Caffyns Share Discussion Threads

[cjohn] 04/6/2021 19:07

The results were surprisingly strong with Basic EPS of 52.4p per share, putting the shares on a PE of 8, in spite of sales down from £198m to £165m.

Bank debt was down from £16.2m to £10.3m, with strong free cash flow. PFCF of around 1.6!!

Based on the balance sheet, tangible book value was £27.6m, so the shares are on a PTBV of 0.42. However, this doesn't include the off-balance sheet revaluation surplus from their freehold properties of some £12.3m. So a total TBV of about £40m, putting the shares on a PTBV of about 0.29.


These are really cheap and a bid would be expected, if the Caffyns' family didn't have de facto control over voting through preference shares.

[this_is_me] 02/6/2021 06:51

Our freehold premises in Lewes remain leased until 9 June 2021, to the purchaser of our former Land Rover business, which was sold in April 2016. The board continues to evaluate future opportunities for the site.

[cjohn] 17/2/2021 15:41

Good spot, Strathroyal and thanks for passing on the information.

[strathroyal] 26/1/2021 16:34

I see that the Land Rover site at Lewes which has been Under Offer on the CBRE site for what seems like months has finally been removed from their website so hopefully the sale has now completed.

[cjohn] 02/12/2020 11:47

Hi itx, of course, you're right that interest rates could go down even further.

However, at some point in the next few years, the chances are much better than not that interest rates will be significantly higher than the current ultra-low rates. A 1% rise in the discount rate - not unlikely - would eliminate the deficit.

The size of the pension fund and associated liabilities would definitely be an off-putting complication to any takeover, irrespective of whether the fund's in deficit or surplus.

I've tried to find a previous discussion on here - a few years back - about the voting rights of the preference shares in such a situation. From what I remember, they do get to vote on some sorts of takeover, others not.

I wonder if there is any chance of a change in use of the Land Rover site. I took a look on google maps and the site is not far from a residential zone. Perhaps someone who knows the town might comment.

[strathroyal] 30/11/2020 12:49

Very interesting at the moment, I was offered 305p to sell last week, 410p two minutes ago!

[clemo69] 30/11/2020 12:38

MMs still don't have a lot of stock... I'm very surprised given the big rise already

[clemo69] 30/11/2020 12:31

Boom there you go jaf111

[1tx] 30/11/2020 12:11

The reason I mentioned the pension fund is not just the deficit which is not vast in terms of Caffyns assets;but rather the size of the fund @ presently £90m which is huge.Very low interest rates have magnified potential liabilities of defined benefit pension funds because they are measured against the yield on "blue chip" bonds even though pension funds have a balanced range of investments and in reality these earn a higher return.The funding presently being put into the plan,about £500k plus costs, is probably enough to fund it but whilst the headline shortfall remains I think a return of capital will be limited to reasonable dividends based on profits.The interesting event next year is the future of the Lewes Land Rover site which is rented to Harwoods
and is due for lease renewal next year.Will they renew or not.If not will it be sold or if they do renew will it be retained for investment or sold on to another investor.It is a valuable site.Finally with regard to the pref shares although on paper these could block a takeover,under Stock Exchange listing rules a buyout of ordinary shares cannot be blocked by pref share votes.....Truthfully I don't see a takeover as very likely however.

[cjohn] 30/11/2020 10:35

coolen28 Nov '20 - 18:04 - 597 of 600

To what extent, if any, might the Pension Fund deficit alter were the family to transfer to the Fund their 2 million 6% Preference Shares ?






According to the balance sheet the preference shares are worth £812k. So the simple answer is it wouldn't make much difference. (Maybe, they'd be transferred at a premium to book value, in view of the attached voting rights and healthy coupon of between 6 and 11%.)

In any case the family are never going to do that, because the preference shares complicate - may make almost impossible - any takeover approach, and they want to retain control.

Likewise, the family, like us, can see that the deficit will shrink significantly, if and when interest rates rise a little. Each 0.1% rise is the discount rate reduces the deficit by £1.4 million. It's worth pointing out that at the FY balance sheet date, the pension fund had £81 million in assets. (That value has increased since then.) So the current deficit is not enormous in percentage terms.


(It's ironic that giving up the preference shares might well be a catalyst to a much higher share price, which would benefit the family like other shareholders.)

[clemo69] 30/11/2020 09:40

Nice director buy at 3.90

[jaf111] 30/11/2020 09:14

so why don't they increase the price then to attract sellers??????

[clemo69] 30/11/2020 09:00

Mms massively short of stock at the minute

[coolen] 28/11/2020 18:04

To what extent, if any, might the Pension Fund deficit alter were the family to transfer to the Fund their 2 million 6% Preference Shares ?

[cjohn] 28/11/2020 12:36

These were really excellent and surprising results, 52.3p eps basic, in spite of COVID.

If they could repeat that in the second half, at 350p, they'd be on a PE of 3, PTBV of about 0.3, including the off-balance sheet property surplus.

Absurdly cheap.

In view of the first half, it looks like they may well ride the COVID 2nd wave; it won't be a knock out blow, in any case.

But there is political uncertainty regarding Brexit import arrangements, which could be another serious short-term hit.

The pension deficit doesn't seem to me to be a major negative. Quite modest improvements in the discount rate would make the situation much healthier, and asset values have continued their recovery since the 30th September results date.


I first bought these shares about 5 years ago, when they were in the low 500s and have gone on buying since at lower and lower prices. One of my worst investments!

[1tx] 27/11/2020 14:03

NAV is about £12.50 per share including revaluation surplus not included in accounts.The company has a fairly large historic defined benefit pension scheme this could be expensive to buy out and the company could be restricted by pension trustees in returning capital to shareholders until the pension plan is bought by an insurance company,the cost of a buy out could be substantial.
Andrew Perloff the biggest shareholder a well known property investor must see value however.
I am a shareholder here for some years perhaps the best return might be by getting better use of capital in present business operations.

[clemo69] 27/11/2020 13:50

The NAV value is £11.5m understated due to the property undervaluation. Never seen such an under valued share as this one.

[spob] 27/11/2020 11:36

I doubt the nav figure reflects the true value of the freeholds anyway

[mortimer7] 27/11/2020 09:55

Very good trading performance under the circumstances, but the Pension deficit undermines it. NAV down 8% YoY because of it.

[rightnellie] 27/11/2020 09:54

Impressive results considering the impact of Covid. As car companies go a pretty safe undervalued investment. Shame the spread is so ridiculous

[spob] 27/11/2020 08:47

with all that cash sitting around I wouldn't be surprised to see a juicy special dividend next year to make up for the skipped interim payment

[spob] 27/11/2020 08:44

not too worried about the spread

as I won't be selling any

maybe one day someone will buy them from me

[clemo69] 27/11/2020 07:51

Wow wasn't expecting those results!

EBITDA 3.218m
Cash at Bank 5.273m
Cashflow 4.379m
Market Cap 8.3m

Thats without the property surplus of 11.8m!!

[scepticalinvestor] 27/11/2020 07:33

*investible