Share Name Share Symbol Market Type Share ISIN Share Description
600 Group LSE:SIXH London Ordinary Share GB0008121641 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 14.625p 14.00p 15.25p 14.625p 14.625p 14.625p 8,293 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Industrial Engineering 47.0 3.2 2.0 7.4 15.26

600 Group Share Discussion Threads

Showing 1776 to 1797 of 1800 messages
Chat Pages: 72  71  70  69  68  67  66  65  64  63  62  61  Older
DateSubjectAuthorDiscuss
22/8/2017
22:16
Interesting analysis john Fwiw Carclo,Molins & Aeria are my pension deficit value plays as I agree with your logic
rhomboid
22/8/2017
21:47
Interesting CJohn; I've been reading here just for background for a while. If you think pension defs are a source of misvaluation, then might be worth having a scan at ALU.
dan_the_epic
22/8/2017
09:23
Hi Buywell, If you said SUN to me, I'd say MOON to you. All best. This is a quick one as I'm on the beach. I want to say a word about pension DEFICITS. I regard pension déficits as a potential source of misvaluation, and hence a potential buying opportunity. I've invested money on a couple of occasions in companies with large and apparently threatening pension déficits. The last occasion was about 5 years ago in Trinity Mirror. A sloppy article in the FT suggested Trinity Mirror's pension déficit was unsustainable. This article was then bandied around like it was gospel. This pushed TNI's share price down to 25p, valuing the company at less than a single year's free cash flow. A no-brainer. The share price subsequently rose to above 200p. (5 years later, TNI's pension funds are still a thorn in its side and a constant drain on cash. But the company still exists. And will probably eventually pay off the déficit.) (Of course, sometimes pension defcits are terminal.) Regarding enterprise value and pension surpluses: the usual ítem that is subtracted from enterprise value is net cash. Obviously, it's much better to have 10m net cash than a 10m surplus on a technical provisions basis. That's a no-brainer. So a discount factor must be applied. It's also better to have 10m net cash than a 10m surplus on a full buy out basis. Why? Because even with that surplus, the chance that the company will actually pull off a buy out is less than a 100% for reasons we've already discussed. Say you estimate the chances of the surplus coming back to the company in this situation is 30%,then it would make sense to subtract 3m from enterprise value, rather than 10m. So what I would be interested in is an estimate by Kazoom or Buywell of what they think is the probability of any money coming back to SIXH from the current technical provisions surplus. My sense is that it's very slight. I admit before the long discussion with Kazoom I thought the chance was negligible. Now association with Kazoom's cheery optimism and dogged plugging away has had its effect and I'd be prepared to go as high as 5%. All the best to both. Enjoy your holidays.
cjohn
09/8/2017
09:19
Well done guys Perhaps you two should get together and form a new company to sort out/manage pension fund deficits for smaller cap companies (to begin with) by means of perhaps going through insurance companies / other financial institutions. As you both recognise there is a very big market there and thus monies to be made if a formula to fix the problem ( even on a temporary basis eg 5 years ) so that companies could present their balance sheets in a better light and thus get themselves bought. CJohn if I said SUN to you would that mean you saw the light ( if you get my drift) PS Perhaps I could also be involved , say as CEO / ideas guy
buywell3
08/8/2017
20:43
a move late in the day, any news?
ntv
25/7/2017
22:40
LOL CJohn. I will do my best to come back with the sum of parts view later this week before I go off on my hols; I think we might find more common ground there - or maybe even that I think you're overly bullish ;-)
kazoom
24/7/2017
15:17
Hi Kazoom, many thanks for your long and interesting posting. Withut generating acres of ink, I can't respond in depth to all your points. 1. Yes I do realise surpluses are listed on the balance sheet!! This doesn't of itself, make them in any real sense an asset. Bear in mind, that until a few years ago, pension déficits and surpluses were not listed on the balance sheet at all. (So according to you, suddenly in that year SIXH gained a huge asset. Wowee!) Clearly putting surpluses on the balance sheet leads to misunderstanding. 2. I do realise that pension trustees do not always demand balancing payments when a scheme is in déficit. I didn't actually want to go through every permutation...... You've done that for me. Thanks. 3. It's still an error to subtract the surplus from Enterprise value. No company looking to take over SIXH would use that definition of Enterprise value. 4.Regarding buying insurance. I wonder, if there will be a window of opportunity to buy insurance contracts for all pensioners. Or come to some other resolution. I do understand your point that waiting could produce a better resolution later: one that might allow a complete pay off and a surplus for the company. Of course, this is a tempting view. Of course, I'm tempted. I am human, after all. However, they'd be taking a pretty big risk in not going for a speedier resolution. VALUATION: The huge assets and liabilities of the pension fund are a negative for the company. I believe the risks involved have put off potential acquirers over the years. Regarding EV evaluation: there is obvious uncertainty, so quote a range for EV. This has two positives- firstly, it's more original than quoting a single figure. Secondly, it would alow us to agree and stop arguing. Have a beer and a cheese sándwich for being so good-tempered and for getting in a couple of good digs. All the best. CJohn
cjohn
24/7/2017
09:13
I have mentioned before, I don't know all the ins and outs of pension fund legislation - no doubt I would be outraged as an outsider if I did. However, it is pretty clear to me that if this same pot of money was managed as an investment trust, neither the pensioners nor the management would have the slightest worry about its ability to exceed its obligations. Even a mediocre IT prospers significantly enough. I would be aghast if this company tried to raise what the pension industry regarded as a suitable 'insurance' payment when the significant surplus already is deemed inconsequential. In the meantime we probably continue with pension funds - in general - lending shares to shorters instead of moving out of poor performers, I do wonder why.
rburtn
20/7/2017
21:31
Oh and just one point re rburtn's point : The rule about pension funding are deliberately (and imho rightly so) skewed in favour of the pensioners. Any projected shortfall must be addressed via a plan to make it back which has to be agreed with the trustees (who do as I understand it have quite a bit of power in the event of a dispute). On the other hand it is actually now very hard to recover any surplus (as we've discussed earlier here). Whilst somewhat frustrating to investors this seems to me to be entirely appropriate. The principle reason that many funds are now in deficit is because back when ridiculously optimistic investment return assumptions were being made (see the endowment mortgage scandal) many companies took sustained "pension holidays", which when reality struck resulted in the big deficits we are now looking at in most cases. I'd even go so far as to say that without that episode Defined Benefit pensions may well still be considered the norm - but that's a rant for another time and place ;-)
kazoom
20/7/2017
17:50
But CJohn the £10.8m is by definition the CURRENT value of the future realisable assts (and that on conservative assumptions) so if you want to apply a DCF to it, you should do so on the FUTURE value not current. Your inheritance analogy I don't think to be honest is particularly analogous so I'll skip over it. I'm comfortable that this asset is a measurable tangible thing that can be taken account of, you see it as a liability - other must make up their own mind. What is of more interest to me though is how you value the business to make it seem investible if you regard the pension surplus as a liability - you must have a massively more positive asessment of the worth of the operational business than I do. I really hope you are right in that! Anyway with this in mind, the light bulb moment that Buywell's point gave me was not that I should disregard the pension asset, but that a sum of parts valuation would be much more insightful than the enterprise value model I was looking at. I'll come back to that ......
kazoom
20/7/2017
12:37
I don't profess to be any kind of expert on the, deliberately IMV, black arts of pension fund accountancy but if a pension fund is in deficit, shareholders lose out due to the need to top up with additional contributions. By the same token, if a company fund is in surplus, then surely a pension fund holiday - unless it is contracted with fixed proportion to that of employees -is distributable, or can be re-invested in the business?
rburtn
20/7/2017
11:25
I haven't bought SIXH because of the pension situation and it's inflating of balance sheet with phantom assets. The pension situation ia a negative, as I've explained already. What is of interest is the pattern of real profit, creating an increase in tangible asset value. Now standing at around 6m. Buywell, you are wrong. The company made a clear profit after subtracting the accounting gains on the pension scheme. Look at the figure for adjusted profits. May I suggest you also go through recent balance sheets and subtract all intangibles, the pension scheme surplus and associated deferred tax laibilities etc. You will then see a clear increase in shareholder equity over the last two years. Operational cash generation in the last half was very promising and there is likely to be cash inflow from working capital changes in the current half in addition.
cjohn
19/7/2017
11:42
Hi buywell, apologies, I thought you were being facetious. To be clear NO they cannot spend the pension surplus, but they do as you point out earn notional interest on it. (In fact this interest is calculated on the much higher IAS19 calculation of the surplus £52.5m as opposed to the technical provisions surplus of £10.8m) I think I would need to go and sit in a darkened room for a few hours to see whether I should be looking at the Enterprise Value in a different way therefore. Bottom line though is I place a value to the company on this surplus, others do not.
kazoom
19/7/2017
07:36
So you are saying they could I don't think that is correct as trustees have to act in the best interest of the pensioners they are working for How many of the are there ? ''A credit of £0.65m (2016: credit of £0.94m) is included as a result of the work by the Trustees of the UK pension scheme and the Group in reducing pension liabilities. A number of transactions took place over the prior and current year including a pension increase exchange, commutation of small pensions and other flexible retirement options. These are now an integral part of the flexible offer to members at retirement. These resulted in actuarial adjustments to the pension liabilities, which are processed through the Consolidated Income Statement. In addition, as a result of the pension scheme being in surplus on an accounting basis, a credit of £1.45m (2016:credit of £1.17m) is recorded in financial income. No cash was paid to or received from the scheme in respect of these transactions.'' So re the £1.45M , without that being recorded in the financial income , there would have been no profit made .
buywell3
18/7/2017
19:53
If you need to ask that question buywell you clearly haven't been paying attention. Is there something in particular you'd like them to buy?
kazoom
18/7/2017
19:37
I ask again can SIXH get the trustees to use the cash to buy something ?
buywell3
18/7/2017
18:30
But we already know the CURRENT discounted value of the future realisable asset - £10.8m as per the conservative technical provisions analysis. Why you would feel the need to apply a second discounting to that escapes me. But given that even the pension trustees are comfortable with the idea that the asset value will outperform the assumptions, I suspect that even if you double discounted this you'd still come up with a positive number.
kazoom
18/7/2017
17:34
My problem with sixh is that it is really two companies. One is an engineer in which it is hard work and difficult to make money and in which I have a tiny measure of control. The other is a pension fund from which making money is normally easy and highly remunerative for its managers. The control of the latter is opaque. Perhaps if we knew something of the management of the pension fund of ppix, we might see the logic of that purchase. Somehow, the value of sixh as an IHT saving vehicle has got to be used to incentivise the controlling minds of this pair of companies so that the engineer can at least match the returns on offer to those managing the pension fund. The words 'expansion' have crept into the sixh lexicon of late but I fear that if precedent is anything to go by, any discharge of pension fund liability is going to punish the poor old sixh shareholder yet again. This is despite its surplus and value to the acquirer as a cash cow. It seems a surplus is irrelevant until it has to be bulked up to persuade someone to take it off the company's hands to make it adequate. On the calculations above, any meaningful surplus - as the existing one is rated worthless - would have to be unimaginably too expensive for the company. It doesn't make much sense as anything other than a potential rip-off.
rburtn
18/7/2017
16:21
So can the company spend it now?
buywell3
18/7/2017
09:00
What's the CURRENT value of of a posible pension surplus - after all pensioners paid off - in say 60 years' time. Use a reasonable cost of capital -say 10% - as the discount rate. 10% annual discount over 60 years produces a PRESENT value of near enough zero. In other words, it's not worth bothering with.
cjohn
17/7/2017
12:02
Not likely CJohn with asset returns outstripping inflation (and surplus assets moreso).
kazoom
16/7/2017
19:20
And the present value of any such future possible surplus would be close to zero.
cjohn
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