Member Info for TheWednesday

Easy Livin.

If the SP is divided by 0.76 then this really is Christmas for us all.

However, the SP will not be divided by 0.76, it will simply be the same as the day before (plus or minus any natural market movements).

Aviva even tell us this. In the literature they make it clear (clearish) that the whole point of the 76:100 consolidation is to maintain the share price at the current level. i.e. to avoid a sudden drop following the return of the £3.75bn.

The value of a persons shareholding will reduce by approx. 24% immediately following consolidation. However, they will have an equal cash amount in their pocket to replace the reduction the value of their holding.

Will the share rerate in the next year or so? If Aviva can indeed maintain and grow the aggregate dividend pot then it will. The big question is can they?

I hope they can because I'm holding on for the ride and hope to use the capital returned to buy the 24% of my shares back!

GLA

Maddmax,

the share price will not go to 550 immediately after consolidation, it will stay the same as it was the day before (with minor market fluctuations). The whole point of the consolidation is to keep the share price the same, not increase it by approximately one third.

The share price MAY go towards 550, or even higher in the longer term, but only IF Aviva are indeed able to pay, and more crucially, maintain the estimated future dividend of 31p.

Vind,

the circular states that they see 2022 FY at 31.0p and FY at 32.5p, but this is caveated as indicative only and in no way guaranteed.

Not sure about future years but seem to remember the initial announcement suggested an intended dividend policy of low to middle single digit dividend growth, so probably intend growing dividends at about 3-6%.

Morning,

not sure it is factored in to the price. The return of 101.69p is being followed up by the share consolidation for the express purpose of maintaining the share price at the same level, not to increase it by a third (lets say from 440 pre consolidation to 587 post). Were they not to do the 76:100 consolidation, when the 101.69p is returned the share price would fall by that amount to approx 338.

The intrinsic value of the company won't be the same, it'll have reduced by the £3.75bn given away. By that token, if it were remaining the same, a vote against it with the £3.75bn not being returned, but instead kept by Aviva, means you would expect the share price to go up by 101.69p immediately, to approx 542. Clearly this would not happen as the current price of approx 440 reflects the value of Aviva, including the £3.75bn that sits in the bank.

When this goes through shareholders should see no immediate effect, i.e. still have the same wealth but hold 24% of it in cash and 76% as shares, as opposed to 100% in shares before.

What happens in the future? Who knows?

The theory is that if Aviva is able to generate the same profits, thus a greatly increased EPS/dividend, then yes, the share price should increase considerably, leaving us clearly better off. However, this is not guaranteed.

As other posters have indicated, previous examples of capital return have not gone too well. I know of Vodafone and Tesco. These were not done in quite the same way, but the ensuing share consolidations didn't really have the desired effect. Another recent one was Standard Life, which did it in the same way, via a B share scheme and accompanying share consolidation. This has not really provided any true shareholder value either.

I believe the three examples I have mentioned above all did this following asset sales, the result of which was to reduce the companies' revenues and profits, thus there was never going to a great effect on dividends as the reduced numbers of shares were simply getting a slice of a smaller total payout. In other words, the whole process simply maintained the status quo. I'm simply trusting to memory here so could be wildly wrong abut these three examples.

The difference in Aviva's case is that they have have indicated revenues/profits will not be affected, in which case the same "pot" would be shared by fewer shares, thus having the desired effect of significantly increasing dividend / yield. It is this that should then drive an increase in share price and provide significant long term value for shareholders. However, it is in no way guaranteed.

I'm a shareholder and am going to hold until this hopefully goes through as I believe it will be worth it in the long run, it's just that previous experience of such things has left me less excited than some, who seem to think they are receiving a very generous payout. Personally, I hope to buy back my "lost" shares with the returned cash.

Good luck whatever you do.

SFH300
"From previous experience I think you will still have the same number of shares but at a lower share price."

NO.

You will have 25% less shares. If you had 500 before you will have 375 after. Aviva make that quite clear.

The price of those shares is up for debate. The intention is that it will be higher than now, reflecting a higher EPS and Divi PS. The reality is that they will probably be at a similar level to now, reflecting a smaller business following return of capital. Depending on world events they could even be lower than today's price.

No-one knows what the SP will be following consolidation, be you can be sure you will hold 25% less shares.

GLA

Capital return via share consolidation was the last thing I wanted.

My preference would have been for a straightforward buy back. They could potentially take upwards of 800m shares off the board with that amount of money, possibly a 1bn if you factor in the £1bn buyback already underway. That would be taking 30%ish of Aviva's shares out of the market and would have the same effect of ratcheting up the EPS and subsequent dividend. The only difference would be that the ones selling at current price would be doing so voluntarily. As it stands, I will be forced to sell 25% of my shares at a time and price I would not choose to sell then at, then will have to hope I can get the same or slightly lower market price to be able to buy them back again.

I understand the theory that the share price should also rise, leaving me with a similar valued holding, plus cash in the bank, but I have seen these things happen before and it doesn't seem to play out that way.

Good luck all

$30m
Dollars are worth a lot less than pounds.
Still a promising deal though

...and if the income misses target and the AAA publisher is underwhelming, make sure you've got a change of pants.

Azzurri,

I think people are simply estimating the final dividend announced later in the year to be twice the interim of this morning.

Therefore final to be 1.34p.

Added to today's interim of 0.67 will equal 2.01p for the year.

Simply a guess, but one third / two thirds split is fairly normal I think.

I personally think we will receive a nice surprise at final results in shape of special divi plus a buy back.

Sadly there were also a lot of images not to feel so proud of.

"whether you purchase at 4p or 6.4p will make little difference in 24 months time."

Would make 60% difference to eventual value.

He could do the presentation in Speedos for all I care, as long as it's inspiring.

GLA

That's correct scousemark. Frome the Jan Interim Results RNS:

"In December 2020, we announced the selection of our lead COVID-19 vaccine candidate, SN14. In light of the newly identified variants of the SARS CoV-2 virus, which are becoming increasingly prevalent and which may become more important in the transmission and community spread of COVID-19, more recent data has suggested that another of our lead candidates, SN15 (or SCOV1 for future reference), may confer even better protection against the virus than SN14. SCOV1 reproducibly elicited higher-titre anti-S virus neutralising antibodies (VNAbs) together with high avidity T cells against both the S and N proteins and further studies are underway to test SCOV1 against the variants identified in South Africa and Brazil."

I put the following into google "A universal Covid vaccine may be our best means of escape".

The first link was the FT one and it let me read it no trouble. Unlike the link in the thread which requires subscription.

I remember Chris Ackers investing here in Nov 17 when the reverse takeover of Kin (FITBUG) went through. He put up enough cash to get 3.2% of the company.

Since then I can't remember there being any notification that he has either reduced or increased his holding. I could be wrong though.

GLA

Surely a director (or anyone) would not e able to purchase shares now and use them to vote as any shares purchased would likely already have had their corresponding vote cast by the previous owner.

Unless there is a definitive qualifying date of ownership, as per dividend entitlement etc. then there is a clear risk of double / multiple counting of the same vote.

Whoever it is, I would love to know the reasons for the vote against the resolution.

I did not vote, but would happily do so now to get the resolution through, but ONLY if I am sure it is the right thing.

The money on offer to the company looks great in theory, but someone who is a lot closer to the top than all us PIs, and who have infinitely more experience investing than me, have decided it is not as good as it appears. I would love to know why.

I must admit, although the £17.9m should be great for the company, I am a bit uncomfortable about one shareholder becoming so influential. After all, such a big cash raise did take us all by surprise so soon after the previous one, and we are not entirely sure what it is all needed for.

Happy to use my small vote, but don't want to blindly help a resolution through that ultimately comes back to bite me on the bottom.

Any thoughts are very welcome.

Unfortunately, I think you were also right with decease Inan.

To be fair Mads, you could buy these for less than 0.5p as recently as March. It would only have took a cheeky £500 top up back then and they could have been sold double that last week. So £500 made in a couple of months. No reason to doubt Michu's claims at all.

Unfortunately for me. although I considered topping up while the price was in the 0.5-0.6p range, I never had the nerve. I've sort of made the decision I have enough skin in the game now and with a 3.1p average am just going to sit it out.

A bit more confidence in trading £500 - £1,000 now and again could possibly see me reduce that average, but knowing my look, the day I decide 0.5p is the bottom and put my money in will be the day before the RNS telling us it's all mothballed!

Anyway, good luck all, and let's hope we get the RNS we all want. I will happily take anything over 5p.

Agree. Very disappointing.

I missed the fact they have sold a load more while I was typing my previous post!

Yesterday's 500,000 seemed insignificant. Not so now though.

GLA