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Caffyns Share Discussion Threads
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|This was the important bit, imho, in the RNS dated 18/12/15, which indicated a change in status of the family held 2nd Preference shares as far as I can interpret listing rule 10, from early in 2016. The only purpose I could see for those 2nd prefs was to give the family absolute control in the event of an unwanted T/O attempt, as the shares only yielded a £12K or £24K pa dividends (can’t remember which). Having held the shares for a couple of years, I felt that they were at last more vulnerable to a takeover at a big premium by one of the big groups needing more presence in Caffyn’s neck of the woods. But then came the VW scandal and Brexit, both of which I feel are negatives for CFYN, so I sold out for a modest profit which combined with good dividends wasn’t too disappointing
----------------------------------Changes to the Listing Rules----------------------
In May 2014, as part of a package of measures, the FCA introduced new provisions in relation to the governance of companies with Premium Listed securities. In particular, the FCA introduced Listing Rule 9.2.21 which requires that in certain circumstances where a shareholder vote is required by the Listing Rules that vote must only be decided by a resolution of the holders of Shares which have a Premium Listing. As at the date of this announcement, only the Ordinary Shares have a Premium Listing.
Listing Rule 9.2.21 applies where the following circumstances require a Shareholder vote to be taken:
-- cancellation of the listing of equity shares as per Listing Rule 5.2;
-- a transfer of the listing of equity shares with a premium listing into or out of the category of premium listing as per Listing Rule 5.4A;
-- approval of an employees' share scheme if the scheme involves or may involve the issue of new shares or the transfer of treasury shares or a long-term incentive scheme in which one or more directors is eligible to participate in accordance with Listing Rule 9.4;
-- the transactions set out in Listing Rule 9.5 including an issue of equity shares in specified circumstances;
-- any significant transaction, which is a class 1 transaction as set out in Listing Rule 10|
|Muckshifter, that's an interesting angle which I admit to having been unaware of.|
|I don't think the family held prefs have -full- voting rights. My understanding, fwliw, of the premium listing rules makes me believe that the right to vote them does not apply in a major event ie. a takeover bid. But I would be interested in the opinion of anyone who is familiar with the operation of those rules.|
|The family-held Prefs have full voting rights and effectively, with the family holdings of Ordinary shares, make the company bid-proof.
As you rightly imply, this is a negative for some investors.|
|See previous comments on the board.|
|Do the preference shares and their associated rights put off many investors?|
|As does the fact that freehold property revaluations haven't been recorded on the balance sheet, which thus understates assets.|
|The future does look less bright for motor dealers but at least the net asset value of Caffyns is around £8.30 despite the increase in potential pension liabilities. Also there is nothing in the balance sheet for goodwill or intangibles. This should provide a buffer as does a yield of over 4%.|
|At the moment pension fund assets are round about 85m (That's an estimate. We are told that pension assets have risen since the year end at which time pension assets were 78m)
Each 1% rise in the discount rate will knock about 14m sterling off the present value of future pension liabilites. The discount rate used dropped from 3.35% at last year end to 2.2% at the half year. If the discount rate goes back to its year end level, the fund will be in surplus. (Assuming no other changes, of course.)
In this half year, Land Rover contributed 5.8m to revenues; last half year, it contributed 22.2m to revenue. In spite of the loss of 17m revenue from Land Rover, overall turnover was up from 95.5m to 105m. So quite a decent revenue performance.
Underlying profitability was more or less flat.|
|like the fact the cfyn are into used cars with the FX going against companies at the moment, price comparisons between new and 1-3year used can be quite effective.|
at the balance sheet date of 30t September, gilt yields were at historic lows (following the Brexit vote.) Gilt yields are used as an indicator for the discount rate on calculating the present value of future pension liabilities. Sincé that time, gilt yields have risen. Were the pension déficit calculated today, it would be less than the sum in the half-year results.
Gilt yields remain very low, and it is more likely than not that they will rise in the future. This will eliminate the déficit on CFYN's pension scheme. As I'm sure you're aware, all companies with defined benefit pension schemes have seen liabilities balloon, because of the gilt yield falls. CFYN is not in a bad situation compared to the many other such companies I know.
So they will not have to "pay off" the déficit from their profits. No pension administrator worth his salt would insist they did so.|
|They should be very careful about further expansion at the moment- very uncertain times. Is this the right time to be considering expansion?|
|The pension deficit is frightening even half of it would take many years of profit to pay off.150k payment isn't going to scratch the surface .Would worry me|
yes, you're right: I was only right in part. Thankyou for the correction.|
|I think you're wrong, and right, CJohn. There were three categories of prefs of which the most significant was the "2nd preference shares", three million in total, which I believe are all held by the Caffyn family. These were effectively not touched in the changes and give the family overall control of the voting rights.... except, if you read the rules for shares on the premium list of the LSE, they lose the right to vote on certain major issues. Although it's not very well spelled out in the rules, I think this would disqualify these 2nd prefs from having a vote on a takeover bid.
That pleased me when it occurred, as I felt that cfyn were so undervalued that one of the big dealerships which was under represented in cfyn's part of the UK might be tempted to make a bid. Since brexit, I think that has become highly unlikely because of the predominance of VW brands, which is disappointing.
PS. IIrc they actually only issued 2m of the authorised 3m 2nd prefs, but the purpose of them was very clearly one of control - they paid a dividend of just £12k / year.|
|Hi NTV, best not to rely on memory. Check the balance sheet for yourself. There are 812k preference shares left. These reamining preference have been stripped of voting rights. The compensation was a 1% increase in interest paid.
It would be best if these preference shares were bought out. 425k were bought out last year.
I agree with you that the directors pay themselves too much - not an uncommon problema in small companies - but the preference shares are only a very minor issue.|
|you forgotten the large lot of almost 2m from memory. these have equal voting rights
what will the family demand for those?
bet it won't be £1
and don't forget the fees on top and profits will fall this year as well|
|812k left of preference shares. A likely premium to buy out these shares will be about 400k sterling. So that sum can be subtracted from the total asset value of the company. Very small beer.|
|Assets are not the same as in 2004. Did you mean something else?
The preference shares should be bought off, I agree. That makes financial sense. The company bought out 425k last year at a small Premium to par. This really doesn't seem to me to be such a major issue given that there are only 812 k left.It's just a form of debt. This is particularly so as the preference shares have been stripped of their voting rights.|
|no comment about trading from the agm then?
the company appears not to want inform shareholders of current sales etc|
|you have forgotten about about all the pref shares on the balance sheet. the directors dictate at what price these are repurchased
one lot yields 11% but the bulk yield 6%
this is a two tier share structure which is controlled by directors
prefs are valued at par it seems on the balance sheet and at mkt prices
maybe that will change at the next balance sheet date
also very old fashioned to have pension owning a chunk of share capital
share price and assets the same as 2004|
|When you add back the revaluation surplus of £9.5m and the £5m goodwill on the Land Rover sale the net assets come to £41m. Divide by 2.8m shares and you come to a nav of just under £15 per share. At some stage the family will release this but it may be a while during which the dividend yield of 4% is some compensation.|
|More importantly, it would be beneficial to tangible asset value per share.|
|Everything else being equal, buying back shares at this level would be beneficial to per share earnings.|