In earlier newsletters we established that Caffyns’ (LSE:CFYN) net current asset value is between double or treble the current market capitalisation (assuming properties are current assets and there is no need to write down the value of its stock of cars for sale). We’ve also seen a big improvement on the balance sheet, financial distress risk and potential to pay off almost all bank debt with a single asset sale. Today we turn to its profit history.
Profit after tax and earnings per share 2012 – 2021
Reported profit after tax (including the “non-underlying” negatives and positives) £‘000 | Earnings per share | |||
2021 | 1,424 | 52.4p | ||
2020 | -252 | -9.4p | ||
2019 | -566 | -21p | ||
2018 | 1,030 | 38.2p | ||
2017 | 5,123 | 186.3p | ||
2016 | 2,487 | 90.1p | ||
2015 | 9,255 | 335.5p | ||
2014 | 1,411 | 51p | ||
2013 | 1,289 | 46.6p | ||
2012 | 1,416 | 51p | ||
Average earnings per share | 82.1p |
The cyclically adjusted price earnings ratio at my buying price of £4.65 is 465p/82.1p = 5.7. But we need to scrutinise the components of the earnings.
For example, the 2015 result deserves a special mention: most of that £9.255m profit was a result of pension rules changing (so that future pensions could rise by only the RPI rather than the CPI) – it is a true one-off.
The 2019 earnings number was greatly affected by impairment charges on two properties (£945,000). Also there was a negative £572,000 exceptional charge mostly caused by a one-off expense for equalising pensions (a countrywide imposition on companies).
If I correct for these distortions, remove true exceptional items and take away the profits made on property I arrive at earnings coming solely from the operating business (including rent collected on properties).
Method 2. Stripping out the one-off elements and separating the operating income from the property development capital gains.
Year end
(in March) |
Profit from selling cars and rent, £000s | Earnings per share from selling cars and rent | ||
2021 | 1,571 | 58.3p | ||
2020 | -252 | -9.4p | ||
2019 | 952 | 35.3p | ||
2018 | 1,030 | 38.2p | ||
2017 | 1,284 | 46.7p | ||
2016 | 2,525 |
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