Caffyns - A look at earnings

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   82.1pThe 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………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1