Standard Life Share Capital consolidation?

redbuzzard

babyj3 wrote: »

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

This comment betrays a complete misunderstanding of what a share price is.

The company is no better or worse off in terms of the amount of money it has if the share price doubles or halves, other things being equal.

The company has essentially paid out an amount of surplus cash, that came out of the company and reduced its book value by that amount.

To the extent that the market cap has moved by more than the amount paid out, it is due to movements in the share price consequent on the market's determination of the value of the company and shares in it.

A company cannot create a "windfall" by announcing a cash distribution - it can only give shareholders their own money.

This has been explained every which way and I can only suggest, as respectfully as I can, that for your own benefit you go back over the explanations given until you understand them.

You have not been diddled. The value of your investments can go down as well as up, and would have done so with or without the distribution - though if anything, I would expect it has made a positive contribution to shareholder value, in that it effectively makes the company more financially efficient.

The capital restructure, whether it is 9 for 11 or 122 for 36, and whether the share price is a bit more or a bit less makes no difference to the book value of the company or its future earnings, or the proportion of it that you own.

Please, for your own peace of mind, try to understand this.

I have no shares in SL and I do not work for it.

Sicatrice

zolablue25 wrote: »

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?

Absolutely !!!!!!!! mate.

They have sold some of my shares at an unfavourable price without my permission.

If I wish to cash in some of my shares, then I shall decide when I will do that not someone else.

Sicatrice

eskbanker

Sicatrice wrote: »

Absolutely !!!!!!!! mate.

Quite possibly, it all depends on what !!!!!!!! is meant to mean.

Sicatrice wrote: »

They have sold some of my shares at an unfavourable price without my permission.

No they haven't, they have undertaken a consolidation after consultation with shareholders, or do you feel you should have some sort of unilateral veto?

Sicatrice wrote: »

If I wish to cash in some of my shares, then I shall decide when I will do that not someone else.

Nobody is stopping you from cashing in your shares whenever you like, just don't confuse that with the consolidation process.

Malik123

Still having a hard time understanding. i also believe that I have lost out. I received the letter today telling me what i own and how much i have got back.

i previously held 5000 shares in SL. they have given me about 73p per share. i have received a cheque for £3643. hey, im about 3500 pounds richer, which is good. however, i now own 4090 share rather than 5000. Ok no problem. today the market value per share is around £4.77.

4.77 x 4090 = 19509 + 3643 =23152.
5000 x 4.77 = 23850.

doesnt that mean ive just lost out on around £700. Cant seem to understand the benefit. i wouldnt have been that bothered if it was neutral. but it seems to me that im losing £700. thats quite a lot of money.

eskbanker

Malik123 wrote: »

doesnt that mean ive just lost out on around £700

No, because if the original number of shares were still issued then the price would be lower than £4.77, i.e. the current share price reflects the reduced number of shares now in circulation.

Malik123

eskbanker wrote: »

No, because if the original number of shares were still issued then the price would be lower than £4.77, i.e. the current share price reflects the reduced number of shares now in circulation.

yeah thats what i was thinking, just needed some clarification. thanks for that. i guess it does work out better in some way. but then im probably gonna get less dividens later i suppose.

bowlhead99

Malik123 wrote: »

yeah thats what i was thinking, just needed some clarification. thanks for that. i guess it does work out better in some way. but then im probably gonna get less dividens later i suppose.

You will still get your fair share of all future dividends.

Let's say there were 5 billion shares in issue, and you had 5000 of them. You get a pound for every million pounds that SL has spare out of its annual profits and can afford to distribute.

Then, everybody's shares got picked up and re-split so that now every 11 shares have been consolidated into 9 new shares.

The total shares in issue are 4,090,909,090, and you have 4090 of them . You still own the same share of the company. If the company has a spare million to distribute as dividend next year, you'll still get a pound.

The reason they did that was that after the company gave out the special one off return to investors, the company shares would fall in value by the amount paid out. People think of it as being a three to four to five pound a share company, and if they didn't do anything, it would fall in price to be a two to three to four pound company. By consolidating the shares together, the price is more directly comparable with what it was before (i.e. when it's having a good day it will be priced over £4 and if it's doing poorly it will be priced at £3.

So you have fewer shares than you used to have, at around the same price they used to be, but you also have a fat chunk of dividends or capital return (all your 73 pences. So you haven't lost out.

jillkeb

I get the logic however my understanding is... I had 5146 shares the share price on 13 march was 4.56 Value £23465. Cheque received £3756. recalculated no of shares 4210 @ todays share price 4.77 equals £20081.70. Therefore chq value plus todays price equals £23837.
So I am £372 better off, however I received the cheque as a dividend not capital and I think I may have made a mistake as I am a co director and this standard life dividend will use the allowance I would have used for my own Company dividend before paying tax. The tax voucher states tax credit £417.40 does this mean I have already paid this tax?
I am confused????

bowlhead99

jillkeb wrote: »

I get the logic however my understanding is... I had 5146 shares the share price on 13 march was 4.56 Value £23465. Cheque received £3756. recalculated no of shares 4210 @ todays share price 4.77 equals £20081.70. Therefore chq value plus todays price equals £23837.
So I am £372 better off,

That £372 is completely arbitrary though. Share prices change every second of every day. So obviously the price today is going to be different to the price almost three weeks ago, or the price on 1 January, or 1 September last year before they announced the deal, and so on. You are making or losing money on paper all the time.

however I received the cheque as a dividend not capital and I think I may have made a mistake as I am a co director and this standard life dividend will use the allowance I would have used for my own Company dividend before paying tax.

Yes, if you wanted to avoid having a large income and needing to pay tax on it, you shouldn't have chosen to receive dividend income. You should have elected to receive the return of capital (assuming you had some spare capital gains tax allowance this year). Ah well.

The tax voucher states tax credit £417.40 does this mean I have already paid this tax?
I am confused????

It is like any divs you receive from your own company. As a nice gesture from HMRC, who recognise that companies already pay tax on their earnings when they're profitable, there is a notional tax credit of 1/9th of the value of the dividends. So when you received £3756 of dividends they say the notional gross amount of the dividend is £4174. The official tax liability to someone in the basic rate tax band is 10% of the £4174, which is £417.40, and is considered to have already been paid. So, if you stay in basic rate tax band for the year, no further tax to pay on this transaction. But it will eat up £4174 of tax band.

After you run out of basic rate tax band, you pay an effective 25% of tax on all dividends received. The tax rate on dividends for higher rate taxpayers is 32.5% of the notional gross, which in this situation would be 32.5% of £4174=£1356, then take off the £417 credit leaving £939 to pay, which is 25% of the £3756 that you actually received.

Durley123

The share price was about £5.60 (the highest it has been) then it fell very sharply so that it was £4.56 on 13 March when the dividend was calculated. The consolidated shares were calculated on 16 March when the share price had risen to £4.68. Consequently we all lost out so that in effect our shares were cashed in at £4.02. Now we all understand that there are risks when trading in shares but the way this consolidation has been carried out appears to have been contrived as it has benefited SL massively compared with just about any other realistic scenario that I can think of. Fortunately I only had a few hundred shares but I sympathise with those that had a large holding. I will be trading in my shares and will never invest in SL based on the way they have carried out this consolidation.