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

jimjames

babyj3 wrote: »

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

You're obviously not a regular on the forum or you'd see that bowlhead routinely posts very detailed and helpful posts here on a wide range of subjects.

Just because people aren't telling you what you want to hear doesn't mean they work for the company or are wrong, they just understand investment. Maybe something you need to read up on if you're holding investments you don't understand and vote without knowledge.

It's nothing new. Do a search for Vodafone payouts and you'll find investors complaining about the same thing.

molerat

As I have already said the issue is not what they have done. I understand what they are doing and why but that is not how it was sold to shareholders at ISSUE1 in bowlhead99's post quoted above and his ISSUES 2 and 3 were not clearly put forward at the time. Whitbread did a similar exercise several years ago but they were very clear from the outset how it would affect the ordinary small shareholder and IIRC they made it easy for that shareholder to re-invest that cash back into the business.

HarryD

molerat wrote: »

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

A DRIP, if taken up by most shareholders, would destroy the whole point of the exercise, which is to return to shareholders a pile of cash realised from the Canada sale.

molerat

HarryD wrote: »

A DRIP, if taken up by most shareholders, would destroy the whole point of the exercise, which is to return to shareholders a pile of cash realised from the Canada sale.

Then an easy buying shares on market option.

vectistim

<Typical bowlhead War and Peace>

babyj3 wrote: »

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

Go and do a user search on bowlhead99 and you will see the length of that post wasn't out of the ordinary.
My disclosure: I'm not a Std Life employee but I have a shareholding that is several times larger than 500 shares, and I'm quite happy for them to give me cash.

I think you've been receiving lots of posts as people are mystified as to what the problem is.
Having read through your posts again I think I've worked it out. You're concerned that with fewer shares and with dividends expressed in pence per share your future dividends will be reduced.
Assuming that's the issue, I'm now going to use simplified numbers to explain it away:

Let's assume company SL has 1000 shares and you own 20 of them.
Let's assume SL likes to return 50% of its profits to shareholders via dividends.
Let's assume that every year SL makes £100 profit
The budget for the dividends is therefore £50 dividing that between 1000 shares means a dividend of 5p per share.
You own 20 shares therefore you get a total payout of 100p.

Now, the company goes through a share restructuring and reduces the number of shares by 20%.
There are now 800 shares and you now own 16 of them.
Again SL makes a profit of £100 and pays out 50% as dividends
£50 divided by 800 shares 6.25 p per share
You own 16 shares therefore you get a total payout of 100p.

Assuming the company makes the same profit, you own the same proportion of the company, and the company returns the same proportion of profits as dividend it doesn't actually matter how many shares you have.

Going the other way, Standard Life could restructure and for each share currently worth £4.15 they could issue 100 shares each worth 4.15p
If they did that you might end up with 50,000 shares - that wouldn't mean you would receive 100 times the dividend payout you currently do.

molerat

The next dividend will only be 82% of what was expected .

HarryD

molerat wrote: »

Then an easy buying shares on market option.

If you are equating buying shares on the market with a DRIP, you are not correct. It works out about the same for an individual shareholder, but not for the company.

With a DRIP, the money stays within Standard Life. If you buy shares on the market the money does not go back into Standard Life.

So, the DRIP, if taken up by all shareholders, would mean the £1bn (or whatever the amount is) would all be sloshing around in SL's bank account. Whereas, even if all shareholders used their cash payouts to buy shares on the market, none of the £1bn would end up in SL's bank account.

This is all very basic stuff! Maybe a bit of background reading would be in order?

bowlhead99

babyj3 wrote: »

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

You obviously have little faith in human nature. Try to read the post as someone having an attempt at explaining to someone who does not understand their investment how the world of investments actually works: what votes are about, how returns are generated and distributed and what happens to the residual value of a company when it pays something out and has fewer assets left.

The concepts were boiled down to the simplest analogies possible that would tie in to something you could relate to. I even dumbed down that sentence right there for you, by saying, "something you could relate to" instead of saying, "something to which you could relate".

Put it this way - if SL are evil and their management is full of bad guys why would they want to go out of their way to try to take you through a very lengthy explanation of how it all works and what is happening at every stage of the process? They already gave you news releases, circular documentation, voting packs, FAQs and you didn't understand it. As they are bad guys trying to swindle you, then surely they would not come on here and dumb it down even further to painstakingly explain the concepts while you act so dismissive.

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

At the moment they're trying to distribute cash out of the company to get rid of it and reduce the number of shares in total, rather than issue new shares and keep the cash in their bank accounts.

So, there's no option to have them issue new shares to you as part of the distribution process if you don't want the cash. You're right, you can go to a broker and buy however many shares you like, using your proceeds of this distribution or dividend or any other cash you have lying around.

HarryD wrote: »

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?

Without checking any of your maths to see how realistic those numbers are... the concept should be that if your shares were previously allocated between newshares and B shares in the ratio (1636x 401.5p) £6568.54 to (2000 x 73p) £1460, then you would just take your initial purchase cost of £3200 and split it 656854:146000 into the two buckets.

Basically, think of it like: if you had one old share you are getting it split up into a new little B share worth 73p and a new main share worth the rest. So, by looking at the proportions of the two new shares you apportion your cost of the old shares. Then when the little B share gets paid out for cash of 73p, you will make a gain or a loss depending on how much you had apportioned to that share, which came from what you had spent on the entire big share originally back in the day.

The cost that you didn't apportion into the B shares is left behind to be your cost on the other shares.

Another way to look at it is that if you, say, tripled your money over time from £1000 to say £3000 of value today, basically one third of what it's all worth now is cost. So, after you split off the 73p shares, each of them is one third of cost and two thirds of gain, and each of the remaining shares is one third of cost and two thirds of gain.

If you then cashing in just the 73p shares, for CGT purposes you only make your two thirds gain on those and the other shares you have not sold keeps its status as two thirds gain and one third cost. But if you chose to sell the remaining shares too, then you'd make your two thirds gain on those too, and in total everything you sold would have been two thirds gain and one third cost, as implied by the £1000 cost to £3000 value.

molerat

HarryD wrote: »

If you are equating buying shares on the market with a DRIP, you are not correct. It works out about the same for an individual shareholder, but not for the company.

With a DRIP, the money stays within Standard Life. If you buy shares on the market the money does not go back into Standard Life.

So, the DRIP, if taken up by all shareholders, would mean the £1bn (or whatever the amount is) would all be sloshing around in SL's bank account. Whereas, even if all shareholders used their cash payouts to buy shares on the market, none of the £1bn would end up in SL's bank account.

This is all very basic stuff! Maybe a bit of background reading would be in order?

I know there is a difference. Either option was to give the individual small investor the opportunity to keep their money in a company they trust, who actually receives the cash is not relevant, it is all about trust and relationships and showing they care. I know that small investors are not liked by companies, they only want to attract the large institutional investors, so upsetting and losing a few will be a positive in the eyes of the board.

HarryD

bowlhead99 wrote: »

the concept should be that if your shares were previously allocated between newshares and B shares in the ratio (1636x 401.5p) £6568.54 to (2000 x 73p) £1460, then you would just take your initial purchase cost of £3200 and split it 656854:146000 into the two buckets.

Thanks. So the formula for the cost of the B shares is:

Original acquisition cost of total holding x (value of B shares / (value of New Shares + value of B shares)). Where the values are prices on the first day of trading of the New Shares x number of shares held.

Have I got that right?