Caledonian Share Discussion Threads

[profdoc] 03/4/2017 10:08

Hi Rhomboid

After a number of conversations my conclusion is that both directors do not want to work through another property downturn. I cannot be completely certain, but my impression is that the current plots will either be sold as-is or, more likely, built on and then sold. Cash will accumulate. It will be paid out in dividends until there is little left. But this process will take time. Edinburgh has only just got going again. The directors are quite slow at realising value but they will get there in the end - hopefully most of the sales will take place in the run-up to the next boom.
Why the "premium" label - can't we open this up?

Glen

[rhomboid] 01/4/2017 18:45

Hi profdoc
Can't argue with the scale of undervaluation here, my concern is how the upside is unlocked, do you have a sense for where Mr Lowe is intending to steer the company as he's now an octogenarian?

[rhomboid] 30/3/2017 15:47

Well I managed to buy some at 94p , but this is ridiculously illiquid, I got filled for 2k & then the price popped up into the close. I'll buy more when everyone falls asleep again ..

[papy02] 20/2/2017 09:25

Any views on why the drop on fri? I didn't view the rns at that dire? Does the delay on the 2 semis knock on to other things maybe?

[spob] 16/2/2017 10:15

Hopefully no management buyout or cheap bid to steal that value from us.

[cjohn] 15/2/2017 09:16

Yes, and pre-Brexit nerves created a truly spectacular buying opportunity. Despite the rise since then, these are still significantly undervalued.

[spob] 31/1/2017 08:18

Started this thread because the only active one is a premium thread.


I understand there is significant hidden value on the balance sheet here, far in excess of the current market cap of 13m.

It all comes down to accounting rules which show assets at the "LOWER" of cost or realisable value.

Basically we have assets/properties with planning permissions that are now worth far more than as shown in the accounts.

Please DYOR etc etc

[spob] 31/1/2017 08:02

110.5p mid, Mcap 13m, Nos 11.8m








1 year






All data










Douglas Lowe, Chairman and Chief Executive, Date of Birth 24/03/1937 (age 82) Shareholding 79%

Michael J Baynham, Executive Director, Date of Birth 09/10/1956 (age 63) Shareholding 6%

[profdoc] 16/1/2017 10:14

Huge Pants,

I agree that the St Margaret's land is worth a lot. I wrote a Newsletter on the valuation of the property (part of a series of three). Here is some of it - I would value your observations.

In this Newsletter I’ll try to value the plots, houses and offices owned by the company. Such an estimate is fraught with danger. Indeed, individual asset valuations shown below are bound to be wrong (by a large margin in many cases), so do not take them too seriously, but I hope that in averaging-out we have a reasonably accurate minimum value of the company’s assets.
I think these are conservative assumptions (as I understand commuter belt houses around Edinburgh sell for £200 - £250 per sqft,). For the assets listed in the table I have made a very rough and ready estimate of value based on the following notions:
• Plots, barns with permission to build or convert, or offices already built, are valued at £80 per square foot. For Edinburgh office space unbuilt but with planning permission £40 per sqft. That is my guess of what they could be sold for (on average) as plots or unconverted farm buildings (more value might be available if CNN undertook the build and then sold as completed houses).
• Planning permission applied for but not yet achieved is valued at £10 sqft of house space.
• Land is valued at £10,000 per acre. Bear in mind that I have not allowed for any success in persuading councils to include acres of farmland in local plans, e.g. the 200 acres at Gartshore where “proposals have been prepared for a village of several hundred cottages and houses together with local amenities, all within the existing landscape setting”. If these proposals are accepted then the value of the company becomes a multiple of its current MCap. - a real bonanza.
Those sites with planning consent Estimated value in June 2016: £80 sqft for consented, £10 sqft if without consent

St Margaret’s House: Currently 92,000 sqft offices + 168 parking spaces. Market rental £0.5m pa. PP for flats for sale, and/or private rented flats and/or students and/or offices (231,000 sqft). Also “Part of the site is ideal for an hotel”. 2016 Report: “the Company intends either to develop or undertake a joint venture development of St Margaret's or, if suitable offers are made, to realise its value” My valuation: £7.4m

Brunstane Home Farm: 1 cottage built (£0.3m) + pair of semis built (2,850sqft, £0.8m) + PP for 10 houses, of which 5 nearly completed and 5 scheduled to start build soon (14,648sqft) + Georgian steading + rundown cottage + detached stone building with consent for conversion and extension (3,226 sqft) + Proposals for a two-acre site, “have been accepted in principle” for 18 new-build houses (21,923 sqft) + “lodged a planning application for an extensive residential development”. 2016 Report: “I expect the sales value of this Horsemill refurbishment and the new Stackyard [the 10 houses, I think] to be around GBP4.5m.”
My valuation: £0.3m + £0.8m + £4.5m minus £1.3m build costs of 5 houses + £0.5m + £0.1m + £0.3m + £0.2m + ? = £5.4m

Wallyford: PP for 6 detached + 4 semis (12,496sqft)
2016 Report: “Given these greatly improved circumstances I expect to continue the development of our ten houses next year.” My valuation £1m

Belford Rd: 22,500sqft of offices + 21,000sqft for 20 flats
2016 Report: “we will seek to commence the development with a value in excess of GBP10m next year.” My valuation: £3.5m

Dunglass: PP for 48 house plots.
2016 report: “We intend to build a few houses there in order establish demand, … I expect the results will allow us to develop the whole site, but at a modest build rate.”
Possibility of another 30 houses: “the ground conditions, which initially appeared to preclude development, may be remediated”. My valuation: £3.8m

Hazeldean: PP for 28 house plots My valuation: £2.2m
Chance Inn: PP for 10 houses (21,836sqft) + farmhouse + 11 paddocks My valuation: £2.3m

Carnbo: PP for 4 houses (7,900sqft) My valuation: £0.6m

Strathtay: 4 houses + mansion (16,851sqft).
2016 Report: “Work is in progress to move services to permit the formation of entrances onto the public road in order to allow marketing of the two large house plots [worth £0.5m].” My valuation: £1.3m

Myreside Farm: PP for 5 houses (8,531sqft) My valuation: £0.7m

Larennie: PP for 9 houses (19,325sqft). 2016 Report: “a start will be made to the development in order to endure the consent which currently expires in April 2017” My valuation: £1.5m

Ardpatrick: More than 10 houses My valuation: £1.2m

Tomperran: 30 acres + farmhouse.
PP for 25 houses (33,912sqft) My valuation: £3m

Those without planning consent.
Gartshore: 200 acres + 20,000 sqft of buildings.
2016 Report: “proposals have been prepared for a village of several hundred cottages and houses together with local amenities, all within the existing landscape setting. This development would complement our separate proposals for a high-quality business park, including a hotel and a destination leisure centre, all situated in mature parkland. Discussions with East Dunbartonshire Council continue.” My valuation: £2m

Frithfield: 12 houses (20,326sqft) My valuation: £0.2m

Nydie (3 miles from St Andrews) “Proposals will be prepared for 7 houses over 10,000sqft.” My valuation: £0.1m

TOTAL £36.2m

Property value plus other assets minus all liabilities £36.2m + £0.27m - £4.3m £32.17m or £2.73 per share

I estimate the hidden value in this company to be so large as to make the real net current asset value around £32m or £2.73 per share, compared with the current share price of 96p. The shares were last above £2.40 at the end of the last property cycle upturn in 2007.

[hugepants] 15/1/2017 19:35

prof,
There is a bit more info in the accounts on these assets. I'm fairly confident these guys are prudent in their accounting and at the end of the day unless assets are in cash there will always be some doubt as to the precise value.

I walked passed CNN's main investment recently, St Margaret's House in Edinburgh. It's a substantial property well located just outside the centre. It must be worth a few bob.

[profdoc] 12/1/2017 10:26

Hugepants,

I've taken a quick look at RMA. I note the reported NAV of £104m, but worry about the make up of the assets.
There is a lot of flexibility in valuing the following:
"financial assets measured at fair value £49m"
"Available for sale investments £21.7m"
"Goodwill £11.3m"
A lot of caution required
Glen

[hugepants] 11/1/2017 20:05

It doesn't take much to shift this. Very difficult to buy in decent quantity without moving the price.

prof have you looked at RMA as a possible investment? It looks miles too cheap currently being valued at 0.3 of book value. They are currently trying to sell £20M of private equity which, when complete, should re-rate the shares.

[hugepants] 29/12/2016 22:34

prof, Yes its not been too busy here. 4 posts in 3 and a half years!

I just like buying cheap assets and as you say there is hidden extra value here with planning consents and development possibilities not being shown in the NAV. And its interesting the NAV has hardly changed over the last few years whereas the share price has fallen markedly.

Property prices are certainly heading north in the Central Belt. My Glasgow flat has risen by 15% in value the last couple of years after several years of stagnation.

[profdoc] 29/12/2016 11:23

I'm pleased you are interested in this one HugePants. It's been quite lonely for the past three years, but I think will get a reward fairly soon as the directors create cash from all those assets - fingers crossed that the Edinburgh/Glasgow property market continues to rise.
From my conversations with them I conclude they are not interested in buying property again (they are getting on).
So it is either large dividends and winding up, or being bought by someone interested in those plots with permission and the landscaped acreage
Glen

[hugepants] 28/12/2016 09:47

Agreed a 40% discount to net asset value is excessive even with the majority director shareholding.

24th December


Profits down but forecast positive at leading trust

CALEDONIAN Trust chairman and chief executive Douglas Lowe has said the company is ready to take advantage of a “stable” housing market in the central belt, after pre-tax profits collapsed 80 per cent to £105,000.

Profit per share fell to 89p from £4.79, and the net asset value (NAV) per share was 153p compared to 152p following the sale of one property and remaining assets increasing in value.

In a lengthy commentary to the property developer’s accounts, which quoted Shakespeare and the Greek poet Archilochus, Mr Lowe heavily criticised forecasters for their “fallibility” and subsequent impact on inflation targets, fiscal balance sheet and the fallout from the Brexit vote.

etc

you need to subscribe for the rest

[profdoc] 23/12/2016 12:36

They are finally building and selling.
From the Prelims: "A major component of the Group's site development value lies in securing planning permission, and in its extent, ...... For development or trading properties, unlike investment properties, no change is made to the Group's balance sheet even when improved development values have been obtained. Naturally, however, the balance sheet will reflect such enhanced value when the properties are developed or sold......... The mid-market share price on 21 December 2016 was 85.5p, a not insignificant discount to the NAV of 152.88p as at 30 June 2016."

The NAV shown in the BS fails to reflect the true value now that so many planning permissions have been granted.

[profdoc] 23/6/2016 11:31

Look's as though we have had a classic "tree shake" from the market makers over the last 24 hours. Or does someone have any news on the underlying business? Glen

[profdoc] 16/5/2016 08:58

Wrong company?

[thomasthetank1] 13/5/2016 11:33

Read Beaufort Securities's note on CALEDONIAN TRUST PLC (CNN), out this morning, by visiting hxxps://www.research-tree.com/company/GB0001628584

"Caledonia’s financial and operating results for the first quarter of 2016 look promising despite the low realised price of gold. The company was also successful in reducing the fixed cost per ounce of gold produced. Moreover, the projected increase in production in 2016 is expected to result in improved cash generation due to higher sales volume and lower costs per ounce of gold, as fixed costs are spread over more gold ounces produced. The higher gold price, if sustained, will further enhance cash generation. Meanwhile, the company remains on track to implement the Revised Investment Plan at the..."

[profdoc] 31/3/2016 11:33

Nice to see the extra value created at St Margaret's. The property upturn will come - eventually

[profdoc] 19/1/2015 10:30

If anyone is interested I set out an analysis of Caledonian Trust a couple of weeks ago on my Newsletter ( and explained why I bought some more.
I'll attend the AGM next week and report back.
Glen

[finbarr] 07/1/2009 14:55

just read chairman's statement.Wow!