Phoenix Share Discussion Threads

[robsy2] 18/5/2011 10:28

Cash flow is strong and predictable.Target of 800m GBP this year is around 460p a share.More than enough to press on with servicing debt,reducing debt, and increasing dividends............
The share price ought to start to close the valuation gap and rise in step with the rise in MCEV, targeted at 100m I think for this year.
To date as an invstment it hasn't really done what i thought it would do over the last 12 months.SP has underperformed the benchmark FTSE 250 and the life assurance sector.
Maybe this year will give us more. I'd like to see 800p and an improved dividend by this time next year.

[jonwig] 17/5/2011 07:53

Robsy - no great issue to take!

I think Ignis is given a value of £123m in the accounts ('Customer Relationships' = £420m, then Note 32 in the AR). I wouldn't be too confident that's the whole story, though.

I suppose Ignis is apportioned zero value by the market, since the MCap is significantly below the MCEV and Ignis isn't part of MCEV.

Anyway, in the normal scheme of things, Ignis will wither away as policies mature, so value and cashflows are enhanced by gaining new business. As the IMS says, some is lost, some gained.

[robsy2] 16/5/2011 16:57

I think things are fair set. This is valued as solid and slighty stodgy.

I think it could surprise us, but if not, I'll settle for solid and slighty stodgy.

The need for cash generation in most businesses is something that keeps owners awake at night. Here cash generation is not a problem and in hard times , (all times?) cash is king.

Jonwig, I take issue with you! I think Ignis is valued at more or less zero in the books ?

Of course it could stumble but it is very unlikely to do so . And given the valuation who cares if it does? But it most probably won't because they have 67 billion to manage.... and these are sticky funds..............

The way I figure it,If Ignis is worthless then this means that every policyholder closes their account.

If that happens the company closes and we get a lot more than the current sp?

This is at least a hold at this price.I just think why would you own a policy from the Pearl stable yielding ?% a year when you can be a proper With Profits Pearl shareholder yielding around 6% a year with serious upside potential.
Onwards and upwards I say
All the best
R2

[jonwig] 16/5/2011 07:56

That's right - I quite like the measured tone:

... over £300 million of operating cashflows in the four months to end April 2011. Phoenix remains confident that it will be successful in delivering all of its 2011 financial targets, including £750-850 million of operating cash flows.

Though Ignis could always stumble - fund management is a fickle business.

[envirovision] 16/5/2011 07:42

Going from strength to strength.

[jonwig] 29/4/2011 10:12

Can't find anything recent.

[envirovision] 28/4/2011 16:25

Has there been a broker upgrade today?

[jonwig] 07/4/2011 14:15

I see the AGM will be in Jersey:



I try to attend AGMs whenever I can, and London isn't impossible, though I do live in the sticks.

But Jersey ... who'll bother? The instis were at the presentation, so there'll only be Alex from Megabank (on expenses) and the board there ... on expenses.



Private shareholders are getting a bit irate about the fact that UK companies are starting to hold their annual general meetings overseas.

Wolseley, the heating and plumbing supplier, changed its domicile to Switzerland last year and held its AGM in January in Zug.

Rather than viewing this as an opportunity for an Alpine holiday (Gavin Oldham at the Share Centre suggests that some shareholders should see overseas AGMs as an opportunity to mix business with pleasure!) some shareholders see this as a bit of a hassle.

Companies save a lot of tax by moving their domicile to a tax haven - Dublin and Switzerland are among the most popular - some of which is of course passed on to shareholders in the form of higher profits.

But being domiciled overseas mean you have to hold your AGM in that country too. One shareholder in Wolseley contacted the FT to complain that the company hadn't bothered to set up a video or audio link for those in the UK that didn't fancy, or couldn't afford the trip.

Wolseley counters that it had done a little research among other UK-listed companies that have also moved their domicile overseas and found that they did not offer video links (though it has agreed to set up video or audio links at future AGMs in response to the concerns raised).

In fact, finding out which companies hold their AGMs overseas is actually very difficult - having spent all day phoning the FSA, the FRC, the ABI, the IMA and the ICSA, none of whom had this info to hand and all of whom referred me on to each other. For reference, they are, according to one member of this list who did not wish to be named, and in terms of the most recent to do it first:

1. Wolseley

2. Ineos

3. Brit Insurance

4. Informa

5. Tarsus

6. WPP

7. Regus

8. Henderson

9. Charter

10. UBM

11. Shire

12. Colt

13. Hiscox

But it's not clear that Wolseley's shareholder is representative of your average private investor. WPP - which moved its domicile to Dublin in November 2008 and does not currently offer video links for UK-based shareholders - told me that it abandoned the idea after it offered a video link in London at its 2009 AGM and just three shareholders turned up.

"We put on a load of food and we had to eat it ourselves," said their spokesman.

Understandably frustrating. But shareholders should still have the option.

[hyden] 29/3/2011 22:55

Interesting snippet from today's results:

"I am a firm believer in the power of brands. Both IGNIS and Phoenix have customer bases that present opportunity for business development through the leverage of those brands. Over the next few months, I intend to review our brands and their commercial potential. We will construct and implement plans which will maximise value from brand development and consequential revenue generation."

I believe Phoenix already have partnerships with Cornhill and Dignity and it seems more are to follow.

[jonwig] 29/3/2011 13:36

scburbs - the covenants are more than the dividend block, though that's the most glaring one of them. Again there wasn't much detail provided.

The quote you give from p14 means the dividend can be maintained at 42p on the increased share capital. In other words, 42p for 2011 and 2012.

Your last paragraph: exactly so! (But why on earth the January wobble?)

[scburbs] 29/3/2011 13:20

Jonwig,

Did they clarify exactly what the relevant covenant/dividend block was.

I thought when they did the equity raise they removed the old €0.50 dividend cap. The below from the presentation may cause an effective dividend cap, although the source of this restriction is unclear.

"Cash up to PGH capped at £58m in 2011 and £72m in 2012"

With MCEV per share at £12.27 per share and up 11% in the year, the share price continues to look good value if still quite highly geared. Internally generated cashflow in 2011 is expected to return the gearing level to a more appropriate level, presumably to ease a subsequent refinancing (they are both maintaining the dividend and paying down the debt significantly). If you are going to invest in a highly geared business, better for it to be one with exceptional cashflow like Phoenix.

[jonwig] 29/3/2011 10:48

Quite a few questions raised on the webcast about the debt, such as

"Why not use cashflows to pay down debt and reduce dividend if necessary?"

"What would be the extra debt cost involved in renegotiating covenant terms?"

They were deliberately quite cautious in the answers given. Current interest rate on debt is very low, actual amount of debt is not a problem, confident of repositioning themselves when interest rates step up [REM: need to check this in accounts], will always act in the best interests of shareholders and policyholders.

Also, no current acquisition plans.

[topvest] 29/3/2011 09:49

Yes, looks well positioned for continued recovery. Happy to keep holding and dividend yield is good.

[robsy2] 29/3/2011 09:15

Yep
Its the cash flow that I like, we need it because there are serious demands from lenders but even at the capped level the divi is 5% on an share price of 800p, 800p which looks realistic within the next 12 months I would think. The Phoenix is rising from the ashes and it will take time but the situation looks to be unfolding smoothly and theh business model is very robust. Expectations have been well managed to date.

[jonwig] 29/3/2011 08:45

Missed your post Robsy - they seem to have overlapped.

Agreed they have done a good job - or maybe Sandler was canny about managing expectations! I'll try to see some of the webcast and if there's any more to be said about the dividend cap.

Of course, strictly speaking it doesn't matter, as the money is ours whether it's paid out or not. But I'd expect them to deal with the maturity profile of their debt in good time.

[jonwig] 29/3/2011 07:31

Haven't done more than scan the headlines, but a strong hint that we mustn't expect the dividend cap to be lifted anytime soon:

We will continue to explore options with our lenders regarding the best structure and timing for the restructuring of our banking facilities, with a view to changing some of the current covenant constraints. However, our present facilities feature favourable interest margins and we will only agree to new arrangements if an opportunity arises that we consider to be in the best interests of our shareholders.

Rest of it looks OK on the surface.

[robsy2] 29/3/2011 07:29

Good set of results, Beat targets on cash flow, material addition to MCEV, raised cash generation targets for the coming years,plenty of scope for further increases in MCEV through management actions.Final dividend 21p.
Good progress, Lets see what the market thinks of it.

[jonwig] 28/3/2011 14:02

197300 - just two recent stuff (neither one helps you) on a search 'clive bannister':



and ...

FT article - may be subscription, so I'll remove shortly:

Restructure boosts Phoenix's book value by £140m

By Paul J Davies, Insurance Correspondent

Published: March 21 2011 22:52 | Last updated: March 21 2011 22:52

Phoenix Group, the "zombie" life fund business formerly known as Pearl Group, has added about £140m to its book value by restructuring assets.

The company, which recently appointed Clive Bannister as chief executive, said it could not give details about the release of capital ahead of its full-year results next Tuesday, but said the £139m addition to its embedded value – a measure of the future profitability and worth of a life assurer – was material.

Analysts said the deal was also significant because it showed the company could generate capital and add value at a time when it was still constrained by covenants attached to its large and complex set of bank loans, which are spread out among more than 15 institutions.

"This is a significant number – we estimate that the group EV will be around £2.1bn, so the benefit is about 6.6 per cent of EV – which shows that the EV has the capacity to grow through management action," said Duncan Russell of JPMorgan Cazenove.

The company has been exploring options since last year to free up capital, such as securitisation and hedging options for its annuity books, or longer-term asset swaps with banks, according to people familiar with the group. It might also consider a partial sale of Ignis, its asset manager, at some point.

Additional capital could fund smaller acquisitions or more quickly pay down Phoenix's large debt load, which came as part of the highly leveraged takeover that both created the group and nearly destroyed it.

Phoenix needs to pay down 10 per cent of its nearly £3bn in bank debt before it can easily renegotiate covenants that restrict its ability to explore large deals and escape a dividend cap. There had been some hope that it might be able to restructure the debt in time for its full-year results, however, that is unlikely to happen.

The deal announced on Monday involved restructuring a £1.2bn portfolio of corporate loans across its subsidiary companies, which would lead to a "significant reduction in asset volatility", it said.

Companies can use a number of routes to release capital in this way, such as transferring some of the risk of the loans to a third party, or through turning the pool of loans into something more saleable through securitisation.

Shares in the company rose 2.3 per cent to 665p.

[197300] 28/3/2011 13:31

today's times
"the chief executive of closed life fund consolidator believes that his business has undergone a near death experience. but clive banbnister who previously ran the insurance and asset management divisions at hsbc is undaunted. that which does not destroy you makes you stronger. he says"
anyone know from what article this was taken?

[jonwig] 21/3/2011 17:15

Divi amount and dates probably announced with the FY results on 29/03.

[envirovision] 21/3/2011 16:49

Inverted head and shoulders completed + new high for the year. When is the divi?

[jonwig] 21/3/2011 16:14

My first thought on reading the RNS was that it might help in the process of lifting the dividend cap, but I couldn't see how, concretely, so didn't comment.

But it certainly looks good.

[robsy2] 21/3/2011 15:52

Another step forward and the market likes it.The results will show more progress and excellent cash flow meaning that the dividend can now be increased? MCEV up again.It all looks good.

[hyden] 10/2/2011 14:58

Struggling to identify the right shoulder. I think a fall to c. 620 then a breakout from 650 would do it. :-)

[envirovision] 10/2/2011 08:22

chart looks good, inverted head and shoulders.