Chartists may like this one - albeit I prefer facts, which is what you get every 6 months in Chairman's comments. Have held for several years, as I like to hold for the longer term small/medium businesses with tangible assets, good track record and paying dividends. Downside is lack of liquidity (family control over 50%). Steep recent rise on back of good results but could be more to come. Market cap now just under 30M, looks fair for a solid timber merchants business (been around since 1750!)which made 3M pretax in year to 3/2004 and current year has started well. Modest gearing. Yield 3%. Interesting bit is its former depot on which planning for mixed residential/commercial development recently received on Appeal after a long battle. With the company not needing the cash from the sale there could be a bumper one-off dividend. Anybody care to guess approximate value of just over 13 acres development land in Clapton?

Partridge

Do you know where i can get details of the planning - is it on their website if so whats the address. Do you know if the whole site is 13 acres or the developable area is 13 acres. If I can get this info I can probably put a avlue on the land (i have worked for housebuilders as FD for a last few yrs)

Finals penultimate paragraph : - although the current year ----------

Planning permission issue is exceptionally complex e.g.so many variables.
Therefore,it is impossible to value within reasonable parameters of accuracy.

Fundamentalist - website is lathamtimber.co.uk. No real details and family control means they only release what they have to - read Chairman's comments with results/interims and you will get the drift.Perhaps he is a Yorkshireman (hear all,see all, say nowt etc..). Whole site is 13 and a half acres, so there will no doubt be green areas and affordable housing to accommodate present requirements. Do not know the site, but suspect it must be in a generally heavily built up residential area, which is no doubt why they wanted to relocate - incidentally relocation site bought freehold outright. Abbie2 - agree it is complex, but I haven't a clue whether value overall may equate to a couple of hundred thousand per acre or a couple of million, hence the request. I will hold for the ride in any event (and the underlying fundamentally sound business).

Holding correct as city has low valuation priced in.High - good planning
permission- valuation = price rise:presuming other factors remain constant

I think it is millions for the p/p portion.

I would expect land with residential planning permission to be worth in the region of 1m per acre (with a tolerance of 20% either way depending on the site) in this neck of the woods though this price is likely to only be applied to the developable acreage. If i can find better details of the site i will try to give a btter valuation

Thanks - very helpful - no need to bust a gut on it. At say 5 or 6 million it would represent around 20% of current market cap, believe it is in the books at about 1.6M. Looks as though recent price rise is justified, but perhaps not a lot left until sale price determined. Taken several years for them to get to this stage, so a few more months patience/negotiation may be rewarded.

If you want to see the full plans go on to Hackney councils web site. There
are going to be over 600 dwellings got to be worth over 10 million especially
when you think of the wharf aspect and it cost over 3 million for the new site
plus all the costs of moving. Could now be taken private

Good news, thanks poacher. Never expected to lose any sleep on this one, although didn't think it would provide much excitement either! With their long history, hadn't considered possibility of going private, but with net assets (and real assets you can touch) exceeding market cap by some margin that may well come into play.

poacher45 great work but do you not think a major factor in the equation is
how to value the low cost housing aspect plus the effect it will have on the
remainder.Snobbery is not in my dictionary but unfortunately many people will
only buy what they term exclusive in an area that excludes low cost housing ?

All big developments these days have to have social housing. However this gives
a bigger density of dwellings on the site. So either way you will still get the
same price.For a flat in Fulham 350,000 minimun here perhaps 180,000-200,000
First time buyers cannot be fussy.

All seems very quiet, perhaps affected by Countryside manouevring to try for MBO (they are buyers at Clapton). Poacher - do you have any details of the planning application as I got lost on the Hackney Council website? (ref no or street address?) Thanks.

Hi Guys, dont mean to upset the party but if you go onto the Motley fool site Pauly Pilots Cafe there is everything you want to know about this land and its likely value.

You will have to do a search though as it appeared about 2 months back.

cheers GF.

Thanks - as an ageing investor, one BB has so far been enough for me to cope with, but now sufficiently confident to try a second!
Regards

Land value is always tricky, the most common way to work out a value is to think in thirds, one third is the price of the land, one third is the build cost and one third is the profit!

A bit more tricky with multiple plots and multiple uses but a good guide.

This is the piece I spoke of earlier lifted from the Pauly Pilot Pub On The motley Fool. Applause should go to the author Carmensfella for his excellent article.

MONEY HIDDEN UNDER THE FLOORBOARDS.....

Or hidden within the company that makes them would be more appropriate or at least a little value to come from the sale of one of their old woodyards.......

I am often asked if I have another company that I think is undervalued in the same way that I felt so confident about Ben Bailey all those years ago.....I wish they came along in threes like the buses but this one in my opinion is a very interesting short term play on the value of a rather large piece of land and the company name is James Latham

They reported their annual results here......


ttp://www.uk-wire.com/cgi-bin/articles/200406250730021295A.html

First of all, for those with an unaccountable fascination for what the company actually does, they are timber importers and distributors. Their website can be found here...

http://www.lathamtimber.co.uk/

You will find a short paragraph about the planning consent regarding the land in Clapton, London at the end of the introductory statement. This is a very longstanding family firm and they do not get too excited about anything but I am sure they are pleased that the consent has finally come through after five years.


If you want to get a feel for the company and it recent performance the Chairman's comments on 2004/05 was as follows...

Sales for the first three months, namely April, May and June, of the current financial year have started well and are comfortably ahead of the same period last year.

Towards the end of the 2003/04 financial year, the prices of some panel products increased substantially. This has continued into the current year and is, at least in the short term, enhancing gross margin.

Although the current year has started well, timber importing and distribution remains volatile and we are mindful of the effects that world demand and the UK economy have on our trading.

So pretty good outlook there then but I am not necessarily suggesting a long term play here.The Diluted EPS has come out at 40.7p. This is favourable against the only forecast, by Credit Lyonnais, of 36.6p, bettering it by over 10%. CL forecasted a dividend of 17p against an actual outcome of 18p, again usefully ahead. I would guess that broker upgrades for next year were a near certainty.

I make the NTBV about 26.7 million, versus a market cap. of about 23.4m at the mid, therefore at a discount to tangible book value.
Net debt was 4.2 million, which is slightly down on last year's 4.6 million.

There is a pension defecit and I am no expert on this so I expect others to do careful research on how the defecit will be covered in future years.

The net profit before tax of 3,029,000 was a substantial increase on the previous year, which was affected by exceptional costs, and was achieved despite the Company paying 474,000 more in pension contributions. The pension contributions look set to continue at a high level for the foreseeable future.



So lets look at the statement regarding the money under those floorboards.......

In December 2003, the planning application on our Clapton site went to Appeal having been refused by the London Borough of Hackney. Confirmation was received on 23 June 2004 that the office of the Deputy Prime Minister HAS granted planning consent. Our appointed professional valuers have now begun to negotiate the current market value of our Clapton site with the buyer's agents. A further announcement will be made when agreement is reached on the value.

To get an idea of the scale of the development, have a look here...

http://www.london.gov.uk/mayor/planning_decisions/2002/april_25_02.jsp#latham

which states...

Latham's Yard, Clapton
A mixed use re-development providing business/light industrial/storage units; office units; 622 homes; 79 live/work units; community facilities; retail type uses; with 577 car parking spaces.
London Borough of Hackney


I have researched this one in great detail and attempted to achieve a fair valuation of the Clapton site which Lathams are now in a position to sell with all consents in place to Countryside homes

It is important to have a feel for the site which is 5.3 hectares/13.5 acres and is in two parts with river Lea frontage to both. There is already a residential development which is about thirty years old in between the two sites all the way along the river in the appropriately named Riverside Close. I have spoken to owners of those properties who are naturally keen to see the old timberyards change into a trendy development so adding value to their property. The one beds and two beds in Riverside range between 130 and 160k.

There are schools nearby and other useful amenities but some road improvement works and access measures will be required . I have spoken to local estate agents ,surveyors , commercial land agents, Hackney planners, and other housebuilders.......the site is well known as very few of this size come available in London. The majority of the 2012 Olympic bid sites and village are within 2.5 miles.


The planning consent has barely changed from the original proposal except that there will be no 12 storey tower and the Deputy PMs office have stated that 43% of the homes should be affordable housing .....Hackney wanted 50%. It is a mixed use development of which I have absolutely no expertise .... retail, office, commercial and light industrial are just not my thing but only about a sixth of the scheme is devoted to it so I am not too concerned about that in my figurework.

There will be 622 one and two and three bedroom homes and 79 live/work units.... the term "Live/work" describes accommodation that is specifically designed to enable both residential and business use. It differs from ordinary home working in its nature and in the intensity of business use that may be involved. They are very popular and are ideal to assist planning applications where the loss of previous employment from the land may be of concern.


I am going to concern myself with the value of the land based solely on the residential development and allow the other parts of the scheme to be bonus value and also balance any cost of clearance of the site that may be cosidered by a valuer to reduce value as the site is not currently ready for build out.

Lets first though take a close look at Countryside Homes who after all Latham have to agree the price with and who through their own valuer will be hoping to pay as low a settlement figure as possible. Countryside specialise in urban regeneration schemes and mixed use developments are not new to them. They work closely with Housing Associations and will know how to maximise the gain on the 43% of the homes that have to be sold to them and available as affordable housing. They often do a design and build programme for the HAs and may pre sell the land required for the 43% in a deal to return their outlay and agree a fixed price to build the units.

At their last annual report CYD claimed to only have margins of 3.4% on their HA build whereas the private residential sales gave them margins of 13.4%. However they made significant amounts on the land sales to HAs. It appears that the average amount paid per plot in 2002 was 54,657 and in 2003 59,218 but at the same time the average selling price increased to 243,000 at the latest interims and they sold 312 of them. They can therefore expect to have to outlay around 25% of their build out value in the land at the outset. This is in line with most builders.

On a standard cost basis I therefore anticipate that with the commercial units , the HA land trade and possible build contract CYD will be looking to make a profit of between 12 and 15m and then at the margins they showed for the private housebuilding on their own account they should achieve at least a further 10m minimum for the build out of remainder of the site after all costs.

So what will they be prepared to pay to gain those returns....as little as possible of course to maximise them even more. Lathams valuer will come up with his estimation of value and under the agreement signed in 2000 and I understand extended last year under the same terms. That agreement stipulates that the two parties must agree within six weeks of the planning consent or go to arbitration valuation with the original consent date of 23 June being the valuation date for all calculations. So unless the valuations are wildly different they should be able to agree something within the next four weeks and advise the market accordingly. After all these years I suspect they will want to press ahead with the deal quickly and delays with a third party arbitrating are unlikely as professional valuers should be within 10% of each other.

I have had differing reasons behind downvaluation of land due to the high housing allocation for affordable homes but all agreed that the overall scheme was strong enough to allow a reasonable reduced profit on that element. As mentioned before I am not including the non housing use in my valuation which is based on CYD paying 45k per plot for the 400 homes to be sold at average selling prices of a very conservative 180k for new build in that riverside location. I have reduced by 25% the valuation of the affordable homes and then reduced the plot cost element to a minimum 20% whereby reducing the final cost to 27k per plot for the other 301 homes.

In my opinion that gives a figure of 26.127m for the site this actually compares very conservatively with the official residential land building index for the borough of Hackney which places a value of 6.8m per hectare on average land in the borough. A downgrade for the affordable homes at a 20% loading would give a value of 28.83m for a 5.3 hectare site but that figure was for the last available index in November 2003. Land values have levelled in the last six months however.

One thing is certainly clear from the index values and that is all land in the borough and the London and south east regions has more than doubled in value from the date that Lathams set their minimum reserve expectation of 6m so I am sure many would seriously question any valuation presented by CYD if it is lower than that.

I personally expect CYD to go for a valuation around 20m which would then guarantee profits well ahead of the amount they would be outlaying for the land. It should be remembered that the build out value of this site is likely to be in excess of 120m so there is plenty of scope for negotiation. As Latham will be well aware that CYD have carried substantial appeal costs they will probably settle closer to CYDs valuation and I suspect somewhere around 22m may be the final settlement figure.

We must then accept that under the contract only 91% which is most likely on the sliding scale once again due to the exceptional costs will be rightly due to Lathams. I am therefore hopeful that within the next four weeks we will see a further RNS stating that CYD have agreed a net payment to Lathams of 20m plus a little bonus of 20000k for the wild riverside bash on the site before we hand over the keys......

To be honest from the outset I suspect the Board had expected to recoup the cost of the move to the two new sites which I already established and commented on in a previous post. That 11m figure has clearly every chance of being returned to the company coffers and the additional gain is purely because land values have doubled while the planning system has frustrated long term shareholders.....

Taking everything into consideration and because the company have other freeholds with historic valuations the tangible assets are certainly well ahead of the market cap and it is easy to understand why the company have felt very uncomfortable answering my questions. The directors advised me that they are unable to trade in the shares at present and I am sure they will be locked out until this deal is finalised.

So there we have it.....I have tried to be conservative but the valuations and reasoning behind them are realistic but there are two parties to this agreement and it could still end up in arbitration. There is also a possibility that Lathams may concede too much to the developer due to the unexpected windfall seen as ample reward but in a tightly held family company with about 16 members working there and with significant holdings I doubt it very much .......

I shall leave it for others to decide how a 20 million windfall is likely to be used by Latham and of course what effect it may have on the share price if the valuation becomes reality......

cheers GF.

What an excellent bit of work. Hope the sale price/terms are finalised soon, but in the meantime it looks as though ongoing trading from their revised depot networks is very strong and e.p.s for the current year could reach 50p. Means the property angle not unduly relied upon at share price around 550p.

Trading update today well received. In the ultra cautious Latham Speak, "ahead of expectations" probably means fanbloodytastic. Who needs an unused freehold worth most of the market cap?

Check out todays interims. Market cap 28M, earnings 30p first six months,net assets 29M, reserve in freehold probably further 20M, yield over 3% - enough to make a value investor salivate.

Now know what it is worth.Won't bother any more on this thread - but I won't be selling mine for a while yet.

hey i'm watching! so what is nav in this stock???