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Real-Time news about Resolution (London Stock Exchange): 0 recent articles
|scburbs: The Resolution value share looks set to give a wholly inappropriate pay out to the old external manager at some point. It was out of the money when the management was internalised, but is now in the money.
In the event that RSL makes an amount equal to the current market cap (i.e. c.£5bn) then as of 31 December the value share was worth £145.7m! There were discussions about removing this for c.£20m at the time of the management changes, but it was left in place. At the share price peak of c.380p the value share was worth £185m. The value share is the original management teams reward for exceeding a paltry 4% shareholder return target!
This leaves a ridiculous situation where Cowdery and the other members of the Resolution Operations LLP will benefit from 10% of any value growth in excess of 4% p.a. despite Cowdery having stepped down. This is a real value drag for other shareholders.
"Total gross equity deployed in RHN1 is approximately £4,056 million and the accumulated value of net equity deployed (at 4% per annum and after the return of £1,066 million of capital returned to the Company to date) is approximately £3,543 million as shown below."
"Resolution is also expected to seek to cancel a so-called "value share" that ROL holds in the listed company.
This complex agreement entitles ROL to 10 per cent of the shareholder returns above a certain threshold that Resolution generates from its acquisitions of Axa's UK life business and Friends Provident.
They calculated the value share was worth £31m in present terms but added that a sum of about £20m would "likely be more palatable" to Resolution's shareholders."
|nigelmoat: Amazing! 6% yield at current share price with future increases in dividends proposed.|
|nigelmoat: Full year results coming shortly on 18th March. Any one any thoughts as to whether we might see a special dividend returning some funds to shareholders? Been talked of here before and perhaps that expectation pushing share price higher?|
|osirisra: Absolutely Aleman. I had AV. but swapped into RSL some time back. I shall admit that I swapped after AV. announced the surprise divi cut (must have come as a surprise to most otherwise the share price would already have been down). I'm still happy I swapped and here is the maths:
I got 17% more shares in RSL after costs and there have been the divis, 9p at AV. & 14.09p at RSL.
17% extra on the RSL divi gives 16.48p.
16.48p - 9p = 7.48p better off per RSL share I hold over AV.
The share price gap has closed a tad from 50p to 47p.
Take the divi difference of 7.48p off of the Sp difference gives 39.52p
So in real terms I am better off all round. Eventhough AV. have instigated a recovery plan and it shows early signs of working it will probably take a long time before the divi is increased again. They cut it to bollster the balance sheet and have sold off quite a few revenue producing components. Now that their divi policy is set and until the remaining components are drastically improved, or added to, I cannot see the policy changing. Meanwhile the good ship RSL sails unwards. I am looking forward to that difference in the two Sps closing some more over the next few months and then a lump more come August at the next results.
AV. reduced their final divi from 16p to 9p so we can expect the interim to be cut from 10p to around 5.5p. RSL's last interim was 7.05p.
Caveat, I have been awake all night on night shift. If I have made fundamental maths errors feel free to point them out!
Got out of AV. at 322 and into RSL at 272. There have been divis for both since and the gap has closed|
|kendo10: The price was marked down yesterday morning by 14p because it was ex dividend day. Quite a few shareholders don't this so they panic and sell assuming there is something wrong with the share and with the market sentiment the price was down 21p. Normally the share price moves back up to the original price before ev divi day quite quickly but with the state of the maket at the moment it could take a bit longer than anticipated.|
|scburbs: The elimination of the scrip dividend is interesting as it indicates that they are happy to pay out the extra cash rather than suffer the MCEV/share dilution from issuing shares at the current share price.|
|aleman: IFRS NAV 379p. Similar share price to Aviva and RSA (as per the Express article) would be about 410p for a yield of just over 5%.|
|aleman: That Express journalist wants the RSL dividend yield in line with others? OK then - RSA and Aviva trade at IFRS NAV +10%. For RSL, that would be about 450p on interim numbers. A 4.8% sector yield on that would be 21p+. Arguably, the yield IS already at the sector average but the share price is 40% too low. Perhaps that is why it has been recovering of late?|
|scburbs: Good to see that common sense prevailed on the value share which is to be left in place. Whilst the ultimate price paid may be higher (if the share price performs well), paying cash for failure should be avoided.
Not too clear about the cost saving remarks as comparing the settlement payment with contractual payments is not like for like. I suspect these do not include the loss being made on the lease or the fact that RSL has to pay the transferring employees. They also haven't stated any cost savings going forward, which would be very useful to know.
|scburbs: Dividend up (rare in such a high yielder), final divi set to be up too, MCEV solid (£4.27/share - still a massive discount of well over 40%) and strategy finally heading in a sensible direction (I think the share price has suffered from the strategic randomness). Returns on capital aren't great, but it is a low return environment and you can buy those returns at a massive discount anyway making them more effective from the current share price.
Time for the share price to return to £3+?|
Resolution share price data is direct from the London Stock Exchange