Nationwide Accident Repair Svc Share Discussion Threads

[muffinhead] 28/9/2012 12:59

I would hope the government does a IAS 19 on its own accounts just so society can see how insolvent the UK really is...all the unfunded liabilities etc etc...yes apply the same law of invertebrate socialism

[muffinhead] 28/9/2012 12:50

Some day gilt yields will go back up and these deficits will melt away...

valuing a pension deficit based on gilt yields is stupid when inflation is higher than gilt yields and the Bank of England is buying up the gilt market with quantitative easing rigging the market yields. It is fraud and society will suffer if companies (all ftse companies from what i see) have to divert cash into unaffordable pensions...less jobs, less investment

This is a damn good company!

[lej2] 28/9/2012 12:36

Thanks Aleman, the £8m cash is certainly a comfort. Looking at the deficit as a form of borrowing is an interesting and valid argument. The commitment to 'loan' repayments is similar, the cost of 'borrowing' is less certain but will be similar in amount, but the 'banker' is more flexible if covenants are breached.

That said, the size of the deficit compared with the balance sheet is huge and IAS 19 will certainly blow the balance sheet apart. It is a shame, because I do like the forward strategy.

[aleman] 28/9/2012 11:48

The coming change in pension accounting will blow a hole in the balance sheet but I'm more concerned about how it affects cashflows. Pension deficits will struggle to get worse at the same rate as the last few years as gilt/AAA bond yields have fallen sharply and just can't fall much further in future as they are already so low. The company's top up payments of £2.6m seem reasonable for the future, even if the deficit increases a bit further. The pensions regulator looks for deficits to be erased over 10 years but often stretches that to 15 or even 20 if a company gets into difficulties that threatens the viability of the company to maintain the scheme. (Be aware that extanding deficit reduction to 15+ year is likely to see dividends axed, though.) The deficit should start to top out in a few years as the scheme was closed in 2006 and weak asset markets and falling bond yields become less likely, especially the latter as they've got so low there is not that much room for them to fall into.


My concern is then how the company can cope with £2.6m per year and that depends on trading. It has been a disappointing 6 months but there were difficulties to contend with that the company should get over in time. The question is then can it avoid further hits to cashflows while they implement a strategy that brings growth. I'm not sure, but the yield at the current price is generous and the £8m cash on the balance sheet gives flexibility. I think it is worth a small punt that the deficit won't get much worse, contributions won't be increased and the cash position holds up and buys time until they try build a market based more on retail and fleet than insurers. I wouldn't fancy investing heavily, though, as the strategy on trading needs to bear fruit.

(Would you be as alarmed if the company had £8m debt and £11m deficit. I bet some people would feel less worried like that but it's definitely more manageable to have more cash, a positive interest flow, and bigger pension deficit.)

[lej2] 28/9/2012 09:44

Aleman, I like the way this company is moving but the size of of the pension deficit is alarming when compared with the balance sheet as a whole. I am an accountant but cannot, for the life of me, see how there is a net pension asset on the balance sheet of £11,747,000, when there is a scheme deficit of £27 million. Pension accounting has always seemed to be a dark art to me and I generally avoid companies with large pension deficits (BAE is the latest to be crossed off my watch list).

[topvest] 27/9/2012 13:53

Interim results out today. Looks reasonably placed on the margin front if growth returns; they seem to be shifting from insurance business to retail and fleet business quite successfully, so bodes reasonably well for the future on a lower cost base.

[aleman] 13/9/2012 12:24

I've decided the pension deficit worry is a little overblown here and decided to have a nibble while the price is near its low. THey've already agreed a regime of top-up payments for the next few years. It shouldn't threaten the dividend because they could have just borrowed to plug the gap but choose to make it up from cashflows over time and avoid paying interest. Besides that, I think the wet summer will have been quite beneficial to the next set of results which are now only a couple of weeks away.

[muffinhead] 13/7/2012 11:10

back to 60 again

what i don't get is the valuation of intangible asset value, £7m on £170m turnover, or 4%...looks very stingy to me and i tend to rate tangibles more than intangibles on a balance sheet

public dysphoria for now, complete opposite of 2007



found this interesting

[muffinhead] 17/6/2012 00:39

2011 report and accounts

[muffinhead] 04/6/2012 19:18

Is The UK About To Engage In A Stealth Default?



From FT




RPI revamp risks 'ruining' linker returns


Proposed changes to the calculation of UK inflation data could "ruin" the £338bn index-linked gilt market and leave investors nursing heavy losses.

However, the proposals would reduce the liabilities of the majority of private sector occupational pension schemes by eroding the retirement income of their members.

...................................................................................................


Potential beneficiaries include the bulk of private sector pension funds which use RPI inflation to uprate future benefits and would see their liabilities fall.

"For the majority of pension schemes that are underhedged, in terms of their liabilities, it is good news," said Laura Brown, head of solutions and liability driven investment at Ignis Asset Management.

[muffinhead] 28/4/2012 12:01

QE quadruples FTSE 350 pensions deficit in one year


its obvious a complete pension system reset is necessary

[muffinhead] 15/4/2012 12:17

A "defined ambition" scheme, as the minister tells it, would be something in between the two: a pension that defines how much your fund is worth, but not necessarily how much income it will provide; or a pension that pays a defined income, but only on an undefined date.

[muffinhead] 09/4/2012 00:12

Pension change to "defined ambition" pension ?



>>>Mr Webb has begun negotiations with major employers

Would these be the MAJOR employers ( ie. most FTSE100 companies ) with pension fund deficits?




>>>What Steve Webb, the LibDem MP for Thornbury and Yate and Minister of State to the Department for Work and Pensions, is pushing is for the adoption of a middle way alternative where there is a share of the risks between employer and employee.

This third way alternative is the 'defined ambition' pension used in the Netherlands, which could be backed by new UK legislation

[red ninja] 05/4/2012 18:07

The pension is certainly a big worry.

[bookbroker] 04/4/2012 22:19

I agree, apart from this wretched pension deficit issue, a solution that although the co. is trying to address is like a millstone around their neck.

[gutterhead] 04/4/2012 20:51

8.5% yield. Great balance sheet, no borrowings, cash in bank, Undervalued.
Dyor

[speedsgh] 03/4/2012 13:15

Write up on NARS on Motley Fool...

[rmillaree] 02/4/2012 13:39

Having a quick look at the results (don't trust my figures !!) - it appears that's an extra £12 million onto the pension deficit in one year. That's quite a big adjustment presuming i have not misread the figures.
£14 million deficit on the basis that the scheme is effectively closed is sort of manageable - £26 million to find is approaching basket case territory on the current profit levels.
Say £5 million pre-tax profit = £3.75 million post tax, i could imagine the pension payments eating up all the available profits for more than the forseeable future.

[deswalker] 02/4/2012 13:16

I agree the results weren't too bad at all. I also notice that QPP is buying ACS so they see promise in the sector. I wonder if either QPP or NAS might move for NARS whilst it's down here.

The reason the market doesn't like NARS is clearly the pension situation and without it these results would send the share price much higher. There will be arguments both ways about the pension liabilities but at the moment the market is definitely taking them into account and IMO it's tough to argue against that view.

[topvest] 02/4/2012 12:52

Well the results were a little better than expected. They increased the final dividend rather than holding it, which says it all in my view!

[aleman] 29/3/2012 13:10

Thanks for that. It's hard enough comparing companies without them all using different accounting methonds. I shall have to go do some study. No rest for the wicked.