Caffyns PLC half-year 2025: statutory loss, revenue dip and dividend held
Caffyns has posted a statutory loss before tax of £0.93 million for the six months to 30 September 2025, swinging from a £0.21 million profit last year. On an underlying basis – which strips out items unrelated to the core motor retail business – the company recorded a £0.81 million loss before tax (2024: £0.45 million profit).
Revenue edged down 2.7% to £133.953 million as weaker new car demand bit into profits. Despite the setback, the board has kept the interim dividend at 5.0 pence per share, signalling confidence in the longer-term plan.
Headline numbers investors should know
| Metric | H1 FY26 (to 30 Sep 2025) | H1 FY25 (to 30 Sep 2024) |
|---|---|---|
| Revenue | £133.953 million | £137.740 million |
| Underlying EBITDA | £1.707 million | £3.004 million |
| Underlying PBT | £(0.806) million | £0.452 million |
| Statutory PBT | £(0.934) million | £0.213 million |
| Underlying EPS | (22.2)p | 12.2p |
| Basic EPS | (25.8)p | 5.7p |
| Interim dividend | 5.0p | 5.0p |
| Net bank borrowings (period end) | £9.6 million | £11.5 million |
| Pension deficit (IAS 19) | £2.8 million | £7.6 million |
Why profits fell: new car shortfall, cost inflation and funding costs
The half-year was tough across the motor retail market and Caffyns felt it. Retail new car deliveries fell by 14% against a national market that grew 3%, leaving new car profits “significantly weakened”. Several brands underperformed the UK market, prompting operational changes already underway.
Used cars and aftersales did better. Used volumes were down 1%, but smarter sourcing nudged margins higher and helped to offset lower throughput. Aftersales revenue rose 7% despite technician recruitment challenges.
Across the group, gross profit slipped £0.6 million (around 3%). That was compounded by higher costs: the April increases to the National Minimum Wage and employer National Insurance alone added £0.5 million. Marketing spend was stepped up to stimulate demand. Finance costs stayed elevated – net finance expense was £1.564 million – and interest on stocking loans accounted for £879,000.
Quick jargon buster
- Underlying results: exclude non-trading items such as property gains/losses, pension financing/service costs, and restructuring.
- EBITDA: earnings before interest, tax, depreciation and amortisation – a cash earnings proxy.
- Agency model: the manufacturer sells the car to the customer and the dealer earns a fee for the handover; wholesale is the traditional model where the dealer sells the car.
Operational mix: agency vs wholesale and a focus on used and aftersales
Only Volvo now operates solely under an agency arrangement for Caffyns. Lotus, MG and Vauxhall are traditional wholesale, and Volkswagen Audi Group brands are mostly wholesale with some agency vehicles. The shift matters because agency reduces inventory and price risk but also caps per-unit margin potential.
The company continues to lean into used cars and service work. Data-led sourcing is being used to find faster-selling stock at better margins, with semi-automated systems speeding procurement. In June, Caffyns consolidated Lotus into Ashford, Kent, closing the Lewes site.
Balance sheet, cash and covenants: waivers in place and headroom maintained
Net bank borrowings were £9.6 million at 30 September 2025, up from £8.5 million at the March year-end but lower than £11.5 million a year ago. Cash and cash equivalents stood at £2.444 million and undrawn facilities totalled £6.5 million at the period end. Inventory funding loans were £8.9 million.
HSBC waived the interest cover and leverage covenants for the September and December 2025 quarters. From 1 January 2026 the bank replaces those with one requirement: positive Senior EBITDA for the current financial year at 31 March 2026. For 2026/27, quarterly tests move to minimum cumulative Senior EBITDA hurdles. Caffyns must also keep at least £2.0 million headroom on facilities. The board is confident these are achievable, with usual covenants due to return from 30 June 2027.
The property estate is a safety net. Caffyns owns all but two of its operating freeholds and reported an unrecognised surplus of £11.2 million versus carrying value at 31 March 2025. That underpins funding and reduces rental risk.
Pension deficit narrows, easing a long-running drag
The IAS 19 defined-benefit pension deficit fell to £2.8 million from £4.5 million at March 2025, helped by stronger asset performance and company contributions of £0.6 million in the period. Net of deferred tax, that is £2.1 million. The non-cash pension financing cost in the income statement was £120,000 and is treated as non-underlying.
Dividend maintained and outlook steady, not spectacular
The interim dividend is held at 5.0 pence, payable on 7 January 2026 to shareholders on the register on 12 December 2025. That is a statement of intent given the loss, supported by a balance sheet rooted in freeholds.
Looking ahead, the new car order book is described as satisfactory. Management flags macro uncertainty and how customers might react to the Government’s November Budget. The focus remains on productivity, digital, and improving used car and aftersales performance.
Regulatory overhang: FCA redress consultation on motor finance
The Financial Conduct Authority is consulting on a redress scheme covering finance agreements between April 2007 and November 2024 following the court cases around undisclosed commissions. The Supreme Court decided dealers generally do not have a fiduciary duty, but one case was deemed unfair due to undisclosed interest levels.
Caffyns says the timing and size of any potential cost is not known, so no provision has been booked. This is a sector-wide uncertainty to monitor.
My take: the good, the bad and what to watch
Positives
- Dividend held at 5.0p, suggesting confidence despite the loss.
- Pension deficit down to £2.8 million, reducing risk and future cash strain.
- Net bank borrowings of £9.6 million are manageable against a sizeable freehold estate and undrawn facilities of £6.5 million.
- Aftersales up 7% and used car margins improving – the higher-quality earnings streams are moving in the right direction.
Challenges
- New car performance materially lagged the market – a 14% delivery decline where the UK grew 3% will take time to fix.
- Underlying EBITDA halved to £1.7 million, reflecting thinner gross margins and higher wage and NI costs.
- Funding costs remain high, with £1.564 million of net finance expense and £879,000 of stocking loan interest in the half.
- FCA redress consultation remains an unquantified risk for the sector.
What to watch in H2
- Evidence that operational changes lift new car share at underperforming brands.
- Used car sourcing and margin discipline holding up as supply remains tight.
- Delivery of “positive Senior EBITDA” for the full year to 31 March 2026 to meet the revised bank covenant.
- Cash generation, given H1 saw a small outflow from operations of £0.07 million.
Bottom line
This was a tough half, dominated by a misfiring new car segment and stubborn financing costs. The decision to keep the dividend, the tangible asset backing, and the improving pension position provide ballast. If management can close the gap on new car performance while maintaining momentum in used and aftersales, the revised covenant package gives time to execute. For now, this reads as a cautious hold with a weather eye on trading into the March year-end and any developments from the FCA.
