Caffyns - The property side

PUBLISHED: 07 Aug 2019 @ 10:17 | Comments (0) |

Caffyns (LSE:CFYN) operates from 13 locations selling and servicing cars. It holds the freeholds of large plots in towns in Kent and Sussex, therefore it has valuable real estate. The book value of property stated on the balance sheet has been understated for years; each annual report tells us that property experts have been called in to revalue the estate. For the March 2019 revaluation the directors say that the BS value understates the property by £11.2m. The market capitalisation of the company is about the same number.

The table below shows the estimated market values of the property held. It also shows the considerable sums spent to enhance the property assets – over £5.5m in 2018, the lion’s share of which was £3.9m spent on the 3.7 acre Angmering site.

£000s March yearend	2019	2018	2017	2016	2015
Balance sheet value	35,793	37,099	32,490	34,932	34,600
Revaluation exercise: excess over BS valuation	11,200	10,300	10,100	9,500	8,490
Additional property held in separate “investment property account” – rented out	8,169	6,893	6,986	1,167	0
Sums to TOTAL	55,162	54,292	49,576	45,599	43,090
More information:
Additions to property in year	1,567	5,545	3,924	2,367	2,412
Disposals	0	43	0	1,148	1,623

There is an impressive gap between the company’s market capitalisation, £12.1m, and property assets of £55.2m.

But, before getting carried away we need to consider whether the company is heavily indebted and has negative net working capital, offsetting the value in freehold property. In the following table I tot up the current assets and deduct all the liabilities (including the pension deficit)

Current assets, current liabilities and non-current liabilities

£’000s	2019	2018	2017	2016	2019 with Ben Graham adjustments
Inventories	34,468	30,398	29,904	32,925	22,956
Receivables	8,796	10,191	7,838	8,449	7,037
Other		60
Cash	3,908	3,375	2,321	219	3,908
CURRENT ASSETS	47,172	44,024	40,063	41,593	33,901
Minus current liabilities other than overdraft	-39,989

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