Caffyns Share Discussion Threads

[beazer2] 22/7/2016 14:48

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.

[cjohn] 20/6/2016 09:11

More importantly, it would be beneficial to tangible asset value per share.

[onwego] 18/6/2016 17:06

Everything else being equal, buying back shares at this level would be beneficial to per share earnings.

[cjohn] 17/6/2016 09:27

The preferences are correctly included in non-current liabilities.

Why is buying freeholds and developing "running on the spot"?

[ntv] 13/6/2016 21:04

why not, that is the cost of the debt
ordinary share price does affect the balance as the caffyns' pension fund owns a lot of ord shares

[prop_joe] 13/6/2016 20:51

The prefs should not be included in the balance sheet at the most recent buyout price, just as the ordinary shares are not be included at the most recent price they have changed hands in the stock market.

[ntv] 13/6/2016 20:23

not sure remaining prefs have been valued on the balance sheet in the correct way either
because surely they should be valued as a liability at there most recent buyout price because in therory this is the min price holders will accept except we don't know what price the 2m 6% prefs shares could be bought for
maybe a 50% premium
so this would create a liabilty of £3m instead of £2m
without associated costs again

[ntv] 13/6/2016 20:15

but that doesn't grow the company because it is just like running on the spot

[cjohn] 13/6/2016 08:58

Hi NTV,

Yes, you're right. Trading at such a discount to book, it makes obvious sense to buy in their own shares, the blessed preferences included.

I wasn't aware that they were thinking of acquiring dealerships. The modus opreandi seems to be buy freehold property and then develop.

[prop_joe] 12/6/2016 09:55

I would like the company to give their broker instructions to buy any available shares at the current share price which would effectively put a floor under it. IMV it would be a low risk earnings enhancing strategy. Another of my investments appears to be doing this and retiring shares which is benefiting those happy to remain holders.

[ntv] 12/6/2016 09:37

i was referring to possible acquistions
anything bought on a higher pe than about 6.5 will be earnings dilutive straight away unless loads of costs can be stripped
though could be hidden by the so called mkt rent from LR property
buying in its own shares would be a better option but not the skies the limit price, lets make up a price on pref shares like the last one
if as according to the board they are so undervalued surely redeeming the prefs
creates value to the ords boosting the value of those by the equilivant probably
more. board gains as they own most of the shares and so do smaller holders for once

[cjohn] 10/6/2016 10:44

You're right, there can always be more information given in accounts. But it's not difficult for us to work out the effects of the Land Rover sale in any case.

I'm sorry I don't understand your remark re a dealership prepared to exit on a PE of 7 or lower. What are you referring to? Possible acquisitions?

[ntv] 09/6/2016 20:55

hi CJohn
unless they can find a dealership who is prepared to exit on a pe ratio of 7 or lower then they going earnings dilutive
most companies produce a profroma balance sheet and give a breakdown of profits/losses but not old fashioned caffyns with its outdated shareholder structure

[cjohn] 03/6/2016 12:55

Hi NTV, the Land Rover deal completed on the 29th April, after the balance sheet date of 31st March. The annual report is merely a snapshot of the balance on that date.


We all agree the board is grossly self-indulgent. I may attend the next company meeting and ask a few questions.

[3800] 28/5/2016 11:57

It cannot be argued that this a steady as it goe's share but the eye wateringly high board recumeration is a great drag on proformance over the longer term. I'm not sure the value will be outed in my lifetime.
3800

[ntv] 27/5/2016 19:13

strange they didn't show the land rover business in the balance as an asset sold but monies not received as it was a known valuation
the cost £136k above the premium paid seemed a heavy price for buying back the some of the prefs.
i love the way the caffyn family dictates the price paid for the prefs to cancel them and its interest rates paid on the remaining ones
i know it upset one major shareholder.
they talk of expansion but with pref share noose round its neck there is little chance of institutional shareholders joining in.
buying another dealer on a lower rating than caffyns (so as not to be earnings diluting) is just a la la mind set.
still yield is good and asset backing is good. the property let to sainsbury as this increases rental income. that along the rent from the land rover dealership is good news and should part cover finance costs next year

[beazer2] 27/5/2016 09:56

Post year end events show they were turned down on planning for the newly acquired sites at Angmering but counsel have advised them to appeal. Presumably they have a better use for the Audi site at Worthing and if the appeal is successful they will be able to unlock that value. I am still of the opinion that at some stage the Caffyn family will want to sell. Yesterday Marshalls made a big acquisition in the south of England. This share is seriously undervalued, with significant asset backing, and at some stage shareholders will be rewarded. In the meantime a dividend of 3.6% covered more than 4 times is better than anything you can get from a deposit account and means that this is a share you can sleep easy with throughout any market fluctuations.

[prop_joe] 27/5/2016 09:43

Hi CJohn, agreed!

[cjohn] 27/5/2016 09:10

Hi Prop Joe, no, I wasn't including the proceeds from the Land Rover sale. My calculation was for the results date.

And of course, the 5.5m goodwill paid shows value here beyond the tangible. This really is a very under-valued share

[prop_joe] 27/5/2016 08:51

CJohn, have you included any allowance for the proceeds from the Land Rover business disposal in your tangible asset value calculation?
They say in the results that they are receiving £5.5m in respect of 'goodwill'. As goodwill is an intangible asset I take this as being the excess over the net assets being disposed of i.e. the profit on disposal as there are hardly any intangibles in the balance sheet. Adding this in to my calculation I get the current share price to be only around 45% of tangible asset value even after this morning's share price uptick (I also included the off balance sheet freehold property surplus). Great results IMV - better than I expected :)

[cjohn] 27/5/2016 08:32

The future plans include the purchase of 3 parcels of freehold land in Angmering.


96p underlying eps. Rock-solid balance sheet. Debt after the receipt of the Land Rover funds will be around 3 million sterling. (Land purchases will push the debt back up.) Trading at around half tangible asset value, if the off-balance sheet freehold property surplus is taken into account..

[jaf111] 27/5/2016 07:05

Results confirm CFYN the most under valued car dealer......but would have liked some concrete news on future plans post Land Rover disposal.....

[cjohn] 25/3/2016 09:05

Hi NTV, you say that for you NET debt is ALL debt. Forgive me, but you simply haven't understood what NET means!

Go through every company on the stockmarket and according to your way of thinking all companies will be heavily indebted, net!


The total liabilites figure you quote is simply a rough measure of the size of operations of a company. It says nothing about the company's creditworthiness or indebtedness. Think about the total liabilites of Shell for example. You will find that they have billions and billions. Shock horror!!

You are right that last year, the Land Rover dealership did particularly well for Caffyn's, but this year it's a less significant % of profit.

Anyway you cut it, this is a good deal and merely confirms that the Company is undervalued on the market compared to what a private buyer will pay. Bear in mind the company is trading at about half NET tangible asset value (if you include the revaluation of the freeholds). And the buyer has paid a significant premium to net tangible asset value. This sugggests very considerable potential upside.

[ed 123] 23/3/2016 19:43

NTV.

Caffyns balance sheet is absolutely solid. It has a net asset value about 1.5 times its market capitalisation and only £286k of intangibles. Also, the property is conservatively valued. Look at the other listed car dealers, you won't find another one with such strong tangible asset backing.

Edit: Ask yourself, if you were a lender, would you feel safer lending to Caffyns (where you know you will get your money back because of the size of the tangible assets) or Lookers/Pendragon/etc. where they carry substantial goodwill amounts on the balance sheet and you will get your money back if they keep up their earnings and are able to roll over their debts when maturity approaches). Remember back to the global credit crunch (post Lehmans)? Lookers and Pendragon needed rights issues (2009 and 2011 respectively), whereas Caffyns did not. FWIW, I do not see a downturn coming soon for the UK motor trade and all three, imo, should continue trading profitably but, of the three, Caffyns has the strongest asset backing. The corollary of this however, is that Lookers and Pendragon, etc, have much better returns on capital than Caffyns. This, though, would be one of the attractions of Caffyns to any of the larger car dealers. They could strip out the central overheads and work the capital in Caffyns harder.

Also, I must disagree with you on price, the amount they are to receive, while still holding onto ownership of the site is good. This is evidenced by taking the rent off the site profit (which leaves about £760k) and comparing this to the underlying operating profit of the whole group (pre-JLS sale), ie £3.7million. On this basis, Caffyns is losing about 20% of its profit for a price of about £9million. If they could sell the other 80% of profit for this rate, then Caffyns would be worth 5 x £9million or £45million or £16 per share.

I'm not saying this will happen, but there is a strong case to be argued for the value in Caffyns.

[ntv] 23/3/2016 16:43

As part of the terms of the Disposal, and with effect from Completion, the Buyer will enter into the Lease with the Company for the Property from where the Land Rover Business currently trades. The Lease will be for a term of up to three years at an initial rent of £490,000 per annum for the first two years and £390,000 for the final year. There will be a tenant-only break clause exercisable at any time after 18 months by the Buyer giving to the Company six months’ notice, such notice not to expire before the date which is 24 months following the commencement of the Lease.