Standard Life - 73p Cash Payment But .......

IronWolf

babyj3 wrote: »

Standard life state that the share price should be approx the same immediately before and after the share consolidation.
My HOLDING in shares will decline when they pay me out my own money - something that I do not want

It would be wonderful if companies could payout money and it have no effect on their share price, we'd all get rich quite easily. But that just isn't how it happens, the shares will fall by the amount of the payout, and in this case the share consolidation negates the effect but reduces the number of shares you have.

They haven't been misleading, this always happens and shareholders should know this. This isnt a bank account, it is shares in a company that will be worth significantly less once all their cash is removed from the balance sheet.

vectistim

Just make sure that you take the low hanging fruit from the tree rather than picking up the fertilizer or you'll have to wash your hands.

I don't know what the fuss is about:
Std Life did a Good Thing and generated more cash than the markets expected.
They told the markets about this - the share price went up.
Std Life doesn't have any use for this big lump of money and so is returning it to shareholders.
Once the big lump of money has been returned to shareholders the value of the company will go down as the big lump of money is no longer part of the company.
Std Life have worked out that its more tax efficient to return the big lump of money by restructuring the shares.

If you have 500 shares now, and will end up with 409 shares after the restructuring it doesn't matter.
You will still own the same proportion of the company because everybody else's shareholding will have been reduced by the same proportion.
Currently there's c. 2,400,000,000 shares in existence of which you currently own 500 - 0.0000208% of the company (subject to me typing in the correct number of 0s)
After the restructuring there will be 1,960,000,000 shares of which you will own 409 - 0.0000208% of the company.

IronWolf

babyj3 wrote: »

You are the one who has it wrong
The consolidation is not irrelevant and it seems to me that it is a smoke and mirrors exercise designed to let the unwary think they are getting the promised windfall
Standard Life are using the consolidation to reduce the value of my shareholding and then return capital to me - something that I do not want especially at a time of low interest rates. I feel I would do better if my money was left in their shares and getting the dividend twice yearly
I want the status quo
If I have less shares it means that my future dividend will be lower as the dividend payments are based on the number of shares held. So I lose out there as well
I want my shareholding to be left as it stands. I do not want nor need the return of capital
Standard Life never told me that I was going to see a decline in my holdings if I received a payout. They lead me to believe I would receive a windfall payment in the form of a special dividend as previously paid and a lot of people must have believed the same to vote as they did.
I feel as if I am a turkey who ended up voting for Christmas

I don't have it wrong, share consolidations are irrelevant to the returns you will get as a shareholder. If they didn't consolidate the shares then the share price would fall by an appropriate amount. Future dividends are up to the company, if they have sold off a chunk of their business then it's quite obvious dividends may be reduced going forward. If you did not want capital returned to you then you should have voted against it. But it appears you didn't understand what a return of capital actually means. It's too late now, all you can do is buy more shares with the money you receive.

HarryD

Can anyone explain how the CGT cost for the B shares will be worked out? Their document says:

"a Shareholder’s aggregate CGT base cost in such Shareholder’s holding of Existing Ordinary Shares will have to be apportioned between the B Shares, C Shares and the New Ordinary Shares by reference to their respective values on the first day on which the New Ordinary Shares are listed."

So, suppose you bought 2000 shares @ 160p - cost £3200. Value day before the deal @ 401.5p: £8030. Value on first day of trading: 1636 New Shares @ 401.5p plus 2000 B shares @ 73p: ~£8029 (plus ~£1 cash).

How much of my £3200 acquisition cost do I apportion to the B shares?

HarryD

babyj3 wrote: »

Standard Life are using the consolidation to reduce the value of my shareholding and then return capital to me - something that I do not want especially at a time of low interest rates. I feel I would do better if my money was left in their shares and getting the dividend twice yearly. I want the status quo

Use the cash from your B or C shares to buy Standard Life shares.

babyj3

bowlhead99 wrote: »

Why does the share consolidation

matter so much to you and why are you getting so hung up over it. Do you actually care whether you have 500 shares or 409 shares. Of course not, none of us do, the number of shares on your certificate is neither here nor there. The share consolidation and restructure is just a mechanism to allow them to give shareholders the spare money out of the company's bank account without everyone having to pay tax as if it was a dividend.

What you and everybody else are voting on next, if you read what you are voting for, is them returning money back to investors after selling a part of their business. They had announced that if they sold that part of the business they would want to give the money from selling that part of the business back to the shareholders, because it would be pointless holding 4 billion canadian dollars in their bank account, as they wouldn't know what to spend it on. But what they were pretty certain of, was that the shareholders would rather they had 4 billion canadian dollars instead of a canadian insurance, investment managment, savings and retirement business, so they had arranged the sale.

You and all the other investors voted wholeheartedly to dispose of Canadian operations with the longer term intention of returning the spare funds to shareholders.

Next, you will very likely pass the forthcoming vote and say sure, go ahead, lets restructure the company a little bit and give us back all the spare cash you're not using. And yes we're happy with the tweaks you're making to the company constitution to accommodate the share restructure in the most tax efficient way so we can all optimise our personal tax position.
It was quite clear what the vote is for, if you read what the vote is for.

They did not sell part of the company to allow a share consolidation. They sold part of the company to generate a large amount of cash from a buyer which would have otherwise remained untapped - they wanted $4bn more than they wanted the Canadian business. The value to the shareholders of Standard Life having $4bn of spare cash in it was higher than the value to the shareholders of having Standard Life own a Canadian insurance retirement and investment management business.

Then once they sold the business, they want to perform a share restructure to allow the money to go back to the shareholders in the most effective way possible without everyone paying a huge amount of tax. They asked you to vote on that just now because they can't just rip up the constitution and restructure it themselves without a vote from the owners of the business.

As the owners of the business, as a whole, are not stupid, they will say sure, that's a fine idea, let's restructure the company so we can take the money out in a tax efficient way, and then let's take the money out, because there is no point having these billions in the bank account when we don't need it and interest rates are low.

So, the proposed restructure of the shares is not the reason to sell the canadian company. Selling the canadian company and having way more cash than they need which their shareholders would want to receive in their own bank accounts, is the reason they want to restructure the shares. They have cash and want to give it to you.

I don't think there will be one. What is there to complain about? People liked the idea of the sale of Canada, generating cash and focusing the business. Following the sale, would you prefer the company to just sit there with money doing nothing in the bank when interest rates are low? Why would you want an investment in a company which does nothing with its assets? You wouldn't, so you presumably voted in 2014 for the Canadian business to be sold with the expectation that the money generated would be returned to its investors, of which you were one.
The issues are

ISSUE 1) Shall we sell the Canadian business if we can get a good price for it? Answer from the directors, yes. That operational decision was made a year or more ago. If you are a shareholder who votes at the annual meetings you would have voted to appoint or reappoint the directors who in turn recruit a management team who in turn employ 6000 staff to run the business. You do not need to vote on every issue.

But Canada was a decent sized chunk of the business so they still let you have a vote on whether to sell to get the $4bn from the buyer, and told you at the time of the vote that if you agreed to go ahead they would return the spare 73p per share to you in cash. You and the other shareholders voted 99.66% in favour of going ahead.

ISSUE 2) If we have a lot of money in the bank from this sale shall we return it to shareholders or shall we keep it lying uselessly in the bank? Answer, we plan to return it, and we kinda covered that already when discussing the plans ahead of the first vote. However, we will go out to a shareholder vote for approval of the method.

ISSUE 3) If we are returning cash to shareholders the best thing to do would be to restructure the share capital to allow it to be done tax efficiently using a B/C share scheme rather than pay out taxable dividends to everyone. We plan to do this. However we will go out to a shareholder vote. While doing this, we can also ask the investors to fill out a form whether they want to get their money back as income or capital or both, as most will be able to choose, depending on where in the world they live. We will ask the investors what they prefer.

So, Issue 1 was resolved ages ago. There was no point doing 2 & 3 until the industry regulators had given approval. Now they have, we might as well do point 2 & 3 as one exercise. Documents issued 20 February, meeting coming up for the vote on 13 March.

Only one vote was needed, back in September/October last year, to cover issue 1. Then there is another one coming up in March to cover issues 2 & 3. There are about 4 paragraphs and they relate to making the distribution. Returning the value to the shareholders so that the cash sits in the hands of the shareholders and not idly redundant in a company bank account doing nothing useful.
You own a piece of a company which has several pounds of value in it for every share you own. At least 73p of that value is cash sitting idly in a bank account.

They propose to return that value to you in cash so that you can have it in your hands. At that point, the company will have less value in it, because it no longer has the equivalent of 73p cash per share sitting in a bank account, because it has paid out 73p cash to all the shareholders for every share they hold.

There is a return of value of 73p a share.

The share price is driven entirely by perceptions of what the company is worth - what it has in the bank, what assets it has, what its profits are, what it will do in the future. As the company has made some positive decisions, including the sale of a business and a proposed return of funds to investors, the share price has done quite well.

The company held a vote on the disposal ; holders of over a billion shares bothered to vote. 99.66% of those people voted for the proposal. What did you believe you were voting for, if not the sale of the canadian business which would generate cash to eventually be returned to shareholders?

Perhaps my cake analogy in which I explained how a cake can grow over time but if you have it in your belly you can no longer also have it on your plate, was lost on you.

I'll try again. You voted for the cake to get bigger by siding with the directors to make the positive move of disposing of the Canadian business and therefore improving the overall value of Standard Life in terms of its total assets or cash or business prospects or all three.

The cake, [or shall we call it the apple tree?] was small. The cake, or apple tree, grew as a result of the directors lining up a sale: a big cash buyer turning up with [cake ingredients / fertiliser] and the stockmarket loving the prospects. You as the owner 'voted for' the idea of accepting the ingredients or fertiliser so that after the growth was delivered you would be able to take the spoils away and eat them. The heat turns on in the oven, the sun comes out in the sky, and thanks to the ingredients or the fertiliser we get growth. As a result of the growth, the cake is bulging, the apple tree is bulging.

On the tree, there is now a lot of low hanging fruit. Then if the wind is right, and everyone votes in March, you can take a 'wind fall', as the fruit falls into your lap. Lovely. But the fruit is no longer in the tree. If you let it off the tree into your lap you cannot still have a bulging tree with lots of low hanging fruit that you can sell to someone else for lots of money. I suppose you can vote against taking the wind fall. But most of your fellow owners will vote for it, so now you will pretty much get it whether you like it or not. If you don't want the fruit, you can plant it again and grow new trees.

Are you still following the analogy? Good.

What you seem to be saying now is that you feel misled. If you had known that it was only possible to take a wind fall by having the apples come off your tree and into your hand, you would not have wanted the wind fall, because there's no point just having them in your hand instead of on the tree. You're not hungry, leave them for later. Am I hearing you correctly?

But you are also saying that you feel so strongly about this problem: the problem that you can't have apples in your hand at the same time as they are on the tree, or you can't have your cake on a plate and have eaten it too, that if you had known that this is how the world works, you would never have voted last October to approve the ingredients for the cake, the fertiliser for the tree. You feel you were bribed into approving the fertiliser by the promise of being able to grow some apples to eat. Now you realise that if you take the apples into your hand you cannot still have them in the tree, you wish you had never even grown the apples in the first place.

So Scenario 1, you have a tree that doesn't produce apples.

Scenario 2 you have a tree with apples which you can sell for more than you could sell the tree in Scenario 1, but if you don't sell it or eat the apples, the apples will eventually go rotten and the tree will lose value.

Scenario 3 you have a tree with apples that you take off and eat, but then you no longer have a tree laden with apples that you had in Scenario 2.

You seem to be saying that you prefer Scenario 1 to either 2 or 3. You would prefer to vote last October for no apples to be created, than end up with an apple-laden tree and have to face a vote this March on whether to take the apples off it.

They asked you whether you would like to grow apples and take the windfall. I expect Sir Gerry and his helpers got a bonus for arranging the fertiliser that allowed the apples to grow, because they have created some value for you. You now have a tree full of apples while before you had a bare tree.

You think it is all smoke and mirrors because you can't take the apples off the tree while still leaving the apples on the tree. That is not smoke and mirrors it is how the world works. To decide you don't like how the world works and if you'd known how the world works you would not have wanted Sir Gerry and the helpers to nurture the tree and grow the apples in the first place, seems like you are not thinking clearly.

They created some value and tried to give it to you in your hands. Everyone else likes it - 99.66% approved. However you think that most of them, representing a billion individual shares held, probably don't understand it and should have rejected creating that value.

If you reject it, you will be cutting off your nose to spite your face. You would come across as one loaf short of a picnic. Unfortunately this piece is lengthy enough as it is, and if you are unable to grasp the concepts about having your cake and eating it or having a tree full of apples vs taking a wind fall, I do not want to confuse you with further metaphors about the human body or countryside dining.

Having read how you are analysing my posts and arguing the case for Standard Life so vociferously line by line I can only deduce that you are from their customer service or press office as I cannot see that anyone else would take so much time or trouble and I know from experience that they monitor this site
How many more of you arguing their case are employees of Standard Life?
Bye bye

molerat

HarryD wrote: »

Use the cash from your B or C shares to buy Standard Life shares.

Which they could have made easy by having a DRIP option, they chose not to.

shazbig

Hi

Please be gentle as I have tried to find the answer but can't. I would like to buy new shares with all of the windfall. Is this an option at all or do we have to take it as cash and then buy the new shares through a broker or similar?
Or am I supposed to fill in the form and and enter someyhing at step one?
TIA
Shaz

jimjames

babyj3 wrote: »

You are right
Nothing is being returned to shareholders other than our own money

Who's money do you think they could give you?

As explained previously you can't magic money out of thin air (well not unless you're the Bank of England but that's another story!)

HarryD

shazbig wrote: »

Hi

Please be gentle as I have tried to find the answer but can't. I would like to buy new shares with all of the windfall. Is this an option at all or do we have to take it as cash and then buy the new shares through a broker or similar?
Or am I supposed to fill in the form and and enter someyhing at step one?
TIA
Shaz

You have to take cash and buy shares through a broker or similar.