Just Car Clinics Share Discussion Threads

[narc2] 21/7/2011 20:09

So presumably NARS have capacity to fill if they stopped working before and now want to be back in the frame because surely the contract terms this time round won't be any more generous than previously, will they? Looks like RBS will be in the driving seat when it comes to pricing. On a separate but related matter, does anyone know if RBS Insurance is being sold intact or will it be broken up because going forward that would affect the repair volumes they are able to deploy.

[harrogate] 21/7/2011 19:44

NARS stopped working for RBS a few years ago but I understand they will be involved in the tender this time.

[narc2] 21/7/2011 19:42

Absolutely. I guess that's why RBS has gone out to the market to tender? I'm not sure what NARS exposure to RBS is so it will be interesting to see if they tender and if they are successful. It seems the whole market is chasing lower volume work for lower margin. Most of the guys I talk to say they are reducing the size of their workshops and staff and trying to diversify away from body repair. Every week a large shop seems to go bust.

[aleman] 21/7/2011 16:13

Don't you think insurers would want to encourage competition to NARS?

[narc2] 21/7/2011 12:20

Wow! 50% of eggs in one basket seems a real risk particuarly when the insurance arm of RBS is in the process of being divested from the bank? Volume is OK but reduced claims frequency, seasonal peaks and troughs and variable insurance underwriting trends must play havoc with predicting demand? Repair rather than replace seems to be the vogue with most insurers at the moment but that must put huge a strain on managing labour productivity and repair quality - if you were a customer, would you rather have new parts or ones full of filler? I sincerely hope the volume strategy pays off for JCR.

[harrogate] 21/7/2011 07:45

Hi
I think that is a fair point but my view is that the business is so highly geared to volume that they need to get more through and then work out how to make more money on it. I think they can be more efficient than they have been and the AGM statement talked about the move to repair from replace which can drive margin significantly higher from the same charge to the insurer. You are right that the tender process must put pressure on margins but also RBS must know that in fact that looking at all the bodyshop accounts no one is making a lot of money at their expense at the moment and they need things done right. I could have too positive a view on the JCR / RBS relationship but that is the view I have. They don't disclose the RBS % but it is large I would estimate...50%??.

[narc2] 21/7/2011 07:10

Harrogate, you say: "The crucial thing for me is the outcome of the RBS tender process that a couple of people have mentioned on here. If that is positive and JCR increase throughput from RBS and maybe get volumes into a few sites that are lacking then I think we can have a good run from 2012 onwards." Surely even if JCR are successful in retaining the RBS contract, the ultimate outcome depends what levels of margin the RBS contract yields? My understanding is that the tender has been opened up beyond the current RBS network therefore it's likely to drive margins lower. Does anyone know what % t/o of JCR's business RBS represents? Also are NARS involved with RBS?

[aleman] 20/7/2011 16:27

I'd be surprised if debt only falls to £2m. £1.1m receivables to come in to get back to normal after the Xmas surge. Maybe pushing another £100k if business levels are slightly lower and receivables and payables both reduce on an underlying basis. Inventories rose quite a bit last time and there might be scope for £100k there if they chose to squeeze it (though I very nuch doubt they need to but they have a history of being very frugal). Then add in the cashflow over the period, running at £700k+ before tax and interest. I would think there is potential for it to go as low as £1.2m although admit this is at the optimistic end to get all in one half. £2m seems a rather cautious target, though. That wouldn't even have all the Xmas receivables paid back, never mind anything addition for current year cashflows, and receivables haven't been a problem before. Still, even £2m would look a good drop at a quick glance to an outsider.

[harrogate] 20/7/2011 15:39

It must be good news that NARS are trading well but we do know that they are outperforming the market and certainly JCR based on the AGM statement. I agree on debt but remember that they have always generated enough cash to buy 12 sites in the last 4 years as well as pay dividends and the interest at higher levels on the debt they had back then. I would also like to see evidence of the working capital reversal they promised. If they do no new sites which I would prefer until the market stabilises they will get debt down fine. The broker is forecasting increased dividends this year and next so we had better see that too.
The crucial thing for me is the outcome of the RBS tender process that a couple of people have mentioned on here. If that is positive and JCR increase throughput from RBS and maybe get volumes into a few sites that are lacking then I think we can have a good run from 2012 onwards. if it is the opposite I think we will be under the cosh for a while on profits until we get new volumes from another insurer, the NARG brings decent volumes and/or they get costs down to where they need to be. Still all in here and fingers crossed!!!

[rmillaree] 20/7/2011 15:30

I am certainly hoping for a drop in debt - i was pretty surprised by the final figures last year although the late sharebuyback and acquisition will have been a big factor to the final tally we got.
At present having this level of debt is bad with profits possibly coming in at under a million, take of the tax and dividend payments and there ain't much room to reduce debt and/or add new sites. Hopefully the added receivables at 31/12 will have reversed and the profits made might get us below the £2 million mark but they possibly need another 12 months to get this down to a level that gives more of a safety net if things were to get worse (lets hope not)
Anyway we don't have too long to wait to the interims and hopefully a lower debt figure may give the shareprice a nudge upwards.

[aleman] 20/7/2011 14:07

. I think you are too pessimistic. JCR has always been weather affected. The showery weather of late will be doing no harm but a return to normal trading would not make up for the extreme dry spell in the early spring. Whilst earnings will be weak for H1, there is every chance cashflow and debt will be flattered by the bloated receivables carried over New Year and we should see a significant fall in debt and the prospect of a more normal trading in H2. A new site acquisition would be welcome, though!

I do keep wondering if that surge of recruiting Polish mechanics will have turned around and bitten us when weather turned bitter and business turned quieter (and benefits clampdown/rising UK rents?). Poland has been booming since the recession ended and many Poles have gone home or to Germany. We may have had some distraction from expansion due to lack of trained mechanics.

[rmillaree] 20/7/2011 13:10

It must be good news that NARS are trading ahead of the previous year although it is only 2 months ago that JCR stated that they would be behind expectations so i wouldn't be to confident that there is any likelyhood that things have necessarily improved for JCR in the meantime - doh!

[yorkshiret] 20/7/2011 11:24

FYI - fairly upbeat trading statement from NARS this morning. It has been followed by almost 3m shares being traded which look like sells?

[yorkshiret] 12/7/2011 21:35

Just read yesterday's RNS. Isn't it just the 143,755 shares that Barry bought last week going into his pension fund?

Odd that the 2010 accounts show his pension fund to have 346,691 shares and yet the RNS said the prior position was 340,079. Why would the position be 6,612 shares different?

Anyway, inside the industry everyone's scrabbling around at the moment trying to fill their RBS tender in. The deadline has already been extended by 7 days, and I believe the goalposts have already moved several times as well.

[envirovision] 11/7/2011 23:41

Yes watched that. It was interesting, reflecting what I was saying about the numerous very prevalent and fraudulent Asian gangs over the last decade, coupled with an ever growing burdensome claims culture within the industry which is now rotten to the core.

We could have almost been co-editors or that programme, spooky !

Will anything be done about it ? well imo regards the criminal gang fraud. Technology may win the day including gps camera recording systems in all cars (much like tracker systems have reduced cover on certain vehicles). However regards the compensation culture, I rather suspect it will end in yet another inept endless loop multi million pound government enquiry which will be swept under the carpet and forgotten about.

[aleman] 11/7/2011 21:19

BBC's Panorama was an interesting programme on how fraudulent car insurance claims, referral fees and "no win no fee" court cases are pushing up insurance rates. It seems the government are taking some steps to attack the problem, including making the plaintiff pay losing court costs rather than the solicitor in future.

(Doesn't seem to be available on iPlayer yet:)

[aleman] 09/7/2011 17:00

Vehicle miles travelled have been falling steadily since 2006 or 2007, depending on the region. Petrol prices have enouraged smaller engines and slower travel which means a higher reduction in petrol compared to actual distance. Various offerings are listed here but I chose :



(TRA8906 - York &Humber local authority kilometres travelled, excluding A-roads)

2005 28,458m
2006 28,746m +1.0%
2007 29,580m +2.9%
2008 29,146m -1.5%
2009 28,816m -1.1%
2010 28,479m -1.2%


(TRA0203 - All Road kilometres UK)

2006 507.6bn
2007 513.0bn +1.1%
2008 508.9bn -0.8%
2009 504.0bn -1.0%
2010 495.9bn -1.6%


My point is that lower mileage and slower driving have been hitting JCR for 4 to 5 years and the company has been coping. (The bumper H1 2010 was clearly on lower traffic.) Although I think reduced and slower mileage will have been a bit stronger in H1 2011 and may have had some influence on accident rates and results for the AGM statement, I still think the main driver will in time prove to have been the weather and gritting levels as these figures suggest little difference between JCR's and NARS's traffic input.


Note that we has been here before without too much trouble:



Petrol sales fall 20pc as drivers feel the pinch

By Ambrose Evans-Pritchard and Robert Winnett
12:01AM BST 11 Jun 2008


My gut feeling is that the shares should still be around the 50p-60p and will get back there when this blows over.

[envirovision] 09/7/2011 08:37

Fuel sales fall by a BILLION litres

The 15 per cent dip in petrol sales and the 6 per cent fall in diesel sales were caused by higher fuel costs and consumers tightening their belts.

[aleman] 08/7/2011 17:10

Traffic was quiet on my usual run yesterday. Been out again today and traffic was bad for some reason despite the rain. (Holiday season?) M62 was bogged up both ways at 2:00 and 3:30. Bradford was like rush hour inbetween. Thunder storms were making driving dodgy and I saw 2 accidents.

Petrol prices nationally fell about 3p over the last couple of weeks but are already creeping up again slightly - 133.83p average.

[professor x] 06/7/2011 17:21

Some interesting trade gone through today, x2 at 37.5p and x1 at 38.5p.

[harrogate] 06/7/2011 14:35

Agreed ..I spoke to the investment manager there when they bought them since I was curious what they were doing and he had really no reason behind the decision. The stake was available and they bought it !!!

[envirovision] 06/7/2011 14:02

Shocking investment though for RRF. They paid 60-70p for most of their shares in 2008 by the looks of it.

[harrogate] 06/7/2011 12:29

Given the need to file audited accounts I don't see being listed as a help to them get contracts or finance from banks. Small cap AIM shares pretty much can't raise any new funds at the moment and there is no current desire from any institution to invest since they would have placed the RRF stake before Xmas with them. I sense they see very little value in being listed. I agree they are a very hard working and honest team with a well respected Chairman and I am sure if a take private is in the offing they will do it right.
I agree also that the reaction to the AGM statement was not unreasonable since it seems to me that they are underperforming NARS and the EPS figure for 2011 was slashed.
I also agree with you and Aleman that they might wait until the market sorts itself out and they feel more confident about the funding ..if the share price has recovered to make a deal not doable at that time they win anyway.

[rmillaree] 06/7/2011 12:12

It can't all be bad news being a listed company there must be greater transparency with regards to the finances and this probably isn't a bad thing when it comes to securing and maintaining large contracts. It's pretty easy for any company to do a check on them and see that they are a reasonably run business not making excessive profits with a reasonably secure financial backing.

For the 100k per year the company probably receives alot of additional advertising with RNS releases being put on various web sites and the results/updates being discussed in various newspapers and shares sites etc.

Obviously at some future stage raising extra finance or bringing new investors onboard may be easier being a listed company.

So i would expect there are plusses and minuses and they will still get good rewards long term from owning 50% of the business without risking a wad of their own (or borrowed) cash when the finances of the business aren't exactly at their most rosy.

In some respects the board of JCR have always seemed to me to be very straight down the line when compared to some of the megalomaniacs that seem to run some Aim (and fully listed?) companies.

I think the spike down on the latest trading update in some respects wasn't really anything unexpected at the time.JCR don't make massive profits and if margins continue to erode or turnover declines this is worrying as they do still have some debt. The directors showing faith by buying shares at least shows that they think the business model ain't bust and that should give the rest of us some confidence even if there are no guarantees.