Standard Life Capital Return

Hal17

I received a payment into my bank account today from Standard Life as part of a capital return to shareholders. I am sure I had read about this previously, but life moves on and you forget these things.

I read the following on line today - "The return of value is not a windfall as the company is effectively buying back part of investors’ existing holding".

I am confused, not difficult I must add.

So now I have less total shares after the swap and some extra cash in the bank which together is about equal to the value of the total shares I originally held yesterday. Standard Life say they have given back £1 billion to shareholders, but I have not seen any gain. Am I missing something or just being stupid. Thanks

Rheumatoid

Dear Shareholder

Your 2018 return of capital payment

The sale of our UK and European insurance business completed on 31 August. I’m pleased to confirm a return of 33.99p per share to shareholders via a B share scheme has had regulatory approval.

A cheque for your payment has been sent to you – please cash this as soon as possible. Visit https://www.standardlifeaberdeenshares.com to download your return of capital confirmation and see full details of how your payment is made up.

Share consolidation
We completed the share consolidation exercise on 22 October. The consolidation ratio was 7 new shares for every 8 old shares – you can view details of your new holding at https://www.standardlifeaberdeenshares.com

The return of capital of 33.99p per share, together with the value of your new holding of ordinary shares after the consolidation, is approximately equal to the value of your previous ordinary shares (subject to market fluctuations).

not sure I understand it either!

jonathon2412

I had 673 shares in SLA worth as of today's price around £1875
I now have 602 shares in SLA worth around £1663
By my calculation I should receive around £228 from the Share buyback which totals £1891
I am better off nominally by £16 but now will recieve only dividends on 602 shares.
This seems like a bad deal to me which SLA are trumpeting is a great thing for share holders.
Am I missing something here? Can I complain to the regulator?

AnotherJoe

jonathon2412 wrote: »

This seems like a bad deal to me which SLA are trumpeting is a great thing for share holders.
Am I missing something here? Can I complain to the regulator?

Yes.
Will it get you anywhere?
No.

kidmugsy

jonathon2412 wrote: »

I had 673 shares in SLA worth as of today's price around £1875
I now have 602 shares in SLA worth around £1663
By my calculation I should receive around £228 from the Share buyback which totals £1891
I am better off nominally by £16 but now will recieve only dividends on 602 shares.
This seems like a bad deal to me which SLA are trumpeting is a great thing for share holders.
Am I missing something here?

You certainly are. Why do you assume the dividend will be unchanged?

londoninvestor

Hal17 wrote: »

So now I have less total shares after the swap and some extra cash in the bank which together is about equal to the value of the total shares I originally held yesterday. Standard Life say they have given back £1 billion to shareholders, but I have not seen any gain.

That's about what to expect. Where does money "given" to the shareholders come from? The assets of the company. Who owns the assets of the company? The shareholders.

The rationale for doing this is broadly that the company thinks it doesn't have a useful way to apply the surplus cash in growing its business, so you get it back and put it to a more profitable future use investing it elsewhere.

Which, to be fair, probably is a good thing if even the company's management think they are not the best stewards of the money.

(NB a separate question is whether the shareholders of SL, or Aberdeen, or both, or neither, have ended up with a more valuable investment than they did before the merger. I don't know enough to comment on that.)

jonathon2412

If they do well I'm assuming it will get better, but I will still only get a dividend on 602 shares rather than 673. Given though they have claimed this is a big win for share holders, that clearly isn't, I don't really trust them to get me a good return on my investment. It's more about the way it's pitched than the actual money when you see headlines like £1.75 Billion returned to shareholders you assume that means you are going to have a good return, this is just a con

EdGasketTheSecond

You are doing well if you got paid today. I have Standard Life shares in three different accounts/providers and not received a bean from any of them.

eskbanker

jonathon2412 wrote: »

If they do well I'm assuming it will get better, but I will still only get a dividend on 602 shares rather than 673. Given though they have claimed this is a big win for share holders, that clearly isn't, I don't really trust them to get me a good return on my investment. It's more about the way it's pitched than the actual money when you see headlines like £1.75 Billion returned to shareholders you assume that means you are going to have a good return, this is just a con

But the future dividend distribution will be spread across 7/8ths of the number of shares as before, so, all things being equal (profitability, etc), individual dividends per share should be expected to rise by a factor of 8/7, i.e. the total dividend you receive should be equivalent to what you currently get....

AnotherJoe

jonathon2412 wrote: »

If they do well I'm assuming it will get better, but I will still only get a dividend on 602 shares rather than 673. Given though they have claimed this is a big win for share holders, that clearly isn't, I don't really trust them to get me a good return on my investment. It's more about the way it's pitched than the actual money when you see headlines like £1.75 Billion returned to shareholders you assume that means you are going to have a good return, this is just a con

There's your problem.

cloud_dog

Hal17 wrote: »

I received a payment into my bank account today from Standard Life as part of a capital return to shareholders. I am sure I had read about this previously, but life moves on and you forget these things.

I read the following on line today - "The return of value is not a windfall as the company is effectively buying back part of investors’ existing holding".

I am confused, not difficult I must add.

So now I have less total shares after the swap and some extra cash in the bank which together is about equal to the value of the total shares I originally held yesterday. Standard Life say they have given back £1 billion to shareholders, but I have not seen any gain. Am I missing something or just being stupid. Thanks

I think your original assumption regarding the 'windfall' is where you are falling down.

The UK and European insurance business which were sold previously had a value which, in essence was contained within the share price of SL prior to the sale. All that has happened is the liquidation of the assets value has been taken away from the SP but has been paid in to cash (33.99p per share) to you. In essence there is no new money, simply a distribution of assets (cash) to its shareholders (including the share consolidation).