
Registered Office
Telephone (0371) 664 0300
20 Caffyns plc Annual Report 2023
Our Business Financials Other informationGovernance
21www.caffyns.co.uk
Stock code CFYN
Chairman’s Statement on Corporate Governance
This statement explains how the
Company has applied the main and
supporting principles of corporate
governance and describes the
Company’s compliance with the
provisions of the UK Corporate
Governance Code (the “Code”), as
published in 2018 by the Financial
Reporting Council and available at
www.frc.org.uk.
The Company fully complied with all
provisions of the Code throughout the
year ended 31 March 2023, 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 during the 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
directors, where appropriate.
Mr S G Bellamy was appointed
in June 2019 and remains
independent;
• Provision 11 requires 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 one with just
two members and, due to the
size of the board, the Chairman
needs to be a member in order to
achieve this;
• Provision 36 requires that
remuneration schemes for
directors should promote long-
term shareholdings by executive
directors and support alignment
with long-term shareholder interests.
The Company operates a Save
As You Earn scheme for all eligible
employees, including directors,
but does not operate a Long-Term
Incentive Plan (“LTIP”) for directors,
primarily due to the volatility in the
share price and relative lack of
liquidity in the trading of its shares.
However, all executive directors
are Ordinary shareholders and
those shareholdings are detailed on
page 35;
• Provision 38 requires that only
directors’ salaries should be
pensionable. The Company
Secretary is a member of the
Company’s defined contribution
pension scheme on the same terms
as all other employees and any
bonus payments made to her are
pensionable. This is a long-standing
arrangement with which the board
is satisfied and has decided that it
would not be in the best interests of
the Company to change her existing
employment contract; and
• Provision 39 requires that notice
periods should be one year or
less. The Chief Executive has a
service contract which runs for
more than twelve months (see page
31 of the Directors’ Remuneration
Report). This also is a long-standing
arrangement. The Remuneration
Committee reviews the position
annually and has decided that it
would not be in the best interests of
the Company to change his existing
contract.
A description of the Company’s
business model and strategy is set out
in the Strategic Report on page 7.
Structure of the board and
its key activities
The board is collectively responsible for
the long-term success of the Company
and for ensuring that it operates to a
governance standard which serves the
best interests of the Company. The
board sets the strategy of the Company
and its individual trading businesses
and ensures that the Company has in
place the financial and human resources
it needs to meet its objectives. There
is a written schedule of matters
reserved for board decision, which is
summarised below.
Schedule of matters
reserved for decision by the
board
• Business strategy;
• Approval of significant capital
projects and other investments;
• Principal terms of agreements for
the Company’s principal banking
facilities;
• Annual business plan and budget
monitoring;
• Risk management strategy and
internal control and governance
arrangements;
• Approval of acquisitions and
divestments;
• Changes to management and
control structure;
• Significant changes to accounting
policies and/or practices;
• Financial reporting to shareholders;
• Dividend policy;
• Health and safety policy;
• Changes in employee share
incentives;
• Reviewing the overall corporate
governance arrangements;
• Appointments to the board and its
committees;
• Policies relating to directors’
remuneration and service;
• Prosecution, defence or settlement
of material litigation;
• Any alterations to the share capital
of the Company;
• Approval of all circulars and
announcements to shareholders;
22 Caffyns plc Annual Report 2023
Chairman’s Statement on Corporate Governance
continued
• 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
of 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 1 June 2023, 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 all conflicts of interest at all
board meetings. The non-conflicted
directors must act in the way they
consider, in good faith, would be most
likely to promote the success of the
Company.
Balance and challenge
The non-executive directors
complement the skills and experience
of the executive directors, providing
the requisite degree of judgement and
scrutiny to the decision-making process
at board and committee level.
Mr 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. With
Our Business Financials Other informationGovernance
23www.caffyns.co.uk
Stock code CFYN
the exception of Mr R C Wright, who
was unable to attend one meeting, all
directors were in attendance for all of
the meetings.
Nomination Committee
Our Nomination Committee comprises
two non-executive directors, the non-
executive Chairman and the Chief
Executive. The members are:
R C Wright (Chairman)
N T Gourlay
S G Bellamy
S G M Caffyn
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;
• Recommending to the board
the reappointment, or not, of the
external auditor; and
• Reviewing the effectiveness and
independence of the external
Auditor; including monitoring the
level of audit and non-audit fees.
The Committee met three times in
the year. With the exception of
Mr R C Wright who was unable to
attend one meeting, all directors were
in attendance at all the meetings. The
Committee reviewed the effectiveness
of the Company’s system of internal
control and financial risk management
during the year, including the review
of the Company’s risk register, and
including consideration of reports
from both the internal and external
auditors. The Committee reported the
results of its work to the board and the
board considered these reports when
reviewing the effectiveness of
the Company’s system of internal
control which forms part of the board’s
high-level risk review performed
during the year. The effectiveness of
the internal audit function was also
monitored.
24 Caffyns plc Annual Report 2023
Chairman’s Statement on Corporate Governance
continued
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 considers
what appropriate mitigating factors
should be implemented (highlights
from this work are included in the
Strategic Report).
• Review of poorly performing
dealerships: As part of both
the interim and year-end review
processes, consideration is given to
potential impairments of property,
plant and equipment, investment
property and goodwill relating to
poorly performing locations and that
any related impairments are provided
for. Management then follow up
with detailed action plans to either
improve dealership performance or
seek an exit solution. The Committee
also reviews progress on these plans
at the following review. As part of the
external audit, the Committee fully
discusses with the external Auditor
the identification of cash-generating
units (“CGUs”) for the purposes of
impairment testing. The Committee
is satisfied that no impairments
were required in relation to the
financial year.
• Going concern: The Finance
Director provides an assessment of
the Company’s ability to continue to
trade on a going concern basis for
a period of one year from the date
of approval of this Annual Report.
Forecasts are based on financial
plans agreed with the board (budgets
or forecasts), the Company’s most
recent trading results, and include
a range of possible downside
scenarios. The assumptions that
underpin the assessments are
considered and discussed in detail
when the Committee meets. The
conclusion of that review is included
in the Going Concern section of
this report.
• Inventory valuation: The value
of new and used cars, as well as
the provision for slow-moving and
obsolete inventory, can have a
significant influence on the inventory
valuation in the financial statements.
The Committee has considered
the Company’s procedures and
controls, which are satisfactory, to
reduce the risk of misstatement in
relation to inventory valuation.
• Pensions: The Company operates
a defined benefit pension scheme,
closed to future accrual, which has
an excess of liabilities over the value
of assets owned by the scheme.
The assessment of the valuation
of the scheme is based on several
key assumptions, which can have a
significant impact on the valuation
of the deficit. The Committee has
considered the assumptions used
for the valuation of the liabilities of
the scheme and is satisfied that
these are reasonable.
Mr S G Bellamy will attend the 2023
Annual General Meeting and will be
available at that meeting to answer
any questions regarding the workings
of the Audit & Risk Committee that
shareholders may wish to raise.
Anti-bribery
During the year, as well as its routine
business, the Committee continued to
monitor the suitability of the Company’s
controls designed to combat bribery
to satisfy itself of the adequacy of
its systems and procedures for the
prevention of bribery and corruption,
particularly in the light of the Bribery Act
2010. It has reviewed the Company’s
anti-bribery policy statement which has
been adopted by the board.
Whistleblowing
The Committee has reviewed the
arrangements for its employees to
raise, in confidence, concerns about
possible improprieties in relation to
financial reporting, suspected fraud and
dishonest acts, or other similar matters,
commonly known as “whistleblowing”.
The Committee reviews any such
reported incidences and any
improvements to internal procedures
that may be required.
Non-audit services provided
by the external Auditor
Non-audit services provided by the
Company’s Auditor are kept under
review by the Committee. The
Company’s Auditor does not provide
compliance services in the field of
taxation advice.
The Committee ensures that the
Auditor’s objectivity and independence
are safeguarded by ensuring that the
level of fees is not material to either
the Company nor the Auditor. The
report from BDO LLP confirming their
independence and objectivity was
reviewed by the chairman of the Audit
& Risk Committee and the Finance
Director. The level of fees paid to
BDO LLP for non-audit services is
not regarded to conflict with auditor
independence. Fees payable to the
Auditor are set out in note 3 to the
financial statements.
Effectiveness and
independence of the
external Auditor
The Committee is responsible for
advising the board on the appointment
of the Auditor, assessing their
independence and formulating policy
on the award of non-audit work. The
current Auditor is BDO and the year
under review is their fourth 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.
As part of their normal cycle of reviews,
the Financial Reporting Council (“FRC”)
reviewed BDO’s audit of the 31 March
2021 financial statements. The FRC’s
report identified a number of areas in
which the audit could be improved, of
Our Business Financials Other informationGovernance
25www.caffyns.co.uk
Stock code CFYN
which the most significant related to
the level of testing over occurrence and
accuracy of vehicle sales recognised
in the year. The report also identified
a number of areas of good practice.
The Chairman of the Audit & Risk
Committee received the FRC’s final
report in May 2022 and has discussed
the detailed report with the FRC. In
addition, he has discussed the findings
with the other members of the Audit &
Risk Committee and the audit partner.
BDO have made changes to their audit
approach for the current year audit to
reflect the improvements required.
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. All three bank covenant
tests have been passed for the year
under review. Under the Company’s
first covenant test, it is required to make
underlying profits before senior interest
(that being paid to HSBC and VW Bank
on its term loan and revolving credit
facility borrowings), corporation tax,
depreciation and amortisation (“senior
EBITDA”) for a rolling twelve-month
period which is at least four times
the level of senior interest. Under the
second test, the Company’s borrowings
from HSBC and VW Bank on its term
loan and revolving credit facilities must
be less than 375% of its senior EBITDA.
The Company’s final covenant test
requires that the level of its bank
borrowings do not exceed 70% of the
independently assessed value of its
charged freehold properties. Property
values would need to reduce by some
two-thirds before this covenant test
became at risk of failure.
These Company’s covenants are
tested quarterly with the test on 31
March 2024 being the final test to be
carried out within the twelve-month
period from the anniversary of the
signing of these financial statements.
The Company’s financial results in the
year under review were robust and the
current new car orders held for future
delivery is at elevated levels. External
market commentary provided by the
Society of Motor Manufacturers and
Traders (“SMMT”) indicate that new
car registrations are forecast to show a
year-on-year increase of 9% in 2023 to
1.8 million, with a further 9% increase
into 2024 to reach almost two million
registrations. The used car market
remains healthy, at just under 7 million
annual transactions in 2022, and the
recent shortages in new car supply have
assisted the used car market and are
expected to continue to do so. 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
that are impacting on businesses such
as increases to staffing costs from
the rise in the National Minimum and
National Living Wages, from business
rates and from increases to funding
costs from rising 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 £5.8 million and
a revolving credit facility of £6.0 million
from HSBC, its primary bankers, with
both facilities being next renewable in
April 2026. HSBC also make available
a short-term overdraft facility of £3.5
million, which is renewed annually each
August. The Company also has a ten-
year term loan from Volkswagen Bank
with a balance outstanding at 31 March
2023 of £0.5 million, which is repayable,
to March 2024, and a short-term
revolving-credit facility of £4.0 million,
which is renewed annually each August.
In the opinion of the directors, there is a
reasonable expectation that all facilities
will be renewed at their scheduled
expiry dates. The failure of a covenant
test would render these facilities
repayable on demand at the option
of the lender. At 31 March 2023 the
Company held cash in hand balances of
£4.2 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 21 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 2026 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
26 Caffyns plc Annual Report 2023
Chairman’s Statement on Corporate Governance
continued
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.
During the year to 31 March 2023, the
board carried out a robust assessment
of the principal risks facing the
Company, including those that would
threaten its business model, future
performance, solvency or liquidity. The
directors believe that the Company
is well placed to manage its business
risks successfully, having considered
the principal risks and uncertainties.
Accordingly, the board believes that,
taking into account the Company’s
current position, and subject to the
principal risks faced by the business,
the Company will be able to continue
in operation and to meet its liabilities
as they fall due in the period up to
31 March 2026.
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 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
(2022: twenty-eight days).
By order of the board
R C Wright
Chairman
1 June 2023
Our Business Financials Other informationGovernance
27www.caffyns.co.uk
Stock code CFYN
Directors’ Remuneration Report
Annual Statement from
the Chairman of the
Remuneration Committee
Introduction
On behalf of your board, I am pleased
to present our Directors’ Remuneration
Report for the year ended 31 March
2023. The Directors’ Remuneration
Report has been prepared on behalf
of the board by the Remuneration
Committee in accordance with the
requirements of the Companies Act
2006 and the Large and Medium-sized
Companies and Groups (Accounts and
Reports) (Amendments) Regulations
2013, and is split into two sections:
• The directors’ remuneration policy
sets out the Company’s policy on
remuneration, which was subject to
a binding shareholder vote at
the Annual General Meeting on
24 September 2020. This
remuneration policy will continue
to be voted on in the future at least
once every three years; and
• The annual report on remuneration
sets out the payments and awards
made to the directors and details the
link between company performance
and remuneration for the financial
year ended 31 March 2023.
The information set out on pages 28
to 39 that comprise 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 2023
Annual bonus opportunities for the
directors are based on the achievement
of underlying profit before tax
targets, subject to the discretion of
the Remuneration Committee. The
necessary profit target was achieved in
relation to the financial year ended
31 March 2023, which led to the award
of bonuses to the executive directors of
37% of salary.
Key remuneration decisions
for the forthcoming financial
year ending 31 March 2024
Under the Company’s annual salary
review, the base salaries for the
executive directors were increased by
4.0% with effect from 1 April 2023.
Salaries for employees in general were
increased by an overall average of 5.6%
from that date.
Conclusion
The directors’ remuneration policy
that follows this annual statement
sets out the Committee’s principles
on remuneration for the future and the
annual report on remuneration provides
details of the remuneration for the year
ended 31 March 2023.
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
1 June 2023
28 Caffyns plc Annual Report 2023
Directors’ Remuneration Report continued
Remuneration policy
The policy of the Committee is to ensure that the executive directors are fairly rewarded for their individual contributions to the
Company’s overall performance and to provide a competitive remuneration package to executive directors to attract, retain
and motivate individuals of the calibre required to ensure that the Company is managed successfully in the interests of all
stakeholders. In addition, the Committee’s policy is that a substantial proportion of the remuneration of the executive directors
should be performance related.
The Company’s directors’ remuneration policy is voted on every three years and was last approved by shareholders at the
Annual General Meeting held on 24 September 2020 and became effective from that date. The full policy was disclosed in the
2020 Annual Report, which is available on the Caffyn plc website located at www.caffynsplc.co.uk.
The main elements of the remuneration package of executive directors are set out below:
Purpose and link to strategy Operation
Maximum
potential value Performance metrics
Base salary
Provide competitive
remuneration that will attract
and retain high-calibre
executive directors to develop
and implement the Company’s
strategy, without paying
more than necessary, and
having regard to the views
of shareholders and other
stakeholders.
Reviewed annually effective
from 1 April to reflect
role, responsibility and
performance of the individual
and the Company, and to
take account of rates of pay
for comparable roles in similar
companies. Paid in twelve
equal monthly instalments
during the year. When
selecting comparators, the
Committee has regard to the
Company’s revenue, market
worth and business sector.
There is no prescribed
maximum increase,
although the Committee
would carefully consider
any increases against
those awarded to the
Company’s employees,
taken as a whole. The
annual rate of any increase
is set out in the Annual
Report in the section
covering remuneration
for the 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.
Our Business Financials Other informationGovernance
29www.caffyns.co.uk
Stock code CFYN
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 35 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 2023
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 2024 will be based
on achievement of a pre-set profit
before tax for that year. The target profit
would be the profit excluding property
profits and losses and pension fund
costs or gains. The Remuneration
Committee also reserves the right to
make additional adjustments to the
profit target when calculating bonus
entitlement for items (losses or gains)
that they considered not to be part of
normal underlying profit for that year.
Furthermore, in determining whether to
award a bonus, the Committee would
also take into account factors such
as dividend cover and year-on-year
changes to the net asset value of the
Company. The Committee is of the
opinion that these performance targets
are commercially sensitive and that it
would therefore be detrimental to the
Company to disclose their details in
advance. The targets will be disclosed
after the end of the financial year in the
Directors’ Remuneration Report in next
year’s Annual Report.
In exceptional circumstances, the
Remuneration Committee would have
the discretion to pay a maximum of
10% of salary as a bonus, even if
performance were to be below the
threshold required.
Differences from
remuneration policy for all
employees
All employees of the Company are
entitled to base salary and benefits.
The opportunity to earn commission
or a bonus is made available to a high
proportion of employees. The maximum
opportunity available is based on the
seniority and responsibility of the role.
Statement of consideration
of employment conditions
of employees elsewhere in
the Company
The Committee receives reports on
an annual basis on the level of pay
rises awarded across the Company
and takes these into account when
determining salary increases for
executive directors. In addition, the
Committee receives reports on the
structure of remuneration for senior
management in the tier below the
executive directors and uses this
information to ensure a consistency of
approach for its most senior managers.
The Committee does not specifically
invite employees to comment on the
directors’ remuneration policy, but it
does take note of any comments made
by employees.
Statement of consideration
of shareholder views
The board would carefully consider
any shareholder feedback received in
relation to each year’s Annual General
Meeting 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.
Our Business Financials Other informationGovernance
31www.caffyns.co.uk
Stock code CFYN
Directors’ service contracts, notice periods and termination payments
Provision Policy Details
Contractual provisions
on a change of control
of the Company
Other provisions
in specific service
contracts
Notice periods
in executive
directors’ service
contracts.
Twelve months by
executive directors and
the Company.
Executive directors
may be required to
work during the notice
period.
Twelve months by
executive directors and
the Company.
S G M Caffyn may
give six months’
notice but is entitled to
two years’ notice from
the Company and
an unreduced early
retirement pension.
M Warren may give
six months’ notice
and is entitled to six
months’ notice from
the Company.
Compensation
for loss of office.
No more than twelve
months’ basic salary,
bonus and benefits
(including Company
pension contributions).
None. None, except for the
Chief Executive.
Termination payment
to S G M Caffyn
following a change of
control comprises a
cash amount equal
to two years’ basic
salary, bonus and
benefits (including
Company pension
contributions).
Treatment of
annual bonus on
termination.
Bonuses that have
already been declared
are payable in full. In
the event of termination
by the Company
(except for cause), a
prorated bonus to the
end of the notice period
would also be payable.
None. None. None.
Treatment of
unvested options
from savings-
related share
option schemes.
Good leavers may
exercise their options
within six months of
cessation (one year for
death).
Options of leavers for
fraud, dishonesty or
misconduct lapse.
Options of other leavers
may be exercised
within six months of
cessation, but only
to the extent that
they would ordinarily
become vested during
that time. There is no
discretion to treat any
such leaver as a “good
leaver”.
Other than death,
“good leaver”
circumstances
comprise: injury,
disability, redundancy,
retirement or transfer
of employing business
outside the Company.
The number of options
that can be exercised
is reduced pro rata to
reflect the proportion
of the vesting period
before cessation.
The number of options
that can be exercised
is reduced pro rata to
reflect the proportion
of the vesting period
before cessation.
Not applicable.
32 Caffyns plc Annual Report 2023
Directors’ Remuneration Report continued
Provision Policy Details
Contractual provisions
on a change of control
of the Company
Other provisions
in specific service
contracts
Exercise of
discretion.
Intended only to be
relied upon to provide
flexibility in unusual
circumstances.
The Committee’s
determination would
consider the particular
circumstances of the
executive director’s
departure and the
recent performance of
the Company.
Not applicable. Not applicable.
Outside
appointments.
Subject to approval. Board approval must
be sought.
Not applicable. Not applicable.
Non-executive
directors.
Appointed for three-
year terms.
Early termination by
either the Company
or the director may
occur with six months’
notice. Fees for that
period would be paid
as compensation if
the early termination
was requested by the
Company.
Not applicable. Not applicable.
In the event of the negotiation of a compromise or settlement agreement between the Company and a departing director, the
Committee may make payments it considers reasonable in settlement of potential legal claims. Such payments may also include
reasonable reimbursements of professional fees in connection with such agreements.
The Committee may also include the reimbursement of repatriation costs or fees for professional or outplacement advice in the
termination package, if it considers it reasonable to do so. It may also allow the continuation of benefits for a limited period.
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 2023
R C Wright 27 July 2021 26 July 2024 16 months
N T Gourlay 26 September 2022 25 September 2025 30 months
S G Bellamy 18 June 2022 17 June 2025 27 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.
Our Business Financials Other informationGovernance
33www.caffyns.co.uk
Stock code CFYN
Total remuneration opportunity for the year ending 31 March 2024
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
S J C Caffyn
Fixed Annual bonus
Below threshold
Target
Outperformance
50% £326,000
20% £204,000
£163,000
50%
80%
100%
Below threshold
Target
Outperformance
50% £104,000
20% £65,000
£52,000
50%
80%
100%
Each element of remuneration is defined in the table below:
Element Description
Fixed Base salary and benefits in kind
Annual variable Annual bonus awards
The on-target scenario assumes that for the annual bonus, underlying profit before tax would be 114% 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.
34 Caffyns plc Annual Report 2023
Directors’ Remuneration Report continued
Annual report on remuneration
Total single figure of remuneration for the year ended 31 March 2023 (audited)
The following table shows a total single figure of remuneration in respect of qualifying services for the year ended 31 March 2023
for each director, together with comparative figures for the year ended 31 March 2022. 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
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Executive
S G M Caffyn 306 295 21 21 113 244 13 16 453 576
M Warren 157 152 6 5 58 125 6 7 227 289
S J Caffyn 50 48 6 8 18 40 2 3 76 99
Total 513 495 33 34 189 409 21 26 756 964
Non-executive
R C Wright 70 68 — — — — — — 70 68
N T Gourlay 35 30 — — — — — — 35 30
S G Bellamy 35 30 — — — — — — 35 30
Total 140 128 — — — — — — 140 128
653 623 33 34 189 409 21 26 896 1,092
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
2023 2022 2023 2022 2023 2022
Executive
S G M Caffyn 340 332 113 244 453 576
M Warren 169 164 58 125 227 289
S J Caffyn 58 59 18 40 76 99
Total 567 555 189 409 756 964
Non-executive
R C Wright 70 68 — — 70 68
N T Gourlay 35 30 — — 35 30
S G Bellamy 35 30 — — 35 30
Total 140 128 — — 140 128
707 683 189 409 896 1,092
Our Business Financials Other informationGovernance
35www.caffyns.co.uk
Stock code CFYN
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 on
completion of the external audit. Any bonuses accruing to the executive directors in respect of the year ended 31 March 2023
were based on the underlying profit before tax as shown below.
Bonus paid as a percentage of base salary
S G M Caffyn M Warren S J Caffyn
Threshold Target Maximum
Actual
performance Max Actual Max Actual Max Actual
Underlying
profit before tax
(£’million)* £2.62 £2.86 £4.66 £3.14 100% 37% 100% 37% 100% 37%
Bonus receivable 15% 25% 100% 37% £113,000 £58,000 £18,000
* The underlying profit before tax is calculated after taking account of the cost of such bonus including employer’s National Insurance charges and contributions in
lieu of pension contributions.
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 2023 (2022: 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
(2022: 5%) simple, except where the Company consents to early retirement between 60 and 65 and then no discount is applied.
Pensions paid increase in line with price indexation which may be limited. On death, a one-half spouse’s pension becomes due.
Children’s allowances up to a maximum of 100% of the executive’s pension may be payable, including any spouse’s pension.
Allowance 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 2023
£’000
Total annual accrued
defined benefit pension
at 31 March 2022
£’000
S J Caffyn 12 December 2033 38 37
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 2023, one of the executive directors was a member of the Company’s defined contribution pension
scheme (2022: one).
The non-executive directors are not members of the Company’s defined contribution pension scheme (2022: 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 2023 As at 31 March 2022
Ordinary
11%
Preference
7%
Preference Ordinary
11%
Preference
7%
Preference
R C Wright 7,500 — — 7,500 — —
S G M Caffyn 76,988 1,600 200 76,988 1,600 200
M Warren 6,825 — — 6,825 — —
S J Caffyn 48,323 1,655 — 46,323 1,655 —
N T Gourlay 4,893 — — 4,893 — —
S G Bellamy 5,000 — — 5,000 — —
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 2023, all directors
held a direct interest in the Ordinary shares of the Company.
36 Caffyns plc Annual Report 2023
Directors’ Remuneration Report continued
All-employee share scheme (audited)
Details of share options held by executive directors under the Company’s savings-related share option schemes, the latest of
which were granted in December 2020, are as follows:
Scheme Date of grant
Earliest
exercise
date Expiry date
Exercise
price
£
Number at
1 April
2022
Number at
31 March
2023
SGM Caffyn ShareSave 23/12/2020 01/04/2024 30/09/2024 3.06 1,211 1,211
M Warren ShareSave 23/12/2020 01/04/2024 30/09/2024 3.06 1,211 1,211
The market value of the shares at the date of the grant on 23 December 2020 was £3.85, giving a face value of the awards for
each of the directors listed of £957.
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.
FTSE Small Cap TSR Caffyns TSR
25.0
50.0
75.0
100.0
125.0
150.0
175.0
31/03/2015 31/03/2016 31/03/2017 31/03/2018 31/03/2019 31/03/2020 31/03/2021 31/03/2022 31/03/2023
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 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total single remuneration
figure (£’000) 534 389 410 388 302 364 319 281 576 453
Annual bonus as percentage
of maximum opportunity 100% 39% 43% 31% 0% 19% 0% 0% 83% 37%
Our Business Financials Other informationGovernance
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Stock code CFYN
Annual percentage change in remuneration of directors and employees
Salary and fees
% increase/(decrease)
Benefit-in-kind
% increase/(decrease)
Annual bonus
% increase/(decrease)
2019/20
to
2020/21
2020/21
to
2021/22
Current
year to
prior
year
2019/20
to
2020/21
2020/21
to
2021/22
Current
year to
prior
year
2019/20
to
2020/21
2020/21
to
2021/22
Current
year to
prior
year
Executive directors
S G M Caffyn (13.1)% 2.0% 3.5% 3.5% (1.1)% 0.1% 0.0% ∞ (53.8)%
S J Caffyn (4.7)% 2.0% 3.5% 43.7% 47.2% (22.2)% 0.0% ∞ (53.8)%
M Warren (6.9)% 2.0% 3.5% (45.4)% (24.8)% 9.5% 0.0% ∞ (53.8)%
Non-executive directors
R C Wright (8.9)% 2.0% 3.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
S G Bellamy - 2.0% 15.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
N T Gourlay (5.0)% 2.0% 15.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Employee average
All employees (4.2)% 2.0% 4.4% 13.6% 4.9% 4.9% 62.3% 64.0% (10.8)%
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
Salary
only
2023
£’000
Total
earnings
2023
£’000
Ratio
2023
%
Salary
only
2022
£’000
Total
Earnings
2022
£’000
Ratio
2022
%
Single remuneration figure for the Chief
Executive 306 453 295 576
Remuneration for the Company’s
remaining full-time equivalent
employees:
25th percentile
Median
31
25
41
30
10:1
15:1
30
24
46
33
13:1
17:1
75th percentile 16 19 22:1 14 23 25:1
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 2023, 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 2023.
Change in remuneration of Chief Executive
The base salary of the Chief Executive increased by 3.5% between 31 March 2022 and 31 March 2023, mirroring that for the
Company’s Regional Directors and Heads of Business. Neither the Chief Executive nor the comparator group received any
changes to their employment benefits during the year. The Chief Executive received a bonus for the year under review and
prior year. The bonuses earned by the comparator group reduced by 23% 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.
38 Caffyns plc Annual Report 2023
Directors’ Remuneration Report continued
Relative importance of spend on pay
The table below sets out the total spend on pay in the two years to 31 March 2023 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
2023
£’000
Spend in
2022
£’000
Decrease
%
Spend on staff pay (including directors) 15,839 15,455 2.5%
Profit distributed by way of dividend 606 606 0%
A final dividend of 15.0 pence per Ordinary share has been declared for the year ended 31 March 2023, in addition to an interim
dividend of 7.5 pence that was paid during the year. The total dividend payable in respect of the year to 31 March 2023 will
therefore be £606,000 (2022: £606,000).
Implementation of remuneration policy for the coming financial year ending 31 March 2024
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.
2024
salary/fees
£’000
2023
salary/fees
£’000
Increase
%
S G M Caffyn 318 306 4.0
M Warren 163 157 4.0
S J Caffyn 52 50 4.0
R C Wright 73 70 4.0
N T Gourlay 36 35 4.0
S G Bellamy 36 35 4.0
The basis for determining annual bonus payments for the financial year ending 31 March 2024 is set out in the policy table in the
Directors’ Remuneration Report on page 29. 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 2024 Annual Report.
Consideration by the directors of matters relating to directors’ remuneration
The Committee
The Committee is responsible for reviewing and recommending the framework and policy for remuneration of the executive
directors and of senior management. The Committee’s terms of reference are available on the Company’s corporate website.
The members of the Committee at 31 March 2023 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.
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.
Our Business Financials Other informationGovernance
39www.caffyns.co.uk
Stock code CFYN
Summary of activity during the year ended 31 March 2023
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 2024
and determining the amounts that may potentially have been payable for the financial year under review ended
31 March 2023.
Statement of voting at the 2022 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 %
3,129,903 100.00 100 0.00 100 0.00
Statement of voting at the 2020 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
2020 Annual General Meeting and will be voted on again at the 2023 Annual General Meeting. Votes at the 2020 meeting on the
directors’ remuneration policy were cast as follows:
Votes for %
Votes
against % Withheld %
2,899,279 99.94 1,700 0.06 100 0.00
Mr N T Gourlay will attend the 2023 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
1 June 2023
40 Caffyns plc Annual Report 2023
Report of the Directors
The directors present their report and
the financial statements for the year
ended 31 March 2023. The corporate
governance statement on pages 21 to
26 forms part of this Directors’ report.
Results and dividends
The results of the Company for the year
are set out in the financial statements
Future developments of the Company
are set out in the Operational and
Business Review on pages 2 to 6.
Financial risk management
Consideration of principal risks and
uncertainties is included on pages 9 to
11 of the Strategic Report, including the
management of financial risks. These
are also outlined further in note 21 to
the financial statements.
Appointment and
replacement of the
Company’s directors
The rules for the appointment and
replacement of the Company’s directors
are detailed in the Company’s Articles of
Association. Directors are appointed by
ordinary resolution at a general meeting
by shareholders entitled to vote or by
the board either to fill a vacancy or as
an addition to the existing board. The
appointment of non-executive directors
is on the recommendation of the
Nomination Committee; the procedure
is detailed in the Chairman’s Statement
on Corporate Governance on page 22.
Directors
Details of the directors who served
during the year and who remained
in office at 31 March 2023 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.
Our Business Financials Other informationGovernance
41www.caffyns.co.uk
Stock code CFYN
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
matures in February 2024 when the
share options become exercisable upon
expiry of a three-year savings contract
at a pre-determined price of £3.06 per
share. At 31 March 2023, the number of
share options outstanding was 78,069.
Mr S G M Caffyn and Ms S J Caffyn
are directors of Caffyn Family Holdings
Limited, which owns all the 2,000,000
6% Cumulative Second Preference
shares which have full voting rights,
except in relation to matters that under
the Listing Rules (as amended from time
to time) are required to be voted on by
premium-listed securities, being the
Ordinary shares.
The market price of the Company’s
Ordinary shares at 31 March 2023 was
£5.25 and the range of market prices
during the year was £5.00 to £6.03.
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 18.
Employees
Employees are encouraged to discuss
with management any matters that
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 page 19.
Share capital and the rights
and obligations attaching to
shares
As at 31 March 2023, the issued share
capital of the Company comprised
Ordinary shares of 50p each and three
classes of preference share, namely 7%
Cumulative First Preference shares of
£1 each, 11% Cumulative Preference
shares of £1 each, and 6% Cumulative
Second Preference shares of 10p
each. Details of the share capital of the
Company are set out in note 25 to the
financial statements.
Subject to applicable statutes and other
shareholders’ rights, shares may be
issued with such rights and restrictions
as the Company may by ordinary
resolution decide.
Holders of Ordinary shares are entitled
to attend and speak at general meetings
of the Company, to appoint one or more
proxies (and, if they are corporations,
corporate representatives). Holders of
Ordinary shares are entitled to receive a
dividend, if one is declared, and a copy
of the Company’s annual report and
accounts.
Holders of Cumulative First Preference
shares are entitled, in priority to any
payment of dividend on any other
class of shares, to a fixed cumulative
preferential dividend at the rate of 7%
per annum.
Subject to the rights of the holders of
Cumulative First Preference shares,
holders of 6% Cumulative Second
Preference shares of 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.
42 Caffyns plc Annual Report 2023
Report of the Directors continued
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 2023 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.
Property
The Company valued its portfolio of
freehold premises as at 31 March 2023.
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 £11.5 million (2022:
£13.3 million). In accordance with the
Company’s accounting policies, this
surplus has not been incorporated into
these financial statements.
Voting rights, restrictions on
voting rights and deadlines
for voting rights
Shareholders (other than any who,
under the provisions of the Articles
of Association or the terms of the
shares they hold, are not entitled
to receive such notices from the
Company) have the right to receive
notice of, and attend, and to vote at
all general meetings of the Company.
The Company’s Auditor has similar
rights except that they may not vote.
A resolution put to the vote at any
general meeting is to be decided on a
show of hands unless (before or on the
declaration of the result of the show
of hands or on the withdrawal of any
demand for a poll) a poll is properly
demanded.
Every member present in person at a
general meeting has, on the calling of a
poll, one vote for every Ordinary share
of which the member is the holder,
and one vote for every 6% Cumulative
Second Preference share of which the
member is the holder. In the case of
joint holders of a share, the vote of the
member whose name stands first in
the register of members is accepted to
the exclusion of any vote tendered by
any other joint holder. Unless the board
decides otherwise, a shareholder may
not vote at any general meeting or class
meeting or exercise any rights in relation
to meetings 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 that 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.
Our Business Financials Other informationGovernance
43www.caffyns.co.uk
Stock code CFYN
Significant direct or indirect shareholdings
At 29 May 2023, 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) 432,000 16.0
Charles Stanley 230,579 8.5
HSBC Republic Bank Suisse SA 128,349 4.8
Caffyns Pension Fund 125,570 4.7
A W Caffyn/B Lees 107,409 4.0
GAM Exempt UK Opportunities Fund 107,325 4.0
Interactive Investor Services Nominees Ltd 106,217 4.0
K E Caffyn 104,804 3.9
M I Caffyn 103,495 3.8
Armstrong Investments (Nortrust Nominees) 100,000 3.7
Fostering relationships with
stakeholders
Details of the Company’s engagement
with stakeholders are explained in more
detail on page 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 that
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 that 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 2023.
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 Auditor is 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
1 June 2023
44 Caffyns plc Annual Report 2023
Directors’ Responsibilities Statement
The directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the company’s transactions and
disclose with reasonable accuracy at
any time the financial position of the
Company and enable them to ensure
that the financial statements comply
with the Companies Act 2006.
They are also responsible for
safeguarding the assets of the Company
and hence for taking reasonable steps
for the prevention and detection of fraud
and other irregularities. The directors are
responsible for ensuring that the Annual
Report and accounts, taken as a whole,
are fair, balanced, and understandable
and provides the information necessary
for shareholders to assess the Group’s
performance, business model and
strategy.
Website publication
The directors are responsible for
ensuring the Annual Report and the
financial statements are made available
on a website. Financial statements are
published on the Company’s corporate
website, www.caffynsplc.co.uk, in
accordance with legislation in the United
Kingdom governing the preparation and
dissemination of financial statements,
which may vary from legislation in other
jurisdictions. The maintenance and
integrity of the Company’s website is
the responsibility of the directors. The
directors’ responsibility also extends
to the ongoing integrity of the financial
statements contained therein.
Directors’ responsibilities
pursuant to Disclosure
Guidance and Transparency
Rules 4 (“DTR 4”)
The directors confirm to the best of their
knowledge that:
• the financial statements have
been prepared in accordance with
the applicable set of accounting
standards, give a true and fair view
of the assets, liabilities, financial
position and profit and loss of the
Group and the Company; and
• the Annual Report includes a fair
review of the development and
performance of the business and
the financial position of the Group
and Company, together with a
description of the principal risks and
uncertainties that they face.
Approved by order of the board.
S G M Caffyn M Warren
Chief Executive Finance Director
1 June 2023
The directors are responsible for
preparing the Annual Report and the
financial statements in accordance with
UK-adopted international accounting
standards and applicable law and
regulations.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law,
the directors are required to prepare
the group financial statements and
have elected to prepare the company
financial statements in accordance with
UK-adopted international accounting
standards. Under company law, the
directors must not approve the financial
statements unless they are satisfied that
they give a true and fair view of the state
of affairs of the Group and Company
and of the profit or loss for the Group
for that period.
In preparing these financial statements
the directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and accounting
estimates that are reasonable and
prudent;
• state whether they have been
prepared in accordance with UK-
adopted international accounting
standards, subject to any material
departures disclosed and explained
in the financial statements;
• prepare the financial statements
on the going concern basis unless
it is inappropriate to presume that
the Group and the Company will
continue in business;
• prepare a Director’s Report, a
Strategic Report and Remuneration
Committee Report which comply
with the requirements of the
Companies Act 2006.
45www.caffyns.co.uk
Stock code CFYN
Report of the
Independent
Auditor
Financials
Report of the Independent Auditor 45
Income Statement 52
Statement of Comprehensive Income 53
Statement of Financial Position 54
Statement of Changes in Equity 55
Cash Flow Statement 56
Principal Accounting Policies 57
Notes to the Financial Statements 64
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
2023 and of the Group’s profit for
the year then ended;
• the Group financial statements
have been properly prepared in
accordance with UK adopted
international accounting standards;
• the Parent Company financial
statements have been properly
prepared in accordance with UK
adopted international accounting
standards and 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
2023 which comprise the Group and
Company Income Statement, the
Group and Company Statement of
Comprehensive Income, the Group
and Company Statement of Financial
Position, the Group and Company
Statement of Changes in Equity, the
Group and Company Cash Flow
Statement and notes to the financial
statements, including a summary of
significant accounting policies. The
financial reporting framework that
has been applied in their preparation
is applicable law and UK adopted
international accounting standards and
as regards the Parent Company financial
statements, as applied in accordance
with the provisions of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law.
Our responsibilities under those
standards are further described in the
Auditor’s responsibilities for the audit
of the financial statements section of
our report. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis
for our opinion. Our audit opinion is
consistent with the additional report to
the audit committee.
Independence
Following the recommendation of the
Audit & Risk Committee, we were
appointed by the directors on 25 July
2019 to audit the financial statements
for the year ended 31 March 2020 and
subsequent financial periods. The period
of total uninterrupted engagement
including retenders and reappointments
is four years, covering the years ended
31 March 2020 to 31 March 2023. We
remain independent of the Group and
the Parent Company in accordance with
the ethical requirements that are relevant
to our audit of the financial statements
in the UK, including the FRC’s Ethical
Standard as applied to listed public
interest entities, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.
The non-audit services prohibited by
that standard were not provided to the
Group or the Parent Company.
Conclusions relating to going
concern
In auditing the financial statements,
we have concluded that the directors’
use of the going concern basis of
accounting in the preparation of the
financial statements is appropriate. Our
evaluation of the directors’ assessment
of the Group and the Parent Company’s
ability to continue to adopt the going
concern basis of accounting included:
• Evaluating the directors’ assessment
of going concern through analysis
of the Group’s cash flow forecast
through to 30 June 2024 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 this process we
considered the impact of factors
such as inflationary and supply-
chain pressures. We also sensitised
these forecasts and considered
the underlying assumptions of the
forecasts to industry commentary.
• We also obtained an understanding
of the financing facilities, including
the nature of these facilities,
repayment terms and covenants.
We then assessed the facility
headroom and covenant compliance
calculations on both a base case
scenario, and the sensitised
forecasts.
• We considered the likelihood of the
sensitised forecasts happening.
Our Business Financials Other informationGovernance
46 Caffyns plc Annual Report 2023
Report of the Independent Auditor continued
Based on the work we 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.
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% (2022: 100%) of Group profit before tax
100% (2022: 100%) of Group revenue
100% (2022: 100%) of Group total assets
Key audit matters
2023 2022
Defined benefit pension scheme ✔ ✔
No changes made to the identified key audit matters during the year.
Materiality Group financial statements as a whole
£315,000 (2022: £220,000) based on 0.125% (2022: 5%) of revenue (2022: profit before tax).
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 & Risk Committee meetings 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 have been reflected, where appropriate, in management’s
going concern assessment and viability assessment.
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 any key audit matters materially impacted by climate-related risks.
47www.caffyns.co.uk
Stock code CFYN
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. This matter was 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 this matter.
Key audit matter How the scope of our audit addressed the key audit matter
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 in the statement of financial
position.
The valuation of the defined benefit
pension scheme is sensitive to
movements in 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
tested its consistent application with reference to the principles in the standard.
Working with our external actuarial experts, we challenged the appropriateness
of the actuarial valuation methodologies and their inherent assumptions such as
discount rates, growth rates and mortality rates with reference to relevant market
data and industry practice.
We also considered the competence, capabilities, objectivity and independence
of management’s, as well as our own, actuarial experts.
We also tested the accuracy of the underlying data utilised in the actuarial
valuation on a sample basis to source documentation such as the pension
scheme accounting records.
Key observations:
Based on the procedures performed, we consider the assumptions and
judgements made by management to be reasonable.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions
of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these
levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
We changed the basis for materiality in the current year to reflect the fact that the business is a low margin business and to be in
line with the setting of materiality in the wider industry.
Our Business Financials Other informationGovernance
48 Caffyns plc Annual Report 2023
Report of the Independent Auditor continued
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
2023 2022 2023 2022
Materiality £315,000 £220,000 £315,000 £220,000
Basis for
determining
materiality
0.125% of revenue 5% of profit before tax 0.125% of revenue 5% of profit before tax
Rationale for the
benchmark applied
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 considered 5%
of profit before tax to
be a key performance
benchmark for
the Group and the
users of the financial
statements in
assessing financial
performance.
We applied
professional
judgement to
determine 0.125%
of revenue to be a
relevant measure to
assess the Company,
relevant to the size of
its operation.
We considered 5%
of profit before tax to
be a key performance
benchmark for the
Parent and the
users of the financial
statements in
assessing financial
performance.
Performance
materiality
£235,000 £165,000 £235,000 £165,000
Basis for
determining
performance
materiality
On the basis of our
risk assessment,
together with our
assessment of the
Group’s control
environment and
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,
our judgement is
that performance
materiality for the
financial statements
should be 75% of
materiality.
On the basis of our
risk assessment,
together with our
assessment of the
Parent Company’s
control environment
and 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
Parent Company’s
control environment,
our judgement is
that performance
materiality for the
financial statements
should be 75% of
materiality.
Reporting threshold
We agreed with the Audit & Risk Committee that we would report to them all individual audit differences in excess of £12,600
(2022: £8,800). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative
grounds.
49www.caffyns.co.uk
Stock code CFYN
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 page 25; 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 pages 25 and 26.
Other Code
provisions
• Directors’ statement on fair, balanced and understandable set out on page 26;
• 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 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.
Our Business Financials Other informationGovernance
50 Caffyns plc Annual Report 2023
Report of the Independent Auditor continued
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 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;
• 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 journals raised after the year
end; and
• Considering 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).
Based on our risk assessment, we
considered the areas most susceptible
to fraud to be revenue recognition and
management override.
51www.caffyns.co.uk
Stock code CFYN
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).
1 June 2023
Our Business Financials Other informationGovernance
52 Caffyns plc Annual Report 2023
Income Statement
for the year ended 31 March 2023
Group and Company
Note
2023
£’000
2022
£’000
Revenue 1 251,426 223,928
Cost of sales (217,844 ) (191,982 )
Gross profit 33,582 31,946
Operating expenses
Distribution costs (19,009 ) (17,442 )
Administration expenses (10,076 ) (9,227 )
Operating profit before other income 4,497 5,277
Other income (net) 4 344 390
Operating profit 4,841 5,667
Operating profit before non-underlying items 4,827 5,690
Non-underlying items within operating profit 2 14 (23 )
Operating profit 3 4,841 5,667
Finance expense 6 (1,687 ) (1,116 )
Finance expense on pension scheme 7 (64 ) (166 )
Net finance expense (1,751 ) (1,282 )
Profit before taxation 3,090 4,385
Profit before tax and non-underlying items 3,140 4,574
Non-underlying items within operating profit 2 14 (23 )
Non-underlying items within finance expense on pension scheme 2 (64 ) (166 )
Profit before taxation 3,090 4,385
Taxation 8 (566 ) (1,386 )
Profit for the year attributable to the owners of the parent 2,524 2,999
Earnings per share
Basic 9 93.6 p 111.3 p
Diluted 9 92.4 p 109.6 p
Underlying earnings per share
Basic 9 95.1 p 117.0 p
Diluted 9 93.9 p 115.2 p
See accompanying notes to the financial statements.
53www.caffyns.co.uk
Stock code CFYN
Statement of Comprehensive Income
for the year ended 31 March 2023
Group and Company
Note
2023
£’000
2022
£’000
Profit for the year 2,524 2,999
Items that will never be reclassified to profit and loss:
Remeasurement of net defined benefit liability 23 (6,715 ) 5,045
Deferred tax on remeasurement 24 1,679 (1,261 )
Effect of change in deferred tax rate — 511
Total other comprehensive (expense)/income, net of taxation (5,036 ) 4,295
Total comprehensive (expense)/income for the year (2,512 ) 7,294
See accompanying notes to the financial statements.
Our Business Financials Other informationGovernance
54 Caffyns plc Annual Report 2023
Statement of Financial Position
at 31 March 2023
Note
Group
2023
£’000
Group
2022
£’000
Company
2023
£’000
Company
2022
£’000
Non-current assets
Right-of-use assets 11 2,348 1,413 2,348 1,413
Property, plant and equipment 12 38,145 38,975 38,145 38,975
Investment properties 13 7,531 7,646 7,531 7,646
Interest in lease 14 225 389 225 389
Goodwill 15 286 286 286 286
Investment in subsidiary undertakings 16 — — 250 250
Current assets
Inventories 17 39,989 27,546 39,989 27,546
Trade and other receivables 18 7,121 5,264 7,121 5,264
Interest in lease 14 164 168 164 168
Current tax recoverable — 40 — 40
Cash and cash equivalents 4,226 2,759 4,226 2,759
Total assets 100,035 84,486 100,285 84,736
Current liabilities
Interest-bearing bank overdrafts and loans 20 1,875 1,875 1,875 1,875
Trade and other payables 19 43,674 29,495 43,924 29,745
Lease liabilities 22 511 496 511 496
Current tax payable 28 236 28 236
Net current assets 5,412 3,675 5,162 3,425
Non-current liabilities
Interest-bearing bank loans 20 10,437 11,312 10,437 11,312
Lease liabilities 22 2,203 1,434 2,203 1,434
Deferred tax liability 24 34 1,298 34 1,298
Preference shares 25 812 812 812 812
Retirement benefit obligations 23 8,799 2,797 8,799 2,797
Total liabilities 68,373 49,755 68,623 50,005
Net assets 31,662 34,731 31,662 34,731
Capital and reserves
Share capital 25 1,439 1,439 1,439 1,439
Share premium account 272 272 272 272
Capital redemption reserve 707 707 707 707
Non-distributable reserve 1,724 1,724 1,724 1,724
Retained earnings 27,520 30,589 27,520 30,589
Total equity attributable to shareholders 31,662 34,731 31,662 34,731
See accompanying notes to the financial statements. Company number: 105664
55www.caffyns.co.uk
Stock code CFYN
Statement of Changes in Equity
for the year ended 31 March 2023
Group and Company
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 — — — — (606 ) (606 )
Issue of shares – SAYE — — — — 3 3
Share-based payment — — — — 46 46
At 31 March 2023 1,439 272 707 1,724 27,520 31,662
for the year ended 31 March 2022
Group and Company
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Non-
distributable
reserve
£’000
Retained
earnings
£’000
Total
£’000
At 1 April 2021 1,439 272 707 1,724 23,444 27,586
Total comprehensive income
Profit for the year — — — — 2,999 2,999
Other comprehensive income — — — — 4,295 4,295
Total comprehensive income for
the year — — — — 7,294 7,294
Transactions with owners:
Dividends — — — — (202 ) (202 )
Issue of shares – SAYE — — — — — —
Share-based payment — — — — 53 53
At 31 March 2022 1,439 272 707 1,724 30,589 34,731
Our Business Financials Other informationGovernance
56 Caffyns plc Annual Report 2023
Cash Flow Statement
for the year ended 31 March 2023
Group and Company
Note
2023
£’000
2022
£’000
Net cash inflow from operating activities 27 4,237 3,390
Investing activities
Proceeds on disposal of property, plant and equipment 1 —
Purchases of property, plant and equipment (902 ) (2,837 )
Receipt from investment in lease 185 185
Net cash outflow from investing activities (716 ) (2,652 )
Financing activities
Revolving credit facility repaid — (2,000 )
Secured loans repaid (875 ) (875 )
Bank refinancing arrangement fees — (98 )
Issue of shares – SAYE scheme 3 —
Dividends paid (606 ) (202 )
Repayment of lease liabilities (576 ) (539 )
Net cash outflow from financing activities (2,054 ) (3,714 )
Net increase/(decrease) in cash and cash equivalents 1,467 (2,976 )
Cash and cash equivalents at beginning of year 2,759 5,735
Cash and cash equivalents at end of year 4,226 2,759
See accompanying notes to the financial statements.
57www.caffyns.co.uk
Stock code CFYN
Principal Accounting Policies
Basis of preparation and
statement of compliance
Our Business Financials Other informationGovernance
58 Caffyns plc Annual Report 2023
Principal Accounting Policies continued
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 £5.8 million and
a revolving credit facility of £6.0 million
from HSBC, its primary bankers, with
both facilities being next renewable in
April 2026. HSBC also make available
a short-term overdraft facility of £3.5
million, which is renewed annually each
August. The Company also has a ten-
year term loan from Volkswagen Bank
with a balance outstanding at 31 March
2023 of £0.5 million, which is repayable,
to March 2024, and a short-term
revolving-credit facility of £4.0 million,
which is renewed annually each August.
In the opinion of the directors, there is a
reasonable expectation that all facilities
will be renewed at their scheduled
expiry dates. The failure of a covenant
test would render these facilities
repayable on demand at the option
of the lender. At 31 March 2023 the
Company held cash in hand balances of
£4.2 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 21 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.
The results of businesses and
subsidiaries acquired or disposed
of during the year are included in
the Consolidated Income Statement
using the acquisition method from
the effective date of acquisition or up
to the effective date of disposal, as
appropriate.
Where necessary, adjustments are
made to the financial statements of
subsidiaries to bring the accounting
policies used into line with those used
by the Group.
All intra-Group transactions, balances,
income and expenses are eliminated on
consolidation.
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
59www.caffyns.co.uk
Stock code CFYN
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.
Our Business Financials Other informationGovernance
60 Caffyns plc Annual Report 2023
Principal Accounting Policies continued
Deferred tax is the tax expected to be
payable or recoverable on differences
between the carrying amounts of
assets and liabilities in the financial
statements and the corresponding
tax bases used in the computation
of taxable profit and is accounted for
using the liability method. Deferred tax
liabilities are generally recognised for
all taxable temporary differences and
deferred tax assets are recognised to
the extent that it is probable that taxable
profits will be available against which
deductible temporary differences can
be utilised. Such assets and liabilities
are not recognised if the temporary
difference arises from goodwill or from
the initial recognition (other than in a
business combination) of other assets
and liabilities in a transaction that affects
neither the tax profit nor the accounting
profit.
The carrying amount of deferred tax
assets is reviewed at each financial
year-end date and reduced to the
extent that it is no longer probable that
sufficient taxable profits will be available
to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax
rates that are expected to apply in
the period when the liability is settled
or the asset is realised. Deferred tax
is charged or credited in the Income
Statement, except when it relates to
items charged or credited within other
comprehensive income, in which case
the deferred tax is also dealt with in
other comprehensive income. The tax
base of an item considers its intended
method of recovery by either sale
or use.
Depreciation on buildings is charged
to the Income Statement. On the
subsequent sale of a property, the
attributable surplus remaining in the
non-distributable reserve is transferred
directly to accumulated profits.
Properties in the course of construction
are carried at cost, less any recognised
impairment loss. Cost includes
professional fees and attributable
borrowing costs. Depreciation of these
assets, on the same basis as other
property assets, commences when the
assets are ready for their intended use.
Properties are regarded as purchased
or sold on the date on which contracts
for the purchase or sale become
unconditional. The gain or loss
arising on the disposal of an asset is
determined as the difference between
the sales proceeds and the carrying
amount of the asset and is recognised
in the Income Statement.
Other assets are stated at cost less
accumulated depreciation and any
recognised impairment loss.
The residual value of all assets,
depreciation methods and useful
economic lives, if significant, are
assessed annually.
61www.caffyns.co.uk
Stock code CFYN
The recoverable amount is the higher
of fair value less costs to sell and
value in use. In assessing value in use,
the estimated future cash inflows are
discounted to their present value using
a pre-tax discount rate that reflects
current market assessments of the time
value of money and the risks specific
to the asset for which the estimates
of future cash inflows have not been
adjusted.
If the recoverable amount of an asset
or CGU is estimated to be less than its
carrying amount, the carrying amount
of the asset (CGU) is reduced to its
recoverable amount.
An impairment loss is recognised as
an expense immediately, unless the
relevant asset is carried at a revalued
amount, in which case the impairment
loss is treated as a revaluation
decrease.
Where an impairment loss subsequently
reverses, the carrying amount of the
asset (CGU) is increased to the revised
estimate of its recoverable amount, but
so that the increased carrying amount
does not exceed the carrying amount
that would have been determined had
no impairment loss been recognised for
the asset (CGU) in prior years.
A reversal of an impairment loss is
recognised as income immediately,
unless the relevant asset is carried at
a revalued amount, in which case the
reversal of the impairment loss is treated
as a revaluation increase.
For the purpose of impairment testing,
assets are grouped together into the
smallest group of assets that generates
cash inflows from continuing use that
are largely independent of the cash
inflows from other groups of assets.
Management have determined that the
CGUs are the individual dealerships for
each franchise.
Investments in subsidiary
undertakings
Investments in subsidiary undertakings
are included at cost less amounts
written off if the investment is
determined to have been impaired and
are included in the Parent Company’s
separate financial statements.
Our Business Financials Other informationGovernance
62 Caffyns plc Annual Report 2023
Principal Accounting Policies continued
Share premium includes any premium
received on the sale of shares. Any
transaction costs associated with the
issuing of shares are deducted from
share premium, net of any corporation
tax benefits.
The capital redemption reserve
comprises the nominal value of ordinary
and preference share capital purchased
by the Company in prior years and
cancelled. The non-distributable reserve
within equity is a revaluation reserve
which comprises gains and losses due
to the revaluation of property, plant
and equipment prior to 1995. Retained
earnings includes all current and prior
period retained profits.
Where any company in the Group
purchases the Company’s equity
share capital (treasury shares), the
consideration paid, including any
directly attributable incremental costs
(net of tax), is deducted from equity
attributable to the Company’s equity
holders until the shares are cancelled,
reissued or disposed of. Where such
shares are subsequently sold or
reissued any consideration received, net
of any directly attributable incremental
transactions costs and the related tax
effects, is included in equity attributable
to the Company’s equity holders.
Preference shares
Preference shares are accounted for as
non-current liabilities, as they have the
attributes of debt. Preference dividends
are accounted for as finance charges
within finance expenses.
Financial assets at amortised cost
Trade receivables do not carry any
interest and are stated at their fair
value on initial recognition as reduced
by appropriate allowances for
estimated irrecoverable amounts and
subsequently carried at amortised cost.
The Group applies the IFRS 9 simplified
approach to measuring expected credit
losses, which uses a lifetime expected
loss allowance for all receivables. The
expected loss rates are based on the
payment profile of sales over 36 months
before the year-end date, or the first day
of the accounting period under review
respectively, and the corresponding
historical losses expected in the
period. The Company also considers
future expected credit losses due to
circumstances in addition to historical
loss rates.
63www.caffyns.co.uk
Stock code CFYN
Notes to the Financial Statements
for the year ended 31 March 2023
1. General information
Caffyns plc is a public limited company incorporated in England and Wales under the Companies Act 2006 and is listed on the
London Stock Exchange. The address of the registered office is given on page 20. Its revenue is attributable to the sole activity
of operating as a motor retailer in the south-east of the United Kingdom and comprises revenue from:
Sales of motor vehicles, parts and aftersales services
The Group’s full revenue recognition policy is set out in the section on Principal Accounting Policies under the heading Revenue
Recognition. The Group generates revenue through the sale of new and used motor vehicles and of parts (together comprising
Sale of goods as shown above), and through the provision of aftersales services in the form of vehicle servicing, maintenance
and repairs and introducing customers to finance companies (together comprising Rendering of services as shown above).
The Group recognises revenue from the sale of new and used motor vehicles when a customer takes possession of the vehicle,
at which point they have an obligation to pay in full and as such control is considered to transfer at this point. The Group typically
receives cash equal to the invoice amount for most direct retail sales to consumers at the time the consumer takes possession
of the vehicle. When the consumer has taken out a finance agreement to purchase the vehicle, the Group receives payment
from the finance company at the time the consumer takes possession of the vehicle. Payment terms on sales to corporate
customers typically range from seven to ten days. The Company acts as an agent in instances where it facilitates sales that have
been arranged by the manufacturer.
The Group recognises revenue from the provision of aftersales services when the service has been completed, at which point
customers have an obligation to pay in full. The Group typically receives cash equal to the invoice amount for most direct retail
sales to consumers at the time the service has been completed. Payment terms on sales to corporate customers typically range
from 30 to 60 days.
All revenue recognised in the Income Statement is from contracts with customers and no other revenue has been recognised.
No impaired losses have been recognised on any receivables arising from a contract with a customer.
Due to the nature of the Group’s contractual relationships with customers and the nature of the services provided, there are
no timing differences between revenue recognised in the Income Statement and trade receivables being recognised in the
Statement of Financial Position.
There have been no significant judgements regarding the timing of transactions or the associated transaction price. The
transaction price is set out in individual contractual agreements and there is a range of prices based on the types of goods and
services offered. There are no variable pricing considerations.
Contract liabilities relating to aftersales service plans
Where the Group receives an amount of consideration in advance of completion of performance obligations under a contract
with a customer, the value of the advance consideration is initially recognised as a contract liability within liabilities. Revenue is
subsequently recognised as the performance obligations are completed over the period of the contract (i.e. as control is passed
to the customer). Contract liabilities are presented within trade and other payables in the Statement of Financial Position and
disclosed in note 19 Trade and other payables. Approximately one-third of the value of these liabilities would be anticipated to be
recognised as revenue in each of the next three financial years.
Contract costs
The Group applies the practical expedient in paragraph 94 of IFRS 15 Revenue from Contracts and recognises the incremental
costs of obtaining contracts as an expense when incurred if the amortisation period of the assets that the Group otherwise
would have recognised is one year or less. The Group is satisfied that any incremental costs incurred in obtaining contracts that
extend for more than one year is immaterial.
Transaction price allocation to remaining performance obligations
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining
performance obligations that have original expected durations of one year or less.
Our Business Financials Other informationGovernance
64 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
1. General information continued
2. Non-underlying items
2023
£’000
2022
£’000
Net loss on disposal of property, plant and equipment — —
Other income, net 37 —
Within operating expenses:
Service cost on pension scheme (23) (23)
(23) (23)
Non-underlying items within operating profit 14 (23)
Net finance expense on pension scheme (64) (166)
Non-underlying items within net finance expense (64) (166)
Total non-underlying items before taxation (50) (189)
Taxation credit on non-underlying items 10 36
Total non-underlying items after taxation (40) (153)
The following item was recorded in the year as a non-underlying item:
• A sum of £37,000 was received from the liquidators of MG Rover Group Limited.
3. Operating profit
Operating profit has been arrived at after charging/(crediting):
2023
£’000
2022
£’000
Employee benefit expense 17,934 17,428
Coronavirus Job Retention Scheme grant claims — (110)
Net loss on disposal of property, plant and equipment — —
Short-term lease rentals payable – land and buildings 106 93
Rental income (307) (336)
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.
Operating profit has been arrived at after charging:
2023
£’000
2022
£’000
The Company’s Statutory Auditor is BDO LLP.
The statutory audit of the Caffyns plc Occupational Pension Scheme is performed by Grant Thornton UK LLP.
65www.caffyns.co.uk
Stock code CFYN
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:
2023
£’000
2022
£’000
Profit for the year 2,524 2,999
Tax charge (note 8) 566 1,386
Profit before tax 3,090 4,385
Net finance expense (notes 6 and 7) 1,751 1,282
Non-underlying items within operating profit (note 2) (14) 23
Depreciation charged on property, plant and equipment, right-of-use assets and
investment properties (notes 11, 12 and 13) 2,128 2,022
Underlying earnings before interest, tax, depreciation and amortisation (“EBITDA”) 6,955 7,712
4. Other income
2023
£’000
2022
£’000
Rent receivable 307 336
Liquidation distribution received 37 —
Loss on disposal of tangible fixed assets — —
5. Employee benefit expense
Directors’ emoluments were:
2023
£’000
2022
£’000
Salaries and short-term employee benefits 896 1,092
Details of the directors’ remuneration are provided in the Directors’ Remuneration Report on pages 27 to 39.
Our Business Financials Other informationGovernance
66 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
7. Finance expense on pension scheme
2023
£’000
2022
£’000
Defined benefit pension scheme net finance expense (see note 23) 64 166
The tax charge arises as follows:
2023
£’000
2022
£’000
On normal trading 576 1,422
On non-underlying items (see note 2) (10) (36)
Tax charged in the Income Statement 566 1,386
The charge for the year can be reconciled to the profit per the Income Statement as follows:
2023
£’000
2022
£’000
Profit before tax 3,090 4,385
Tax at the UK corporation tax rate of 19% (2022: 19%) 587 833
Tax effect of expenses that are not deductible in determining taxable profit 106 126
Movement in rolled over and held over gains (93) (215)
Change in corporation tax rate 10 647
Other differences (6) —
Adjustment to tax charge in respect of prior periods (38) (5)
Tax charge for the year 566 1,386
The current year total tax charge is impacted by the effect of non-deductible expenses, which includes non-qualifying
depreciation.
67www.caffyns.co.uk
Stock code CFYN
The total tax (credit)/charge for the year is made up as follows:
2023
£’000
2022
£’000
Total current tax charge 152 427
Deferred tax (credit)/charge
Charged in the Income Statement 414 959
(Credited)/charged against other comprehensive income (1,679) 750
Total deferred tax (credit)/charge (1,265) 1,709
Total tax (credit)/charge for the year (1,113) 2,136
Factors affecting the future tax charge
The Company has unrelieved advance corporation tax of £0.3 million (2022: £0.8 million), which is available to be utilised against
future mainstream corporation tax liabilities and is accounted for in deferred tax (see note 24).
Our Business Financials Other informationGovernance
68 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
10. Dividends
2023
£’000
2022
£’000
Preference shares
7% Cumulative First Preference 12 12
11% Cumulative Preference 48 48
6% Cumulative Second Preference 12 12
Included in finance expense (see note 6) 72 72
Ordinary shares
Interim dividend of 7½ pence per Ordinary share paid in respect
of the current year (2022: 7½ pence) 202
202
Final dividend paid of 15 pence per Ordinary share in respect of the
March 2022 year end (2021: Nil pence) 404 —
606 202
A final dividend of 15.0 pence per Ordinary share has been declared in respect of the year ended 31 March 2023.
11. Right-of-use assets
Group and Company £’000
Deemed cost
At 1 April 2021 1,181
Additions 1,142
At 31 March 2022 2,323
Deemed cost
At 1 April 2022 2,323
Additions 1,308
At 31 March 2023 3,631
Accumulated depreciation
At 1 April 2021 571
Depreciation for the year 339
At 31 March 2022 910
Accumulated depreciation
At 1 April 2022 910
Depreciation for the year 373
At 31 March 2023 1,283
Net book value
At 31 March 2023 2,348
At 31 March 2022 1,413
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 £373,000 (2022: £339,000) in respect of right-of-use assets was recognised within Administration
Expenses in the Income Statement.
The interest expense on the associated lease liability of £51,000 (2022: £37,000) is disclosed in note 6. Payments made in the
year on the above leases were £391,000 (2022: £353,000).
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 £106,000 (2022: £93,000) are disclosed in note 3.
69www.caffyns.co.uk
Stock code CFYN
Short-term leasehold property for both the Company and the Group comprises net book value of £Nil in the Statement of
Financial Position (2022: £74,000).
Depreciation charges of £1,640,000 (2022: £1,578,000) in respect of property, plant and equipment was recognised within
Administration Expenses in the Income Statement.
The freehold properties were originally revalued externally on 31 March 1995 by Herring Baker Harris, Chartered Surveyors, at
open market value for existing use (which then approximated to fair value). Freehold properties acquired since that date and the
other assets listed above have been stated at cost in accordance with IAS 16 Property, Plant and Equipment. The Company
valued its portfolio of freehold premises and investment properties as at 31 March 2023. The valuation was carried out by
CBRE Limited, Chartered Surveyors, in accordance with the Royal Institution of Chartered Surveyors valuation – global and
professional standards requirements. The valuation is based on existing use value which has been calculated by applying various
assumptions as to tenure, letting, town planning, and the condition and repair of buildings and sites including ground and
groundwater contamination. Management are satisfied that this valuation is materially accurate. The excess of the valuation over
net book value as at 31 March 2023 of those sites was £11.5 million (2022: £13.3 million). In accordance with the Company’s
accounting policies, this surplus has not been incorporated into these financial statements.
Our Business Financials Other informationGovernance
70 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
Depreciation of £115,000 (2022: £105,000) in respect of Investment properties was recognised within Administration Expenses
in the Income Statement.
As described in note 12, the total excess of the valuation of all of the Company’s freehold properties over net book value as at
31 March 2023 was £11.5 million (2022: £13.3 million). Investment properties accounted for £0.7 million (2022: £0.8 million) of
this surplus.
14. Net investment in lease
Group and Company
2023
£’000
2022
£’000
Due after more than one year 225 389
Due within one year 164 168
At 31 March 389 557
The premises shown above are sub-let to a third party under a lease which has the same terms and duration as the Company’s
own lease.
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 2022 and 2023.
Valuation basis
The recoverable amount of each CGU is based on the higher of its fair value less selling costs and value in use. The fair value
less selling costs of each CGU is based initially upon the market value of any property contained within it and is determined by
an independent valuer as described in note 12. Where the fair value less selling costs of a CGU indicates that an impairment
may have occurred, a discounted cash flow calculation is prepared in order to assess the value in use of that CGU, involving the
application of a pre-tax discount rate to the projected, risk-adjusted pre-tax cash inflows and terminal value.
71www.caffyns.co.uk
Stock code CFYN
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 2023 to 31 March 2028. These projections are based on the most recent budget
that has been approved by the board being the budget for the year ending 31 March 2024. The key assumptions in the most
recent annual budget on which the cash flow projections are based relate to expectations of sales volumes and margins,
and expectations around changes in the operating cost base. These assumptions are based on past experience, adjusted
to expected changes, and on external sources of information. The cash flows include ongoing capital expenditure required
to maintain the dealership but exclude any growth capital expenditure projects to which the Group was not committed at the
reporting date.
Growth rates, ranging from 1% (2022: -1%) to 12% (2022: 15%) have been used to forecast cash flows for a further four years
beyond the budget period, through to 31 March 2028. 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
(2022: £3.2 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 2023 to 31 March 2028. These projections are based on the most recent budget
that has been approved by the board being the budget for the year ending 31 March 2024. 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 -25% (2022: -46%) to 9% (2022: 7%) have been used to forecast cash flows for a further four years
beyond the budget period, through to 31 March 2028. 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 £2.4 million
(2022: £1.1 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% (2022: 12.4%).
Terminal growth rate
The cash flows subsequent to the forecast period are extrapolated into the future over the useful economic life of the CGU using
a steady or declining growth rate that is consistent with that of the product and industry. These cash flows form the basis of
what is referred to as the terminal value. The growth rate to perpetuity beyond the initial budgeted cash flows used in the value in
use calculations to arrive at a terminal value is 0.5% (2022: 0.5%). Terminal growth rates are based on management’s estimate
of future long-term average growth rates.
Conclusion
At 31 March 2023, no impairment charge in respect of goodwill was identified (2022: 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.
Our Business Financials Other informationGovernance
72 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
Group and Company:
2023
£’000
2022
£’000
Inventories recognised as an expense during the year 216,265 185,398
Inventories stated at net realisable value 976 884
Carrying value of inventories subject to retention of title clauses 22,519 14,675
All vehicle inventories held under consignment stocking arrangements are deemed to be assets of the Group and are included
on the Statement of Financial Position from the date of consignment. The corresponding liabilities to the manufacturers are
included within trade and other payables. Inventories can be held on consignment for a maximum consignment period set by
the manufacturer, which is generally between 180 and 365 days. Interest is payable in certain cases for part of the consignment
period, at various rates indirectly linked to the Bank of England base rate.
During the year, £24,000 was recognised in respect of the write-down of inventories of spare parts due to general obsolescence
(2022: £25,000).
18. Trade and other receivables
Group and Company
2023
£’000
2022
£’000
At 31 March 7,121 5,264
All amounts are due within one year.
73www.caffyns.co.uk
Stock code CFYN
Trade receivables have been classified at amortised cost under IFRS 9 Financial Instruments.
Group and Company
2023
£’000
2022
£’000
Not impaired:
Neither past due nor impaired 5,757 3,910
Past due up to three months but not impaired 50 65
At 31 March 5,807 3,975
Group and Company
2023
£’000
2022
£’000
The movement in the allowance for impairment during the year was:
At 1 April 4 3
Impairment recognised in the Income Statement 16 4
Utilisation (1) (3)
At 31 March 19 4
All amounts are due within one year.
19. Trade and other payables
2023
£’000
2022
£’000
Trade payable 21,810 14,034
Obligations relating to consignment stock 10,229 3,969
Vehicle stocking loans 7,511 7,327
Social security and other taxes 1,204 823
Other creditors 85 78
Group total 43,674 29,495
Amounts owed to Group undertakings 250 250
Company total 43,924 29,745
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit
period taken for these trade-related purchases was 27 days (2022: 28 days).
The directors consider that the carrying amount of trade payables approximates to fair value.
The Group finances the purchases of new car inventory through the use of consignment funding facilities provided by its
manufacturer partners and which are shown above as Obligations relating to consignment stock. Vehicles are physically
supplied by the manufacturers with payment deferred until the earlier of the registration of the vehicle or the end of the
consignment period, generally between 180 and 365 days. In certain circumstances, consignment periods can be extended
with the agreement of the manufacturer. The consignment funding facilities attract interest at a commercial rate.
Our Business Financials Other informationGovernance
74 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
19. Trade and other payables continued
The Group utilises vehicle stocking loans to assist with the purchase of certain used car inventory. Facilities are available from
both its manufacturer partners and a third-party finance provider and are generally available for a period of 90 days from the date
of purchase. These vehicle stocking loans attract interest at a commercial rate. Interest charges on consignment stocking loans
and vehicle stocking loans described above for the year ended 31 March 2023 were £856,000 (2022: £581,000).
The obligations relating to consignment stock are all subject to retention of title clauses for the vehicles to which they relate.
Obligations for used and demonstrator cars which have been funded are secured on the vehicles to which they relate and are
shown above as vehicle stocking loans. From a risk perspective, the Company’s funding is split between manufacturers through
their related finance arms and that funded by the Company through bank borrowings.
The movements in deferred income in the year were as follows:
2023
£’000
2022
£’000
At 1 April 532 614
Utilisation of deferred income in the year (1,021) (1,401)
Income received and deferred in the year 982 1,319
At 31 March 493 532
Management are satisfied in respect of the brought forward deferred income for both the year under review and prior years, that
the amount of deferred income not recognised as revenue in the year is not material.
Note 21 sets out the maturity profile of non-current liabilities. The directors estimate that there is no material difference between
the fair value of the Company’s borrowings and their book value. The loan and overdraft facilities provided to the Company of
£19.8 million (2022: £20.7 million) are secured by a general debenture and fixed charges over certain freehold properties.
21. Financial instruments
Group and Company
2023
carrying
value &
fair value
£’000
2022
carrying
value &
fair value
£’000
Primary financial instruments
held or issued to finance operations Classification
Long-term bank borrowings (note 20) Financial liability measured at amortised cost (10,437) (11,312)
Bank revolving credit facility (note 20) Financial liability measured at amortised cost (1,000) (1,000)
Other short-term bank borrowings
(note 20) Financial liability measured at amortised cost (875) (875)
Trade and other payables (note 19) Financial liability measured at amortised cost (41,977) (28,140)
Lease liabilities (note 22) (2,714) (1,930)
Trade and other receivables (note 18) Financial asset at amortised cost 7,121 5,264
Preference share capital (note 25) Financial liability measured at amortised cost (812) (812)
The amounts noted in the above table are the same for the Company except for:
Trade and other payables (note 19) Financial liability measured at amortised cost (42,227) (28,390)
75www.caffyns.co.uk
Stock code CFYN
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 £31.7 million (2022: £34.7 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 26% at 31 March 2023 (2022: 30%). 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 9.9% (2022: 13.2%).
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 £156,000 (2022: £178,000) before tax relief.
Credit risk management
The Group’s receivables are all denominated in Sterling. The Group is exposed to credit risk primarily in respect of its trade
receivables and financial assets. Trade receivables are stated net of provision for estimated impairment losses. Exposure to
credit risk in respect of trade receivables is mitigated by the Group’s policy of only granting credit to certain customers after
an appropriate evaluation of their credit risk. Credit risk also arises in respect of amounts due from manufacturers in relation to
bonuses and warranty receivables. This risk is mitigated by the range of manufacturers dealt with, the Group’s procedures in
effecting timely collection of amounts due, and management’s belief that it does not expect any manufacturer to fail to meet its
obligations. Finance assets comprise cash balances. The counterparties are major banks and management do not expect any
counterparty to fail to meet its obligations. The maximum exposure to credit risk is represented by the carrying amount of the
financial asset in the Statement of Financial Position.
These objectives, policies and strategies are consistent with those applied in the previous year.
Our Business Financials Other informationGovernance
76 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
21. Financial instruments continued
Group and Company
2023
carrying
value &
fair value
£’000
2022
carrying
value &
fair value
£’000
Bank balances and cash equivalents 4,226 2,759
The net bank borrowings of the Company at 31 March 2023 were £8.1 million (2022: £10.4 million).
2023
£’000
2022
£’000
Interest-bearing overdrafts and loans due within one year 1,875 1,875
Interest-bearing bank loans due after more than one year 10,437 11,312
Less: Cash and cash equivalents (4,226) (2,759)
At 31 March 8,086 10,428
The maturity of non-current borrowings is as follows:
Borrowings Leases Preference shares Total
Group and Company
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Between one and two years 375 875 470 247 — — 845 1,122
Between two and five years 10,062 10,437 980 496 — — 11,042 10,933
Over five years — — 753 691 812 812 1,565 1,503
At 31 March 10,437 11,312 2,203 1,434 812 812 13,452 13,558
77www.caffyns.co.uk
Stock code CFYN
Maturities include amounts drawn under bank term loans and revolving credit facilities, 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 April 2026. The maturities of the bank borrowings represent the final payment dates for those drawn facilities
as at 31 March 2023. 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
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Within one year 1,685 1,506 632 542 60 60 2,377 2,108
Between one and two years 1,136 1,271 579 292 60 60 1,775 1,623
Between two and three years 1,109 998 447 296 60 60 1,616 1,354
Between three and four years 9,747 434 351 197 60 60 10,158 691
Between four and five years — 9,688 348 101 60 60 408 9,849
Over five years — — 894 837 512 512 1,406 1,349
Contractual cash flows 13,677 13,897 3,251 2,265 812 812 17,740 16,974
The Group has a term loan with HSBC, first entered into in March 2018, originally of £7.5 million, at a rate of interest of 2.75%
above SONIA. The loan has a current four-year term to next expire in April 2026, and is repayable over 20 years. The balance
outstanding on this term loan at 31 March 2023 was £5.8 million (2022: £6.2 million) with capital repayments in the year of £0.38
million. HSBC also make available to the Group a revolving credit facility of £6.0 million at a rate of interest of 2.75% above
SONIA. This facility has a four-year term and expires in April 2026. The balance drawn as at 31 March 2023 was £5.0 million
(2022: £5.0 million). These facilities are subject to covenants which are tested quarterly with respect to debt/freehold property
values and interest cover and borrowing levels which were all passed at 31 March 2023. The failure of a covenant test would
render these facilities repayable on demand at the option of the lender.
The Group also has a bank term loan from Volkswagen Bank United Kingdom Branch, which carries a rate of interest of 1.75%
above VBBR. The loan is repayable over its ten-year term, which expires in March 2024.
No reduction in term loan or revolving credit facilities is expected to apply consequent to the trading results for the year ended
31 March 2023.
The Group also had £7.5 million of combined annual overdraft and revolving credit facilities (2022: £7.5 million) from HSBC and
Volkswagen Bank United Kingdom Branch and these facilities are next due for renewal in August 2023. 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.
The Group has granted security to HSBC and Volkswagen Bank United Kingdom Branch by way of a general debenture over
its assets and a fixed charge over certain freehold property. The total value of those assets at 31 March 2023 in the Statement
of Financial Position was £74.6 million (2022: £64.2 million). The Group has also granted security to its defined benefit pension
scheme by way of fixed charge over certain freehold properties. This charge ranks in priority behind those charges granted to
HSBC and Volkswagen Bank United Kingdom Branch.
The ongoing costs associated with the bank facilities are included in finance expense (see note 6).
The preference shares in issue do not have a maturity date as they are non-redeemable.
Our Business Financials Other informationGovernance
78 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
22. Lease liabilities
Group and Company
2023
£’000
2022
£’000
Deemed liability
At 1 April 1,930 1,278
Additions in the year 1,308 1,142
Interest charge for the year 52 49
Lease payments (576) (539)
At 31 March 2,714 1,930
Due in less than one year 511 496
Due after more than one year 2,203 1,434
At 31 March 2,714 1,930
23. 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 2023, the Company contributed £800,000
(2022: £1,781,000) to fund the existing deficit. Contributions for the prior financial year included a one-off deficit-reduction
contribution of £1,000,000.
Over the year to 31 March 2024, the Company expects to contribute £784,000 in relation to deficit reduction contributions. In
addition, the Company will continue to make contributions towards risk benefits and to meet the administrative expenses of the
Scheme and its Pension Protection Fund levies.
The liabilities of the Scheme are based on the current value of expected benefit payment cash flows to members of the Scheme
over the next 70 or so years. The average duration of the liabilities is approximately 12 years. Expected benefit payments in the
year to 31 March 2024 are £4,852,000.
Risks to the Scheme
The ultimate cost of the Scheme to the Company will depend upon actual future events rather than the assumptions made.
Many of the assumptions made are unlikely to be borne out in practice and as such the cost of the Scheme may be higher, or
lower, than disclosed. In general, the risk to the Company is that assumptions underlying the disclosures, or the calculation of
contribution requirements, are not borne out in practice and the cost to the Company is higher than expected.
79www.caffyns.co.uk
Stock code CFYN
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 2023 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; and
• 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 2023 by Willis Towers Watson, independent
qualified actuaries, for the requirements of IAS 19. Details of the actuarial assumptions are as follows:
2023 2022
Mortality tables used: females 97% of SAPS series 2 97% of SAPS series 2
Mortality tables used: males 100% of SAPS series 2 100% of SAPS series 2
Future improvements in mortality CMI2021 + 1.25% CMI2021 + 1.25%
Discount rate 4.75% 2.65%
Inflation (CPI) 2.95% 3.30%
Pension increase for in-payment benefits (CPI max 5%) 2.90% 3.20%
The discount rate adopted is based upon the yields of high-quality corporate bonds of appropriate duration.
The sensitivities regarding the principal assumptions used to measure scheme liabilities are set out below:
Assumption Change in assumption Impact on scheme liabilities
Discount rate Increase/decrease by 0.1% +/- £0.8 million
Pension increases Increase/decrease by 0.1% +/- £0.6 million
Mortality Increase/decrease by 0.1% +/- £2.7 million
Our Business Financials Other informationGovernance
80 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
23. Retirement benefit scheme continued
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
2023
£’000
2022
£’000
LDI fund 22,858 18,862
Growth fund 37,924 72,991
Equity instruments 744 870
At 31 March 61,526 92,723
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
2023 were invested 37% (2022: 26%) in LDI funds, 62% (2022: 73%) in return enhancing growth funds and 1% (2022: 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 4.75% and not the return on the underlying portfolio of investments. Consequently, the charge to the Income
Statement for the year ending 31 March 2024 is expected to be approximately £422,000.
Equity instruments include shares in Caffyns plc, which are detailed in note 28.
The assumptions used by the actuary are the best estimates based on market conditions chosen from a range of possible
actuarial assumptions which, due to the timescales covered, may not necessarily be borne out in practice.
Life expectancy at age 65 (in years):
2023
Male
2023
Female
2022
Male
2022
Female
Member currently aged 65 21.3 23.6 21.6 23.9
Member currently aged 45 22.6 25.2 22.9 25.4
A liability for the defined benefit pension scheme deficit is included in the Statement of Financial Position under the heading of
non-current liabilities.
Analysis of the movement in the net liability for defined benefit obligations recognised in the Statement of
Financial Position
2023
£’000
2022
£’000
At 1 April (2,797) (9,434)
Expense recognised in the Income Statement (87) (189)
Contributions paid by the Company 800 1,781
Net remeasurement recognised in other comprehensive income (6,715) 5,045
At 31 March (8,799) (2,797)
Total expense recognised in the Income Statement
2023
£’000
2022
£’000
Interest cost 2,474 1,891
Interest income on Scheme assets (2,410) (1,725)
Interest – net (see note 7) 64 166
Current service cost 23 23
87 189
81www.caffyns.co.uk
Stock code CFYN
Changes in the present value of the defined benefit pension obligation
2023
£’000
2022
£’000
At 1 April 95,520 98,980
Service cost 23 23
Interest cost 2,474 1,891
Actuarial losses 3,069 2,670
Actuarial (gains)/losses – demographic assumptions (1,237) 160
Actuarial gains – financial assumptions (25,197) (4,220)
Benefits paid (4,327) (3,984)
At 31 March 70,325 95,520
In October 2018, the High Court issued a judgement that 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
2023
£’000
2022
£’000
At 1 April 92,723 89,546
Interest income 2,410 1,725
Actuarial (losses)/gains – financial assumptions (30,080) 3,655
Contributions paid by the Company 800 1,781
Benefits paid (4,327) (3,984)
At 31 March 61,526 92,723
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 2023 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.
Our Business Financials Other informationGovernance
82 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
24. Deferred tax
The following are the major deferred tax assets and liabilities recognised and the movements thereon during the current and
prior reporting period.
Group and Company
Accelerated
tax
depreciation
£’000
Unrealised
capital gains
£’000
Retirement
benefit
obligations
£’000
Short-term
temporary
differences
£’000
Recoverable
ACT
£’000
Total
£’000
At 1 April 2021 (925) (1,572) 1,792 (19) 1,136 412
Change in tax rates and prior year
adjustments
(225)
(428) (39)
45
— (647)
Utilisation of ACT — — — — (599) (599)
Timing differences 210 216 (303) 163 — 286
Recognised in other comprehensive
income — — (750) — — (750)
At 31 March 2022 (940) (1,784) 700 189 537 (1,298)
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)
The Finance Act 2021 introduced an increase in the main corporation tax rate to 25% from 1 April 2023.
The Company carries a balance of surplus unrelieved advanced corporation tax (“ACT”) which can be utilised to reduce
corporation tax payable subject to a restriction of 19% of taxable profits less shadow ACT calculated at 25% of shareholder
Ordinary dividends. Shadow ACT has no effect on the corporation tax payable itself but any surplus shadow ACT on dividends
must be fully absorbed before surplus unrelieved ACT can be utilised. At the commencement of the financial year under review
on 1 April 2023 there was no Shadow ACT outstanding. During the year all Shadow ACT generated by the payment of dividends
was fully utilised, which allowed for a further utilisation of the available ACT, leaving the remaining value of surplus ACT available
for utilisation in future periods at 31 March 2023 of £342,000 (2022: £537,000).
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:
2023
£’000
2022
£’000
Deferred tax liabilities (2,680) (2,724)
Deferred tax assets 2,646 1,426
At 31 March (34) (1,298)
The unrealised capital gains include deferred tax on gains recognised on revaluing the land and buildings in 1995 and where
potentially taxable gains arising from the sale of properties have been rolled over into replacement assets. Such tax would
become payable only if such properties were sold without it being possible to claim rollover relief.
There were no trading losses available for use in future periods (2022: £Nil).
83www.caffyns.co.uk
Stock code CFYN
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.
Our Business Financials Other informationGovernance
84 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
27. Notes to the cash flow statement
Group and Company
2023
£’000
2022
£’000
Profit before tax for the year 3,090 4,385
Adjustments for net finance expense 1,751 1,282
4,841 5,667
Adjustments for:
Depreciation of property, plant and equipment, investment properties and
right-of-use assets 2,128 2,022
Cash payments into the defined benefit pension scheme (800) (1,781)
Loss on disposal of property, plant and equipment — —
Share-based payments 46 53
Operating cash flows before movements in working capital 6,215 5,961
(Increase)/decrease in inventories (12,444) 9,016
Increase in receivables (1,857) (94)
Increase/(decrease) in payables 14,296 (9,911)
Cash generated by operations 6,210 4,972
Tax paid, net of refunds (320) (503)
Interest paid (1,653) (1,079)
Net cash derived from operating activities 4,237 3,390
All interest payments are treated as operating cash movements as they arise from movements in working capital.
85www.caffyns.co.uk
Stock code CFYN
Reconciliation of debt
Group and Company:
Bank
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 2021 8,062 8,000 1,278 812 18,152 (5,735) 12,417
Cash movement (875) (2,000) (539) — (3,414) 2,976 (438)
Non-cash movement — — 1,191 — 1,191 — 1,191
At 31 March 2022 7,187 6,000 1,930 812 15,929 (2,759) 13,170
Current liabilities 875 1,000 495 — 2,370 (2,759) (389)
Non-current liabilities 6,312 5,000 1,435 812 13,559 — 13,559
At 31 March 2022 7,187 6,000 1,930 812 15,929 (2,759) 13,170
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
Non-cash movements in lease liabilities relate to an extension in the year of one existing lease and one new lease that was
entered into during the year.
28. Related parties
The remuneration of directors, who are key management personnel, is set out in note 5 for each of the categories specified in
IAS 24 Related Party Disclosures. Further information about the remuneration of individual directors is provided in the Directors’
Remuneration Report on pages 27 to 39.
The 2,000,000 6% Cumulative Second Preference shares have full voting rights along with the Ordinary shares, except in
relation to matters which under the Listing Rules, as amended from time to time, are required to be voted on only by premium-
listed securities, being the Ordinary shares. These Cumulative Second Preference shares are beneficially owned by Caffyn
Family Holdings Limited (“Holdings”). Mr S G M Caffyn and Ms S J Caffyn are directors of Holdings. The whole of the issued
share capital of Holdings is held by close relatives of those directors. Holdings controls directly 42.6% (2022: 42.6%) of the
voting rights of Caffyns plc. The directors and shareholders of Holdings are also beneficial holders of 502,605 (2022: 542,481)
Ordinary shares in Caffyns plc representing a further 10.7% (2022: 11.6%) of the voting rights. It is therefore considered that the
Caffyn family is the ultimate controlling party. As required under the Stock Exchange Listing Rules, the Company entered into a
Relationship Agreement with Holdings on 6 November 2014 whereby Holdings undertakes to the Company that it shall exercise
its voting rights and shall exercise all its powers to ensure, so far as it is properly able to do so, that its associates shall exercise
their respective voting rights and exercise all their respective powers to ensure, to the extent that they are able by the exercise of
such rights to procure, that:
a) transactions and arrangements between any member of the Company and Holdings (and/or any of its associates) will be
conducted at arm’s length and on normal commercial terms;
b) neither Holdings nor any of its associates will take any action that would have the effect of preventing the Company from
complying with its obligations under the Listing Rules; and
c) neither Holdings nor any of its associates will propose or procure the proposal of a shareholder resolution which is intended
or appears to be intended to circumvent the proper application of the Listing Rules.
Directors of the Company and their immediate relatives control 13.2% (2022: 14.3%) of the issued Ordinary share capital of the
Company. Dividends of £34,000 were paid to directors in the year (2022: £11,000).
Our Business Financials Other informationGovernance
86 Caffyns plc Annual Report 2023
Notes to the Financial Statements continued
for the year ended 31 March 2023
28. Related parties continued
87www.caffyns.co.uk
Stock code CFYN
Our Business Financials Other informationGovernance
88 Caffyns plc Annual Report 2023
Five Year Review
unaudited
2019
£’000
2020
£’000
2021
£’000
2022
£’000
2023
£’000
Income Statement
Revenue 209,246 195,787 165,085 223,928 251,426
Underlying operating profit 2,626 1,633 3,142 5,690 4,827
Finance expense (1,181) (1,382) (1,266) (1,116) (1,687)
Underlying profit before tax 1,445 251 1,876 4,574 3,140
Non-underlying items (1,873) (148) (452) (189) (50)
Profit/(loss) before tax (428) 103 1,424 4,385 3,090
Profit/(loss) after tax (566) (252) 1,410 2,999 2,524
EBITDA 3,982 3,428 5,124 7,712 6,955
Basic earnings/(deficit) per Ordinary share (21.0)p (9.4)p 52.4p 111.3p 93.6p
Underlying earnings/(deficit) per Ordinary share 35.3p (4.9)p 66.0p 117.0p 95.1p
Dividend per Ordinary share payable in respect of the year 22.50p 7.50p 0.00p 2.50p 22.50p
As at year-end
Shareholders’ funds 27,975 26,380 27,586 34,731 31,662
Property, plant and equipment* 47,394 46,835 45,375 46,621 45,676
Bank overdrafts and loans (net) 13,592 16,241 10,327 10,428 8,086
Bank overdrafts and loans/shareholders’ funds (gearing) 49
%
62
%
37
%
30
%
26
%
Retirement benefit liability 8,576 9,434 9,434 2,797 8,799
* Represents property, plant and equipment and investment properties
Our Business Financials Other informationGovernance
89www.caffyns.co.uk
Stock code CFYN
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
31619 27 June 2023 9:51 am V1
Caffyns plc
Meads Road
Eastbourne
East Sussex
BN20 7DR
www.caffyns.co.uk