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'Otherwise why would it cause him to let off steam'
Yes the payoffs were much bigger than they are today.
Having said that, Baronness Altmann (LoL) was crowing she had cashed in a few of her final salary schemes and got similarly inflated values because interest rates were so low. I think thats what has caused the mess we have today - bonds and equities going up together and interest rates going down and a slow grinding bear market correction to engineer a 'soft landing'?
"Off for a cuppa Fleccy - but will get back to Altman before the night is out."
I get it between 1.1 and 1.2 using EBIT
Can I make a constructive observation.
I note all the shares you have mentioned. IAG, LLoyds, BT and VOD all are good dividend players but are also all are near their year lows. You also mention that you have 14% invested in BT.
I would humbly suggest that you spread your investments a little wider. I would avoid having more then 4% in any particular stock. I recently sold part of my Diageo holding as it was 10% of my holding.
I am not for one second being critical of your investment strategy are tellin you what to do I have just made an observation.
'For non manufacturing companies they should use:'
Hi Fleccy, you are probably right. But BT manufactures and bills traffic events and bundles LoL
Off for a cuppa Fleccy - but will get back to Altman before the night is out.
Thanks for that Longish, If I'm reading that right, that senior manager that the exec complained to me about, must have resulted in a huge anount in the many £millions to finance?
- Otherwise why would it cause him to let off steam in front of a lessor minion?
"I found a few references on the web. This one says the score is currently 0.94 and includes the calculations and financial data to 31 March 2019. "
Gurufocus have used the original formula Z= 1.2*X1 + 1.4*X2 + 3.3*X3 + 0.6*X4 + 1.0*X5
For non manufacturing companies they should use:
Z-score estimated for non-manufacturers & emerging markets
X1 = (current assets - current liabilities) / total assets
X2 = retained earnings / total assets
X3 = earnings before interest and taxes / total assets
X4 = book value of equity / total liabilities
Z-Score bankruptcy model: Z = 6.56X1 + 3.26X2 + 6.72X3 + 1.05X4
One final point that "shocked me".
Looking at the 90's online and a bit before (I think) I stumbled across news reoprts back then of 10,000 BT employees were to be made redundant.
Read similar amount in a later period but decades before the latest 13,000 redundancies announced last year. I guess in the 80's and 90's BT was running the entire country effectiverly - MI5 the lot, in telecoms.
ButGezzalou, just how many employees did BT employee in its hey days? Staggerred by the causual mention of five figure redundancies again, again and again over the years.
'So, did BT forgo topping up the shortfall of all those early retirees? '
I guess the big difference was back then, interest rates were so much higher. As an example of how to create a huge deficit take the following example:
Pension £20k per annum in perpetuity...
Interest rate 10%. Fund value required = £20k/.1 = £200k
Interest rate 5%. Fund value required = £20k/.05= £400k
Interest rate 1%. Fund value required = £20k/.01 = £2m
Interest rate .5%. Fund value required = £20k/.005 = £4m
So, if a company is well run, I assume all early retirees must have the company up the contributions to make good the shortfall in absent contributions now cut short from the departing employee? That exec never told me how much was needed to cope with a highly paid manager retiring early - but it hurt so much he complained to me about it! LOL!
So, did BT forgo topping up the shortfall of all those early retirees? Looking at the state of the pension deficit that ended up at one point being the worst in the entire world I expect not; now that would be a breach of regulations.
(2 posts maybe)
Thanks in general to all those adding their own findings to the beginnings of the uncontrolled growth in the pension deficit debacle.
In no particular order:
Yes, I did see something mentioned in the nineties, but was trying to fit in one post, also couldn't recall exactly what the amount was then.
The Union complaining was typical back then (my own employment back then pulled the same trick in the 80's - it was the "in thing" to do.
Which might go some way to answering the query, Would BT be guilty of breeching tax regulations if they kept contributing? Why then, would all the unions all over the country, not just BT related unions, kick up a fuss if it was illegal for BT to carry on contributing? I think it was legal to cease contributions on condition there was a surplus. But no one thought about market crashes etc., (Gordon Brown - No more boom and bust; never laughed so hard in my life). During the 2009 crash interest rates cratered. Everyone, absolutely everyone thought they would soon go back to normal in a year or two and even-out the surplus that was fast disappearing. No one who proposed a pension holiday bothered to ask the question: What happens if the surplus diminishes due to unforeseen events? Just shows with these "permanent" record breaking low interest rates that no one can predict the future. No one asked what if we never see higher or "normal" interest rates for a long time?
Like no more boom and bust delusions - no one in their right mind expected low interest rates would last so long. And that was the end of a free helping hand to get out of trouble.
On the point of early retirements. I can throw some light on that. At one point in my career I was promoted to the second largest branch in my company. They called it fast-tracking so I was no longer solely in charge as there had to be two of us - and as a young man I was called associate manager. It felt like demotion - but I did come out of it well 1 or 2 years later or so.
I found myself tasked with putting the store budget together as the senior manager was off in hospital and an exec phoned me to give me the senior manager's salary to enter in. I was sworn to secrecy but I was shocked - it was 2 & half times my salary - and I was well paid! The senior manager was early retired by the co eventually and the same exec confided in me saying. By god it's cost the company an arm and leg just to finance Graham's early retirement.
So, if a company is well run, I assume all early retirees must have the company stump up the contributions to make good the shortfall in contributions now cut short from the departing employee? That exec never told me how much was needed to cope with a highly paid manager retiring early - but it hurt so much he complained to me about it! LOL!
So, did BT forgo topping up the shortfall of all those early retirees? Looking at the state of the pension deficit that ended up at one point being the worst in the world ...
"Fleccy, can I leave your Altman Z-score calcs until last? (That 4.09 is far, far, too high IMO)."
Velo you're right. I used Revenue in X3, when I think I should have used EBIT.?
I found a few references on the web. This one says the score is currently 0.94 and includes the calculations and financial data to 31 March 2019.
As I mentioned in an earlier post, I don't think the historic total asset cost is really relevant as the cash has been spent. The next generation cost is lower...all you can eat economics etc
So could argue it is a bit unfair to make comparisons or draw firm conclusions based on total asset cost.
There are pros and cons and I think it is fair to say that the trend is negative YoY. This is probably why the 300 buildings closure, withdrawal from Spain, Ireland and Latin America is now being pursued to reduce that total asset cost and avoiding any general write down to fair value based on regulatory economic and long run incremental network costs.
On a separate point, my prorogued stop loss has me sitting on the benches ~#@~~@! Currently my BT cash is sitting in a div index tracker and if I get a red day, will buy back in... I will be spending my BT divs on holiday shortly so I don't feel too bad net net . However, in case I don't see you.... good afternoon, good evening and good night!!
Whilst very obliging of you to help out Velo, I suspect the ask for that info is for fuelling the furnace you refer to.
What motivation would someone have in going back in time to check the price BT bought shares at? Hopefully next step will not be we all have to account for our past purchases as I would envisage all were made with hope and expectation relevant to the time.
Avro - open up your spreadsheet and set aside a couple of hours.
1) Click on the RNS tab up above.
2) Scroll down to the oblong window on the left that says "Filter by category".
3) Click that and scroll down past the seemingly hundreds of entries to second from the bottom and select "TRANSACTION IN OWN SHARES".
4) You'll see 2 pages listed as available from as recently as 28th June this year - (£80m worth of shares @ 1.9635 ea).
5) Unfortunately they only go as far back as May 27th 2014 (£3.024m @ 3.927551 ea) when you click page 2
(I believe there were more entries before this date on the old LSE site but that's all they're offering here now).
Hours of fun there for you.
(Catching up with backlog) -
Avro @ Velo, Thanks for that.
- You're welcome.
Avro @ I do go on a bit of how bad BT's workforce and management are.
- I don't.
(Unless pertinent to a specific issue).
Avro @ You must agree with the benefit of hindsight that BT's policy of buying back their own shares was sheer madness.
- Oh puleeeeze, don't get me started on that or I'll never finish tonight. Do not feed the monster in me.
Avro@ Probably like Fleccy and his cronies on here Gavin thought they were a huge bargain.
- Tsk! Geez -What is it and your patological desire to keep opening the furnace door and shoving your hand into the furnace? Why mention names? It invites discord. If you must, and I wish you wouldn't, just say "some people" or somesuch. Let it die, man. Let it die.
Avro @ Velo, Is it possible to find out what price Gavin paid for each share?
(& Fleccy further up, on Altman)
- Guys, please! You're killing me - You're killing me!
There are not enough hours in ther day.
Avro I'll post after this some pointers, for you to do it yourself.
Fleccy, can I leave your Altman Z-score calcs until last?
(That 4.09 is far, far, too high IMO).
I want to post my intended post on why I now disown the Altman-z score against BT, using the metric's own parameters to disqualify it from 'bad mouthing' BT.
But check your findings? Haven't got time. Disappearing at the weekend for week & half+ on urgent business, and want to complete some other posts beforehand. But got bits to say on Altman and your calcs - will wing my way back to you time permitting.
Thanks TLWilliams for your constructive view. Faultsman, just what I would have expected from you.
Some interesting comments from contributors earlier today. I was a public sector employee at the time and I recall a similar picture, with (not always the best) colleagues being offered 10 years enhancement enabling them to retire with a pension approaching the maximum amount at 50 years of age. Moreover, they could continue to work to supplement their pensions if they chose to do so. Many did just that. A similar upgrade was allocated to their associated lump sum. Their annual increases were subsequently subjected to an RPI adjustment (higher than the CPI on which current pensions are upgraded ).
Sadly young employees at the start of their careers are disadvantaged as a result of this extravagance, and their retirement rewards will be lower as a consequence. Not only a BT initiative, but applicable in many other workplaces in the public as well as the private sector; the gross incompetence of senior personnel at the time has resulted in an unfair distributions of pension fund money, often without any discernible criteria being applied when the offers were made. Sadly our BT Group investment is less potent than it ought to be as a consequence of the mismanagement of a fund which should in theory be applied equally to all in proportion to their individual contributions.
Are you getting confused with uncrossing?
This site says way more sold than bought. If accurate, why SP up ? Excuse my ignorance
I looked it up on internet for you, it means there was a high amount of trading and the share price closed higher than it was yesterday. Glad to help, good luck.
Not sure chrisabipp, although a positive finish is always welcome. It has still way to go in my view. I would be reasonably satisfied with 170 - 175, at the moment (in relation to my own BT Group investment; unsatisfactory for some investors I'm sure). There was a rapid drop in share price both during pre- and post ex-div, leaving it in an 'oversold' position in my opinion. Previously stated range, with progress towards high 170s in September would represent a reversal as I see it.
I am not disputing some contributors' views that the share price could go lower, although, weighing up recent developments, I don't see a reason for it to happen? In general when I look at the current share prices at the low-end of the annual range for so many equities in the FTSE-100, it would appear that a number of investors have moved their capital to safer havens - at least for the time being. Regards.
High Volume of trading today and finishing up. What does this mean ?
With you T.L. Not with you Avro.
On whose side are you on now?.
I made a very constructive point when BT was 3.60 by telling everyone that BT is a strong sell.