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[greatgiginthesky] 03/7/2014 17:28

If you take a close look at the RNS on 5th September 2013 regarding the new Sinclair Family Concert Party Agreement you will find the following sentence:
"This revised agreement sets out certain terms of conduct between the concert party members, including the event of an offer being made for the Company."

Now we are told that the 'hidden' value is to be revealed in a valuation.

I may be putting two and two together and getting five, but one possible take on these events is that the Sinclair Family is gearing up for a sale.

[jonwig] 03/7/2014 11:46

chector - I'd very much like to know myself!

AGM is Wed 13 August. I might just go.

[chector177] 03/7/2014 10:25

Thanks Jonwig, so why do you think some shareholders have pushed for a re-valuation, they obviously feel it will benefit them.

[jonwig] 03/7/2014 08:34

Chris, the 2014 Annual Report should be available any day now, but going back to the 2013 document (can be downloaded from the website), the front of the Income Statement (p23)shows:

Taxation – current (6,511)

and looking at Note 9 on p36, we have:

UK Corporation Tax 24% (2012: 26%) 6,511 (6,648)

(You can't easily produce the 24% yourself, because detailed allowances aren't given.)

I don't think the rate of 20% will have been implemented yet.

Forget "deferred tax", it's an accounting number which won't have to be paid, as it will become part of current tax in some future period.

Incidentally, it might be very useful to remember that a large part of their trading properties will be in a pretty dilapidated state - after all regulated tenancy landlords have no great incentive to improve! - so a current revaluation will reflect this. What MTVW does is to refurbish them, so adding value.
In other words, even a current valuation will understate the potential!

[chri5 wright] 02/7/2014 20:15

I appreciate the posts too. Obviously CGT is only paid on gain, not revaluation, and the balance sheet must always value assets at the lower of cost and net realisable value.

I' not sure your right re tax at 20%. That mean ''not sure'', rather than me saying your wrong politely. Lets look into that. I thought that this only applied to a REIT?

For the record, I am a buyer of the stock, not talking it down.

Chris

[chector177] 02/7/2014 16:22

Interesting discussion, I appreciate the posts

[coolen] 02/7/2014 15:37

Jonwig, good point about the transparency: the difference between travelling and arrival !

[jonwig] 02/7/2014 14:23

coolen - think of mining companies ... underground reserves/resources don't appear on the balance sheet, though they appear prominently in the narrative.

Also, mining companies can account for the cost of evaluating reserves as an intangible asset - after all, if you've spent £mm getting a resource estimate, anyone taking you over should recognise the fact!

As for MTVW, I suspect this is one of the issues which has (allegedly) caused boardroom arguments. They don't currently seem to have any intangible assets on their balance sheet: maybe these will appear in a year or so? As you seem to imply, they've taken on a whole load of costs!

I'm actually a bit sad that they've decided to do this - the lack of transparency was an opportunity to buy in 2008/09 and 2010. When they do emerge with a number, look out for some profit-taking, perhaps.

EDIT: I've always wanted to make their AGM, but living oop north in the sticks, that would prove pretty expensive.
Middle of August is out of the question!

[coolen] 02/7/2014 13:29

I'm wondering whether they could get themselves into an accounting mess by trying to revalue stock: ok for year 1, but what happens to the revaluation figure in year 2 after a further 12 months of buys and sells into and out of the pool of stock ?

[chector177] 02/7/2014 12:50

Thanks Jonwig most helpful

[jonwig] 02/7/2014 10:00

Here:

If you buy and sell property as your business you pay Income Tax rather than Capital Gains Tax on any profits you make from the property. This applies whether you are a sole trader or in a partnership. This may include a one-off purchase and sale of a property. You usually pay any Income Tax due by completing a Self Assessment tax return.

If you are a director or shareholder in a company which carries out property trading, any profits on properties disposed of are part of the company's profits. The company will pay Corporation Tax on its profits.



IFRS has "trading properties" valued at lower of cost and current value. Revaluation gains don't appear, but they do on investment properties.

Goodwill is the excess a company pays over book value for an asset. So if MTVW paid £2m for a property given an independent valuation of £1.6m, the balance sheet would show goodwill of £0.4m.

[chector177] 02/7/2014 09:42

Thanks Coolen. I had presumed the it would be treated like any other stock and be listed as an asset somewhere on the balance sheet. I guess property maybe different.

chri5 wright, thanks for the comment. I'm quite calm, I was just wondering what the result might be. Please could you explain further your view on CGT. I probably don't know enough, but I thought CGT on properties only became due if you sold and didn't re-invest. As the revaluation is for trading stock I presumed they would continue to trade. As for the effect on NAV don't companies list goodwill on their balance sheet, or is this not included in the NAV? This is my simple view and I'm more than happy to be corrected and educated.

[coolen] 01/7/2014 22:29

Yes, it is the trading stock that's to get revalued, so CGT does not apply.
I doubt if any revaluation of stock can be incorporated into the balance sheet, other than via a "note" to the accounts.

[jonwig] 01/7/2014 17:52

Chris - I believe they pay corporation tax (20% after reliefs).

[chri5 wright] 01/7/2014 17:28

nice results, but lets calm down......any increase in NAV is just an unrealised number, until it is realised at which point the capital gain will be subject to CGT at 40%.

so any gain isn't a gain, until it becomes 60% ( less costs of sale ) of the sum we are expecting.

plus interest rates inclining, will dent future profits of course.

this is why these property companies are valued so low IMO.

[chector177] 26/6/2014 11:45

"Whilst it has never been a requirement to value the trading stock it has been a concern for some of the shareholders. The Board has decided to undertake the valuation of the trading stock and anticipate that the results will be published together with the Interim Report 2014."

I wonder what that is going to do to the balance sheet. I take the statement infers they haven't done this for some time. Should I be expecting a huge jump?

[chector177] 26/6/2014 10:06

I sent them an email and then the results were published..... I would like to claim the credit, but I'm just happy with the excellent results.

[eggbaconandbubble] 26/6/2014 09:59

There you go!

You're wrong!.....VERY eccentric :-)

[chector177] 26/6/2014 09:43

hmmm last years results published at 07:01

[chector177] 26/6/2014 09:26

thanks EGG, I was expecting it at 7am. I have the feeling this company is a little eccentric, would I be right?

[eggbaconandbubble] 26/6/2014 09:05

Today has just begun!
(They usually don't post until later)

[chector177] 26/6/2014 08:27

Prelim results today according to website and IC... where are they??????

[coolen] 11/6/2014 21:52

Under accounting rules, trading stock (ie. much of their property) is accounted for at original cost. Potential revaluation (which they do not need to do) could be enormous.

Add the need for trackers to buy this stock by the end of next week.....!!!

[shutittrev] 11/6/2014 12:07

Spot on with your 'asset valuation' assertion.