Communisis Share Discussion Threads

[123will] 28/10/2016 09:25

Given the assumptions in the latest financial reports, I would estimate that the deficit would be eliminated if the 10 year gilt yield reached 3.5%. IMO

[shroder] 28/10/2016 09:09

It could be the pension regulators tighten the rules governing valuations, deficits are moving at an unprecedented levels recently to warrant such action.

BT feeling the impact.

[gnome3] 27/10/2016 11:01

Sorry for quick off-topic, but JT, I was wondering if you'd taken a look at Gear4Music (G4M). Seems right up your street with the music connection and very exciting prospects IMHO. It would be interesting to get your perspective.

[shroder] 27/10/2016 09:59

JT, we chat off board, but glad to see you back even if it's only a flying visit.

[joe say] 26/10/2016 10:50

Edmund - all the measurements used are derived from the market - that's my point

[jtcod] 26/10/2016 10:02

You too Edmund

[edmundshaw] 26/10/2016 09:51

Hi JT. Good to see you about.

Joe there are big differences in accounting for an ageing tractor or computer terminal, or land, or corporate bonds, and accounting for the burden of pensions for an unknown length of time 30 years into the future. And the rule of tying those liabilities (or surpluses) to a bond rate that is now so heavily distorted by QE is not just artificial, it is ludicrous.

[joe say] 26/10/2016 09:39

JTC - it's no different conceptually to the way companies account for items at fair value - when the very next day those values change

However, there is no real alternative and to argue pension deficits aren't real is living in fantasy land - even our government and the EU recognise that

[jtcod] 26/10/2016 09:35

Yes thanks Zhou. I hope you are in good health

[jtcod] 26/10/2016 09:32

Unfortunately the BoE hasn't started to address this problem or even formulated a working party to address it or contacted vested parties with a view to a forum but they are finally talking about it. :-)From what I understand, their people have no credible experience in this sphere of finance. That needs to change because the issue and the related parties are acutely linked to the health of our economy.

[zho] 26/10/2016 09:25

Wow! That's a pleasant surprise. I hope things are going well for you.

[jtcod] 26/10/2016 09:22

Imv there is nothing remotely 'real' about a figure calculated based upon an assumed mean date approx. 20 years hence and geared to a figure which is grossly gamed by the system whilst ignoring all other real world asset classes that offer greater yield.It is unrealistic to the point of being ludicrous. We must calculate deficits for prudence. No rational person would argue with that premise but if we are to make 20 year assumptions then let's build in 20 year averages or better still 50 or 100 year averages. It cannot be beyond the wit of the various parties to formulate a calculation which is both prudent and realistic.

[joe say] 25/10/2016 08:40

Not at all - in fact IAS 19 really allows that the pain is deferred into future years instead of truly recognising (and squaring) the real deficit that exists today

[edmundshaw] 24/10/2016 18:45

Huh? Deficit is at least in part because of accounting (using IAS19). The argument is circular.

Of course if you can resolve the entire problem with a one liner, I expect many people would be relieved! :-)

[joe say] 24/10/2016 08:06

Let's not miss the basics

No deficit - then no need to account

[sharw] 23/10/2016 18:22

Yes, there is a problem, caused by too many people giving up smoking and taking up healthy eating and, of course, by Gordon Brown:



We now have the problem of how to account for it. In between the trustees' triennial valuation IAS19 has to be used. As I have pointed out before the Carclo irony is that, whereas it is obliged to use bond rates in its calculations by IAS 19, its actual pension fund has moved completely out of bonds and is almost wholly in what they describe as 'Diversified growth funds'. (IAS 19 prevented Carclo from paying its declared dividend - CMS would be in a similar position but for the fact that it has reserves that are capable of being converted to distributable - see RNS).

There is a good analysis of this in the current IC:

[joe say] 23/10/2016 10:19

Hardly lunacy - just an argument from an entrenched position

The problem of course started when companies could benefit from the mirror opposite surpluses - but this of course escaped the eyes of some including the Telegraph.

Ultimately the deficits are real issues - which need addressing

As simple as that

[zho] 23/10/2016 08:47

Time for another rant about the lunacy of “mark-to-market” accounting for anything other than investment banks’ trading books. Placing a value on a notional pension deficit in x years’ time, putting it on the balance sheet and forcing companies to make them good within y years was always daft. But even more so today.

[gary1966] 20/10/2016 15:25

Re-affirmation that dividend payments/policy is going to be maintained and that this is important to the co. Cash flow strong enough to support dividend and pension top up payments.

[isis] 20/10/2016 15:24

Well I don't think it was that hard to predict given the interest rate levels. Most Pension Funds are running deficits now.
The worst of all is the Governments!

[mcfly79] 20/10/2016 14:27

Well done to those who predicted an increase in the deficit, I didn't think the increase was going to be as large.From the market reaction it looks like this was already baked into the price.

[speedsgh] 20/10/2016 14:16

Link to the company's webpage from which there is a link to the Circular for the proposed reduction of the Company's capital...

[speedsgh] 20/10/2016 13:31

Notice of General Meeting -

The Company has issued a circular to shareholders to convene a general meeting to seek shareholder approval for a proposed reduction of the Company's capital ("Capital Reduction"). The meeting is to be held at 9.00am on 9 November 2016 at the offices of Communisis plc, 10 Little Portland Street, London W1W 7JG.

Since the Interim results, corporate bond yields have further decreased with a resultant increase in the accounting deficit of the Company's pension scheme. As of 17 October 2016, the pension scheme accounting deficit was approximately £57m, compared to an accounting deficit of approximately £44m at 30 June 2016. This increase in accounting deficit has the effect of reducing the level of the Company's distributable reserves. In order to improve the Company's distributable reserves and to support future dividend payments, the Board is recommending a Capital Reduction.

The completion of the Capital Reduction will not affect the rights attaching to the Ordinary Shares, and will not result in any change to the number of Ordinary Shares in issue.

The Capital Reduction, if approved by the Shareholders and confirmed by the High Court, will (subject to any undertakings the Company may be required to give to the High Court regarding the protection of its creditors) create additional distributable reserves of approximately £22.5m.

The circular gives more detail on the Capital Reduction, including the justification, process and timescales. The circular is available on the Company's website at www.communisis.com.

[taurusthebear] 20/10/2016 08:21

Yet more moral hazard.