Caffyns - The property side

PUBLISHED: Jul 28 2018 @ 05:57 | Comments (0) |

Caffyns (LSE:CFYN) operates from 13 locations selling and servicing cars from seven different manufacturers. It holds the freeholds of large plots in towns south of London, therefore it has valuable real estate. The book value of property stated on the balance sheet has been understated for years. Each year the annual report tells us that property experts have been called in to revalue the estate. For the March 2018 revaluation the directors tell us that the BS value understates the position by £10.3m.

The table below shows the estimated market values of the property held. It also shows the considerable sums being spent to enhance the property assets – over £5.5m in the last year (mostly on the £3.9m spent on the 3.7 acre Angmering (Worthing) site. The Audi dealership is moving from its current location – resulting in another plot being released for development.)

£000s	March 2018	2017	2016	2015
Balance sheet value	37,099 (including assets under construction)	32,490	34,932	34,600
Revaluation exercise: excess over BS valuation	10,300	10,100	9,500	8,490
Additional property held in separate “investment property account”	6,893	6,986	1,167	0
Sums to TOTAL	54,292	49,576	45,599	43,090
More information:
Additions during the prior 12 months	5,545	3,924	2,367	2,412
Disposals in prior 12 months	43	0	1,148	1,623

There is an impressive gap between the company’s market capitalisation, £12.1m, and property assets of £54.3m.

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

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