Member Info for kularatnam

I had a glance through the response by the Institute of Actuaries to the PRA CP13-18 and they are all negative and questions the rationale for bringing up this proposal now and also suggests longer period - more than six months - than the three months recommended to implement. Also to extend the number of years to bridge the gap to more than the three years prescribed.. Surely when an independent body has these negative views it will certainly have a bearing on the final out come. Moreover it can be expected the opposition of the stakeholders particularly the ERM providers would be even worse.
It gives more credence to RBC comments as quoted by icouldntcomment few days ago.
"RBC said that the UK Asset Resolution sale "shows real confidence from a major bulk annuity writer that the PRA is not going to go with its most prudent scenario", and that it was "excellent news for Just Group".

Read these articles

https://www.thetimes.co.uk/edition/money/annuities-come-back-from-dead-as-payouts-soar-fnsqp03dc

https://www.thetimes.co.uk/edition/business/battle-scarred-hohn-cuts-stock-exchange-stake-lfkjqnww3

Sunday times reported a come back/rise in the Annuities market after it almost wiped out with the pensions change introduced in 2015. It says there are only 6 who provides annuities and one them I found to be JUST.

in the £20s

Should Bounce Back

I have been watching the share price movement over the past few months and wondering why it is falling almost every day – the trend, assuming it continues, will make the price Zero- as if the company is going to put shutters. The decline started since 2/07/2018 – the day of publication of the PRA Consultation paper. Now what this consultation is all about? I am no technical expert but in my understanding it is about strengthening the company’s Balance Sheet by mandatorily setting aside certain amount of reserves. The method of raising the capital was not mentioned – several options have been discussed and the least option is only a Rights Issue. Even then what is wrong with that when you are putting in place a stronger company with a long term view? Isn’t that good for the shareholders?
Has this proposals damaged the company’s finances, reputation , image or any other aspect which may result in the company’s ability to continue in business is dented as would have been the case of FCA, SFO investigations for fraud or money laundering etc. In fact there is not going to be any Cash outgoings or Charges to the profitability or anything of that type. So why this drop?
Look at some numbers. The share price was around 140p beginning of July – the MKT Cap was £1.3bn and today it is half of that £665mn. Does the PRA proposal warrant wiping out a colossal £650mn? What is more the company has been doing extremely well and the Half year results published on 6th Sept indicates results improving by 85% but the market didn’t react positively because of the PRA hang over. Otherwise, theoricaly the share price should have increased by what? 85% or 50% If this results are also taken into account, the real damage to the company’s valuation could easily be more than £ 1 bn.This is absolutely crazy.
My only consolation was that I found in a market where everybody else seems to be selling, only one institution added to their existing stake. I noticed Standard Life Aberdeen has increased their position by 2% ( from 8% to 10%) on 11th July – after the publication of the PRA document and at prices in the region of 130 p. They know a thing or two about insurance. Now I know my investment is safe.

The link is below
https://www.justgroupplc.co.uk/investors/results-and-presentations

Have anyone read the transcript - chat with city pundits- attached to the six months accounts? Under the topic PRA they are talking about a shortfall of £69mn. If that is the estimation then it is not a material amount and all they need to do, in my view, is to set aside this amount from the distributable reserves.
As always, I feel the market has over reacted.

The announcement didnt say anything about the shareholding Standard Life Aberdeen will have in Phoenix. It would be 144mn shares plus existing 8.71% or 50mn. In all in the enhanced capital of Phoenix SLA will have a 27% stake which may be valued @£1.3bn at current market price.Add to this the cash receipt of £1.75 bn & also add the value of Indian Investment of £4.5bn. Deduct this total of £7.55bn from the mkt cap of SLA of £9.5bn, and you get just £1.95 bn for the rest of the business with an EBIT of £291mn in the H1 in 2018.It is really a puzzle to have such a low price attached to this share. Hope the market awakens.

https://otp.tools.investis.com/clients/uk/standard_life/rns/regulatory-story.aspx?cid=65&newsid=1164628

Witl this have any effect on share price. Currently ridiculously under valued.

https://uk.reuters.com/article/uk-carillion-restructuring-lewis/uk-government-keeping-close-eye-on-services-company-carillion-conservative-chairman-idUKKBN1F30AL?il=0

How about the tax relief on the US operations?? Most of the companies informed the market.

Honestly I didnt expect this turn around in the SP so fast, from 519p on the 7th to 600p now. Good for all.Now my gut feel is that it will breach 650p soon or before the Rights issue announcement and the rights priced @ 600pa share in the ratio of one share for each share held giving that £1.7bn. Why I was bullish when the price was around the 500p s is due to the nature of this business some features are: 1) 90% sales ( other than adverts etc) done on cash. You dont buy cinema tickets for credit. Other businesses have huge debts in relation to their revenue and recovery issues. 2) you dont pay suppliers anything until sale of their products are concluded. You wait till the films are run and collections counted to pay a share to the producers/distributors,So you are not in a Gross loss situation at any time. 3) So very little working capital requirement. 4) Operationally simple Only issue is Box Office collections . But stats have shown both in the UK and US they( box office collections) are very steady over the years despite the disruptions such as VHS, DVDs and the present Internet streaming. See this year how Star Wars just released compensates all the shortfalls earlier in the year for both Cineworld and Regal Why now Regal acquisition has become more attractive is because of the huge savings Regal is going to have because of the Tax reductions. See the link. below https://www.bloomberg.com/news/articles/2017-12-19/tax-bill-s-corporate-benefits-come-early-then-fade-study-says Suffice to say this is a very defensive and steady income generating stock.

Yeah, Brush was reportedly doing badly but with the recovery of oil, things should look better. But anyway brush is due for disposal by the goings of Melrose. and the sale ( say £600 mn) should happen sooner than later giving some seed capital for next acquisition or distribution to the shareholders I do not know the exact amount of tax liabilities of Nortek but savings if any would be substantial and according to the link below the rate would be 9% from 2018 as opposed to 35% in the past. https://www.bloomberg.com/news/articles/2017-12-19/tax-bill-s-corporate-benefits-come-early-then-fade-study-says

ttps://uk.reuters.com/article/centrica-rough-gas/centrica-aiming-to-produce-56-bcf-of-gas-from-uk-rough-site-in-2018-idUKL8N1OI4KY

With the Tax reforms approved in the US, corporate tax is slated to reduce to 21% from 35% earlier and the companies are going to benefit a lot from 2018 onwards. The share prices of US focused companies have gone up as a result. Here Melrose's operating subsidiary Nortek is based and domiciled in the US but I fail to understand why there is no reaction to the SP.

FH/OT Yeah, it is difficult to get this info from DC;s annual report. Also they may be marketing Mobiles through various channels, including their own mobile phone brand. But the Carphone Warehouse alone had a Turnover of £2.1bn in 2016April year ensd with operating profit of £88mn.You can check this in the Companies House website. By the way, the SP is steady and moving up and hopefully reach the target all are expectring soon.GLA

Apologies if anyone has read it already. http://www.iii.co.uk/articles/468458/dixons-carphone-worth-66-more

Please see the detailed notes under Uk % Ireland in the Results announcement for explanation for the drop in EBIT.Quote " Excluding these items, EBIT was down £38 million year-on-year." About the mobile business I got some numbers from CWS accounts before merger. So the percentage was a ballpark figure Further positive things in the report - Net debt down to 206mn from 285mn, Free Cash Flow 169mn from 64mn. For the second half, iphone X, and the usual festival activities.so things are looking good.

In the context of the prevailing market sentiments on this stock,and the share price the results were extremely good.Soon after the profit warning in August most of the commentators highlighted only one issue - prospects of the mobile phone operations - and made negative sensational headlines and made this stock look like worthless. They said the same to Tesco sometime back. Today's results dispel all those concerns. After all mobile business contributes only 20 to 25 % of the topline reflecting the depth of the other business segments. So you have a number of options to strategize or remodel the business if you are really desperate. Based on the numbers released Dividend @ 11.25 % same level maintained shows the confidence of the Directors to deliver. This alone should give a share price of 225p on a 5% cash return basis.They are targeting around £400m PBt which is only 25 % less than last year but mkt cap fallen by 60% which is over done. Share price should move up.

and demand for its assets in the US https://www.bloombergquint.com/china/2017/12/06/amc-approached-by-six-investors-for-stake-or-theaters-ceo-says