We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Sorry THeTrotsky-didn't intend them to be the "butt" of my humour!!!
I notice my comment about the The Thought Police removing the word I used which rhymes with "bag" has also been removed.
How pathetic can you get- a sign of the humourless times in which we live
Probably review it nearer the time especially if current volatility continues
Massey will you keep reinvesting divis at this price ?
I wish I’d bought a bit more in the past before ex dates, as the divis and entries of 400 were great really in hindsight it’s always the way
Also really happy with my buys av average 401p and lgen 206p with all divis re-invested wish I bought lots more
Quite happy with my buys. 400p, 420p, 433p. Reinvested divis , 1300 shares in total, I have £6k in lgen also , avg 215p
Great post tophat.
TheTrotsky, think he was being polite and meant For Heavens Sake !!
Great post tophat !! I've PHNX and LGEN shares as well as AV. and wish Mr Market would 'cop onto' what you've written. These material accounting adjustments - my background is in Accounts - can be quite subjective, eg the old joke about asking 10 different Accountants to complete a same company's Accounts and all arriving at a different result !!
What shareholders in banks and insurance companies need to keep in mind is that the capital position is more important than the accountancy profit and loss.
Shareholder distributions such as dividends and buybacks, together with investment in new business, are paid out of excess capital, not profits.
For insurance companies the overall Solvency II Own Funds Capital Generation (OCG), Surplus and Cover Ratio are important. These are basically how much capital was generated, the surplus over the regulatory minimum capital required and the ratio of the surplus to the minimum. Slide 42 of the results presentation gives a good summary of the Capital position for Aviva.
Many things such as goodwill and fair value of own funds can make a big difference to the profit/loss figure but have absolutely no impact on the capital. As has been pointed out the change from IFRS4 to IFRS17 resulted in a loss for the restated 2022 accounts. However the capital position remained exactly the same. The change has no impact on capital which is what should be important to shareholders.
Quite right too Warthog4. How can you possibly refer to packet of cigarettes in such a derogatory manner! Cigarettes have feelings too you know ;-)
FHS? Did you mean FFS?
Been buying Pheonix for a rinse and repeat might be pushing my luck nice divi.
Thanks for the replies re IFRS, appreciated.
I see my comment has been censored by the ill-informed thought police at LSE. I used the word f.a.g. (without the punctuation), meaning of course the slang for cigarette.
What did they think I meant FHS?
“Can't she a cookery class, take up hill walking, or spend time with grandkids”
Amanda will have a middle aged white male to do all those menial tasks…Surely .!
Thedetector, considering Blanc's high level job with its high remuneration and all its responsibilities and pressures, I don't feel she should be allowed to do this extra work. Why does she need to do it anyway ? Can't she a cookery class, take up hill walking, or spend time with grandkids, etc...if her Aviva role doesn't excite her enough ?!!
thanks meconopsis-it did occur to me that in view of the apparent blatant discrepancies i might be oversimplifying the calculations and your knowledge of the ifrs has helped to dispel any reservations i may have had.
as a chap who used to do his finances on the back of a *** packet it's all a bit of a revelation i can tell you (joking)- a long time ago i had to read balance sheets as part of my job but now the accounting profession has gone on an ego trip by making annual accounts as complicated as possible, and aiding financial obfuscation big time, i wouldn't stand a chance!
What's this news about whitey Amanda and BP.
She seems to be very popular .She could get poached.
Personally, I think IFRS is a complete disaster. When your KPI's are always "adjusted" it tells you volumes about what the finance professionals and markets think about IFRS. As Meconpsis has already pointed out, a direct comparison between AV's 2023 results and their restated 2022 results with their 2021 and prior years results is nye of impossible (without those figures being restated too). Having said that, I think there are some positives for insurers (from the investors' perspective); under the previous accounting regime insurers used to fairly dissmissive of using mark-to-market valuations but I think the pendulum has now swung too far in the opposite direction (there is certainly some merit in the insurers' argurment that where they are intending to hold gilts and bonds to marturity, market price fluctuations in between are fairly irrelevant).
It seems wherever you look these days, IFRS is leaving investors and professionals scratching their heads and becoming increasingly reliant on alternative performance measures that often aren't audited! When a figure in the accounts isn't self-evident, and needs detailed explanation, alarms bells should be ringing loud and clear that IFRS is not fit for purpose and that rather than making accounts easier to understand it's often actually making them a lot more difficult to understand.
“… do you broadly think the IFRS standards are helpful / an improvement?”
They are helpful for what they are intended for. But not useful as management accounts.
One problem for investors is that they have made EPS and dividend cover numbers almost meaningless. If you look at at the restated 2022 numbers for Aviva you’ll see they made a “loss” - despite being operationally profitable.
Just out of interest, meconopsis, do you broadly think the IFRS standards are helpful / an improvement?
To complete the sentence in my long post...
It's worth saying that there is nothing dodgy about management using their own APM. The IFRS numbers aren't great if you're trying to manage the business. They were designed to provide an objective comparison across businesses and provide a view of fundamental value is broken up and liquidated tomorrow.
Yes, i liked seeing those buys.
"...for all i know she might fall under a bus tomorrow or get poached to something much bigger - plenty of organisations would be happy to have her on board at this point."
Agreed. Although the open market share purchase yesterday by both her and (presumably) her husband demonstrates a commitment to stay.
Her renumeration package will already include a good number of shares issued at below market price. To buy additional shares at market price demonstrates a clear belief in and commitment to the company.
Warthog4 - I've not had a detailed look through the financials yet, so just a couple of general observations...
OPERATING PROFIT
You can't directly compare the 2020 results with the 2023 results.
2020's results were compiled under IFRS4, whereby insurance companies could (more or less) immediately recognise profits from the sale of life and annuity products.
2023's results were compiled under IFRS17. The new rules mean that those "profits" get "parked" in a Contractual Service Margin + Risk Adjustment "pot" (CSM+RA). Money goes into the CSM+RA pot until the liability has lapsed and the profit can be drawn down in future years.
The outcome is that this year's operating profit is reduced, but future years will be enhanced.
There's a good explanation in the (very good) results video at https://players.brightcove.net/6204867251001/823mowZpQ_default/index.html?videoId=6348388200112
You want from 14:00 onwards.
There has also been an adverse change in longevity this year, which is nicely explained in the video.
They have restated 2022's results in IFRS17 terms in the 2023 results - and those are directly comparable.
You also need to be careful that you compare like with like.
ASSETS
At first look there appears to be around £1bn of assets less on the books. I haven't had time to work through what I think is going on, but...
The IFRS accounting standards require that held assets are valued at 'market value' when the accounts are produced (you'll see the term "mark to market"). Any reduction in value is taken off the operating profit and the value of the assets reduced on the books.
So, if you've got 2bn of offices; the market for offices drops 20% then you've got to knock £400m off the operating profit and the same £400m off your asset value. Regardless of whether the loss has, or will ever, be realised.
Some of it will be that revaluation.
This is why a company that is profitable in absolute terms can appear to make a "loss" in the accounts.
COMPARING LIKE WITH LIKE
You also need to be a little careful with which "operating profit", etc numbers you compare.
Because of the above accounting requirements, it starts to become extremely difficult to manage a company using the IFRS numbers. As a result, almost all companies now use so called "Alternative Performance Measures" (APMs), which are typically the accounting measures stated in a way excludes the unwanted distortions of IFRS.
At the front of the Aviva results release you'll see a little symbol next to Operating Profit. A quick look at the footnotes on page 9 shows that this is an APM - i.e. management's view of Operating Profit.
The IFRS Operating Profit is further back in the document.
That front section contains a mix of IFRS and non-IFRS numbers, which is almost certainly why they don't add up.
It's worth saying that there is nothing dodgy about management using their own APM. The IFRS numbers aren't great if y