Caffyns Share Discussion Threads

[clemo69] 07/7/2017 08:29

Coolen - Putting the above into simple language. Can the prefs stop a takeover? Say a bid of 30mil came in could the pref holders ask for 10mil say or we won't vote it through. Could the bidder just say to the preferred holders well your getting 1 mil and thats it. What sort of power would the pref holders have in your opinion??

[cjohn] 05/7/2017 09:33

Thanks Coolen for the informative post.

[coolen] 19/6/2017 22:18

Re the voting rights in a bid situation, in my personal view:

(1)The family held prefs are fully enfranchised were there to be a take-over bid;

(2) A bid for the Company would not be "Class 1" transaction, unless it arose out of a complex merger or similar.

To gain control, a bidder would first need to negotiate a price for the family prefs. In conjunction with that, the Panel would demand an "appropriate" offer be extended to the Ords.

In practice, any bidder will need to sit down with the Panel in advance to agree how the Offer should be split. If both parties ignored the Takeover Panel it would be a unique situation.

In assessing the voting rights in a bid situation the order of priorities is:
1. The Company's own Articles of Association;
2. Company law generally;
3. The rules of the Take-over Panel.

Ironically, the losers in the event of a Bid would be the 7% First Preference shareholders. Under the ridiculous Panel rules, non-voting prefs can be ignored in a bid situation, leaving them at the mercy of the new private owners. This rule causes much anger amongst specialist fund managers.

[sirhedgealot] 19/6/2017 13:12

If you stay invested for five years maybe they could award preference shares so the main stock holders can make money too. :P

[orinocor] 06/6/2017 08:20

hxxps://www.thesun.co.uk/motors/3458353/fears-of-uk-car-financing-industry-crash-as-claims-surface-of-loans-mis-sold-to-poorer-customers-who-cant-afford-to-repay/

Are Caffyns exposed to this?

[3800] 29/5/2017 12:04

Hi brwo, if you look back on this bullitin board to post 121 a poster with the user name Simon Templar QC who mounted a legal challenge, the details can be found in the RNS link which is included in the post. I'm not sure if he still has any holding or even if he is still alive.
3800

[brwo349] 28/5/2017 20:56

Well on looking in more detail at the prefs I've discovered the 2 million 2nd preference shares cannot vote on any resolution to delist the shares of the company or transfer the shares to another listing status. Only the premium ordinary shares can vote on that. This is very important to the investment case here and makes the shares much more attractive. These prefs pay an extremely small coupon and I question if they have much real value. Muckshifter is sceptical they can block a take-over and I tend to agree but I've no hard evidence as yet. Has anyone tried contacting someone at the company on this issue?

This is a stunningly cheap stock. How does it compare with other stocks in the sector?

[brwo349] 26/5/2017 15:15

I took some earlier but I need to take a closer look at the accounts over the week-end before taking a bigger position.

[jimblack513] 26/5/2017 14:39

That's completely wrong WJCCGHCC. The pension deficit has been accounted for, the property uplift has not.

[wjccghcc] 26/5/2017 11:47

You'd have to knock the pension deficit off that amount + quite a bit if they wanted an insurer to buy out the pension fund so pension normalisation would take more than the 10mm property uplift IMHO.

[jimblack513] 26/5/2017 11:03

You need to view the annual report on www.caffynsplc.co.uk

[brwo349] 26/5/2017 10:24

Where does it say the properties are freehold? All I can see is the unaccounted for £10M upward valuation but no mention of the total value of the freeholds.

[jimblack513] 26/5/2017 10:10

LOL on doing more research the question is is this a car dealership or a property company? Caffyns have booked 42 million pounds of property assets, which are of the freehold variety. That's not all because --

''Property portfolio revaluation as at 31 March 2017 showed a £10.1 million surplus to net book value (not recognised in the accounts) '''

That is 52 million pounds of property and the net asset value per share, with the property uplift, of £13.80 per ordinary share.
Whereas the share price of 515p the m/cap is not even £14 mill

basic earnings 58p
good yield in times of non-existent savings rates

what are the forecasts for next year?

[ed 123] 26/5/2017 09:16

Thanks, JAF111. :-)

Also, thanks, CJohn. Yes, holds some promise. :-)

[cjohn] 26/5/2017 09:09

Preference shares are a form of debt and are therefore a liability. They are to be found in non-current liabilities.

[cjohn] 26/5/2017 09:07

Hi Ed 123,

the board at Caffyns is always cautious!

But I humbly take your point. They did do better in the 2nd half than the first. And there has been the uncertainty as to the impact of Brexit and the Volkswagen scandal which in the end hasn't affected trading that badly. As the VW scandal is dealt with, mmargins will rise at the service business, even if turnover dips a Little.

Personally, I was expecting results like today. The rise in the size of the used car parc was bound to filter through into greater profitability from services. And the first half used car performance was itself very good.

Overall quite promising. If and when interest rates trend up, there will also be yet better news from the pension fund, where the déficit shrank 3 million in the half year.


all the best

[ed 123] 26/5/2017 09:06

Yes, Jimblack513, that's my understanding too.

[brwo349] 26/5/2017 09:05

how much are the property assets worth then?

[jimblack513] 26/5/2017 08:59

I've just looked at this and trying to get my head round the preference shares.

Although the Articles of Association of the Company give the directors discretion to only pay the preference dividend if they consider there are adequate profits, such dividends are cumulative. For this reason, the directors consider that the preference shares have the characteristic of a financial liability rather than equity, and consequently the preference shares are included as a non-current liability. None of the preference shares have rights of conversion or rights to capital repayment.


To me that means the preference shares are accounted for in the balance sheet and the market cap is £14.8 million

[jaf111] 26/5/2017 08:56

Exactly Ed (again!)

...and not just the last ints...we have had several years of very pedestrian performance and I had thought that Land Rover had been the mainstay.

[ed 123] 26/5/2017 08:45

Hi CJohn.

I may have missed some guidance? What guidance do you refer to?

My last steer was the interims, released on 24 November 2016. That revealed new car sales up 2.2% lfl and used car sales up 11.8% lfl. That compares to the full year new car sales up 9.3% and used car sales up 15.9%.

So, the second half must have been very strong - whereas the outlook in the interim report said, "... the Board remains cautious for the second half of the year ..."

That's why I said, "... better results today than I expected ..."

[cjohn] 26/5/2017 08:14

I'm surprised you guys are surprised. We already knew about the property surplus and guidance had suggested the decent increase in profitability.

These still look stonking value on asset grounds and decent value on earning grounds.

[jaf111] 26/5/2017 07:43

Likewise Ed!

[ed 123] 26/5/2017 07:31

Sirhedgealot/JAF111

Yes, better results today than I expected, too.

It's a share I'm happy to hold. Pays out a good dividend and enough tangible assets per share to get through any downturn. It survived the 2008 credit crunch without a rights issue when other motor retailers had to go to their shareholders for additional funds.

The uncertainty for me is whether I'll live long enough to witness the outing of that £13 per share NAV. ;-)

[jaf111] 26/5/2017 07:19

Surprisingly good results from CFYN.....

Underlying profit before tax up 40% to £2.05m

Property portfolio revaluation showed a £10.1m surplus to net book value

Still have a holding since it has considerable attractions but not holding my breath for any significant change in rating.