Standard Life Share Capital consolidation?

Langtang

Hello,
I've just received a letter from Standard Life saying they're paying 73p per share back to shareholders following the selling of part of their business.

They are doing it as a "B/C share issue" What does this mean? I can't understand the letter.

They are also carrying out a "Share Capital consolidation" and they are taking back 11 share that we already hold, and issuing us with 9 new shares (which they hope will be at the same price as the old shares - 9 for 11 doesn't seem like a good deal to me!!!)?

To me, they seem to be giving us 73p per share with one hand (B/C shares) and taking it away with the other (the share consolidation)

I have to vote on what I'd like to do before the middle of March but am a. Confused and B. Worried that I'm being "conned" out of some money by SL.

Any clarification would be greatly appreciated. I am happy to provide any information that I've perhaps missed out here.

Dave.

eranou

Langtang wrote: »

Hello,
I've just received a letter from Standard Life saying they're paying 73p per share back to shareholders following the selling of part of their business.

They are doing it as a "B/C share issue" What does this mean? I can't understand the letter.

They are also carrying out a "Share Capital consolidation" and they are taking back 11 share that we already hold, and issuing us with 9 new shares (which they hope will be at the same price as the old shares - 9 for 11 doesn't seem like a good deal to me!!!)?

To me, they seem to be giving us 73p per share with one hand (B/C shares) and taking it away with the other (the share consolidation)

I have to vote on what I'd like to do before the middle of March but am a. Confused and B. Worried that I'm being "conned" out of some money by SL.

Any clarification would be greatly appreciated. I am happy to provide any information that I've perhaps missed out here.

Dave.

see:
https://forums.moneysavingexpert.com/discussion/5180681

bowlhead99

Langtang wrote: »

Hello,
I've just received a letter from Standard Life saying they're paying 73p per share back to shareholders following the selling of part of their business.

Yes, covered to death on the other thread linked above. Happy reading

The long story short is that they are going to send cash to investors that they no longer need in the business after selling a big operating unit. They are going to convert some of your shares into a new type of share which pays out a big dividend (C shares) or is just sold to give you a cash return. (B shares) You can elect which one you want as some people prefer to get dividends and some people prefer to get capital back in their hand and make a capital gain, depending on their personal tax situation.

Then after they've given you this big wodge of cash, there's less cash left in the business, so every one of your old remaining shares would be worth less than it used to be. As this might make comparisons difficult across different financial years, they are just going to gather up all the old shares and reissue them 9 new ones for every 11 old ones. That means the value of the new ones will be pretty much the same as the value of the old ones were (four quid or whatever). You now own fewer shares, because you've got a load of cash in your hand plus 9 shares instead of having 11 shares.

If you are happy to get your money as a dividend (the standard choice if you don't make an election) you can just hold tight and wait for it. If you're a basic rate taxpayer or a non taxpayer that will be fine and you don't need to reply, just wait for the cash. If you pay high rate tax you might not want a dividend that attracts tax, so you could go the capital proceeds route instead.

To keep things neat, just follow that other thread rather than replying on this one.

quickbrick

I am deeply disappointed to find my 888 shares in Standard life 2 weeks ago are now 650 shares at the same price therebye losing me approximately £800. The money I was looking forward to from Canadian Sale was £670 so amid all the euphoria I will end up £130 worse off than I was 2 weeks ago. Oooh!!!! I'm so excited at my "good" fortune. Every shareholder must be in the same position.

jimjames

quickbrick wrote: »

I am deeply disappointed to find my 888 shares in Standard life 2 weeks ago are now 650 shares at the same price therebye losing me approximately £800. The money I was looking forward to from Canadian Sale was £670 so amid all the euphoria I will end up £130 worse off than I was 2 weeks ago. Oooh!!!! I'm so excited at my "good" fortune. Every shareholder must be in the same position.

If you only hold shares in SL are you aware how much risk you are taking?

You'd be far better to diversify into a mixed fund so you aren't just exposed to the fortunes of one company.

bowlhead99

What was the share price before the Canada sale was on the cards? You are all doing quite well out of it.You have not lost £130 from the value of your 888 shares since the days before they announced the proposed sale and capital return.On the contrary, investors have done quite well. If I could go back in time I would buy some.

babyj3

quickbrick wrote: »

I am deeply disappointed to find my 888 shares in Standard life 2 weeks ago are now 650 shares at the same price therebye losing me approximately £800. The money I was looking forward to from Canadian Sale was £670 so amid all the euphoria I will end up £130 worse off than I was 2 weeks ago. Oooh!!!! I'm so excited at my "good" fortune. Every shareholder must be in the same position.

I feel exactly the same. When I voted in September 2014 there was no mention of consolidation just a return of capital to shareholders and I believed what I read in the letter Standard Life sent me. I expected a special dividend of .73 per share and so did a lot of other shareholders and I believe that Standard Life wanted us to believe that so we would vote yes to the sale
They have paid us .73 per share using £4.01 as the price per share not even basing the figures on the share price on the day of the March vote when shares were trading much higher I do not consider this either fair or equitable.
I have read articles online in the Daily Mail where their financial editor James Coney described literature sent out by Standard Life as - clear as mud - and the Telegraph where others such as us feel aggrieved by way Standard Life have gone about this matter. Helen Miah from the share centre explains this very well and if she can why didn't Standard Life explain it properly in their letter of September 2014 - because they wanted us to vote yes to the Canadian sale so they worded the letter to make us think we were in line for a special dividend and they left out the part about share consolidation in case people like me wondered what it meant and questioned where it would leave me and vote no which I would have done
We are worse off and they have now paid themselves huge bonuses
I notice Bowlhead and his supporters who will not have a bad word said about Standard Life have moved onto this thread to shout down any ctritism or offer advice that you did not ask for perhaps to make you feel/look like an unsophisticated investor whose doesn't know/understand what you are talking about when in fact you are spot on with your comments
I wonder why?

zolablue25

quickbrick wrote: »

I am deeply disappointed to find my 888 shares in Standard life 2 weeks ago are now 650 shares at the same price therebye losing me approximately £800. The money I was looking forward to from Canadian Sale was £670 so amid all the euphoria I will end up £130 worse off than I was 2 weeks ago. Oooh!!!! I'm so excited at my "good" fortune. Every shareholder must be in the same position.

That doesn't look right to me. Isn't it a 9 for 11 consolidation? If it is then you should have 888/11*9 surely? This would be 726 not 650.

The figures you have given suggest it is an approximate 8 for 11 consolidation.

Edit: Whilst I understand why SL have done this consolidation following reallocation of funds it may have been less confusing for some shareholders if they had just let the price of their existing holdings fall by the 73p they paid out. But, of course, this wouldn't look so good when trying to compare the share's performance.

zolablue25

babyj3 wrote: »

I notice Bowlhead and his supporters who will not have a bad word said about Standard Life have moved onto this thread to shout down any ctritism or offer advice that you did not ask for perhaps to make you feel/look like an unsophisticated investor whose doesn't know/understand what you are talking about when in fact you are spot on with your comments
I wonder why?

Maybe, becasue they like to help people?

I can't understand why you didn't just sell your existing holding before the consolidation if you felt so strongly that you were losing out by the process?

gt94sss2

babyj3 wrote: »

I feel exactly the same. When I voted in September 2014 there was no mention of consolidation just a return of capital to shareholders

As I replied to another post of yours last month, Standard Life did mention both the return of Capital and the share consolidation in September 2014 - their letter on page 5 here states:

Following completion of the Disposal, Standard Life expects to return £1.75bn of capital (equivalent to 73p per share) to Shareholders by way of a B/C share scheme (the “Return of Capital”). Following the Return of Capital, Standard Life intends to carry out a share consolidation.

And its referred to several times afterwards in that 10 page letter - as well as being clear from this Q&A document

Regards
Sunil

bowlhead99

babyj3 wrote: »

I feel exactly the same. When I voted in September 2014 there was no mention of consolidation just a return of capital to shareholders and I believed what I read in the letter Standard Life sent me. I expected a special dividend of .73 per share and so did a lot of other shareholders and I believe that Standard Life wanted us to believe that so we would vote yes to the sale

Just to clarify: by voting yes to the sale and return of capital which improved the company's financial strength and the market's perception of it, the directors actions and your voting actions combined have changed your 11 shares valued at about £4 each (total £44) into 9 shares valued at about £4.75 each (total £43) PLUS a special dividend of (11x 0.73, total £8). And somehow you feel you have been done over by the company.

My take on it, is that it's your complete lack of understanding of how companies and shares actually work, which is making you feel aggrieved when you have not been wronged at all. When people attempt to educate you and improve your lack of understanding, they are accused of "shouting down" your criticism because you did not ask for the education they are trying to give you.

They have paid us .73 per share using £4.01 as the price per share not even basing the figures on the share price on the day of the March vote when shares were trading much higher I do not consider this either fair or equitable.

They gave you 73p for every share you held because they had about £1.75 billion to distribute after selling Canada for $3bn and utilising some of it within the business. The £1.75bn divided by all the shares in existence resulted in 73p a share. That 73p for every share you held, represents your slice of the cash in the company's bank account which is surplus to requirements after selling Canada.

If the market perceives the company to be worth more money after a good set of results, successful sale and supportive shareholders, the shares may be worth more than the 401p on the open market. That wouldn't suddenly mean the bank account has got any more than 73p available for distribution to you.

I have read articles online in the Daily Mail where their financial editor James Coney described literature sent out by Standard Life as - clear as mud - and the Telegraph where others such as us feel aggrieved by way Standard Life have gone about this matter. Helen Miah from the share centre explains this very well and if she can why didn't Standard Life explain it properly in their letter of September 2014 -

I don't suggest you read the daily mail for financial advice. I patiently explained the telegraph article to you in the other long thread. The bottom line is that share consolidations and returns of capital do not in themselves create or destroy value. Selling Canadian businesses and streamlining the company creates value. However, returns of surplus capital are desirable as they make companies that you own more efficient which is why people vote for them.

because they wanted us to vote yes to the Canadian sale so they worded the letter to make us think we were in line for a special dividend and they left out the part about share consolidation in case people like me wondered what it meant and questioned where it would leave me and vote no which I would have done

They did pay you a special dividend and also made it available as capital proceeds return for those higher rate taxpayers who preferred it in that format for tax efficiency.

Share consolidations do not affect shareholder value, they do not create or destroy wealth.

We are worse off and they have now paid themselves huge bonuses

You have £43 of shares and £8 divs for every £44 of shares that you had before the announcement on 4 September. Well done, directors: your bonuses are well earned.

Bowlhead and his supporters who will not have a bad word said about Standard Life have moved onto this thread to shout down any ctritism or offer advice that you did not ask for perhaps to make you feel/look like an unsophisticated investor whose doesn't know/understand what you are talking about when in fact you are spot on with your comments
I wonder why?

Not sure how to respond to that but I guess if you would prefer to only receive misguided praise for your views from others who- like you- are unsophisticated investors, instead of the unsolicited free advice, education and guidance available from experts... then I suppose I and my "supporters" should dampen our enthusiasm to help you understand what is actually happening and how shares work in general.