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@Enrico "I don't understand all the details here but my assumptions are as follows:"
Depends on what an ESS is in Australia. Virtually certain, for instance that the UK EMI scheme is only for UK companies, even if the directors / employees are located in the UK.
Re: points 2-3, I'd say that's almost certain but there's a big "if" -- if the vesting date is the deferred tax point. But maybe that's the only way this makes sense. Wish I knew Oz tax law better.
I can't see any scenario in which CB and GH would do this if they think there is any chance of selling our share of Hav and paying a big dividend before next July.
So why would they rule that out? The only reason I can see is if they still don't expect to be able to value this by then. Maybe I'm reading too much into this but this seems like one of the most bullish signals in a while. If they expected to be able to value Hav by the end of the year, then you'd have to keep the option of selling our share open.
So, I conclude they don't expect to be able to value Hav until spring, at least. That means there is either gold in the SW, gold out at 1000m (like we heard earlier), or both. In either case, it's going to take a long time to assess the extent of this monster so they won't be selling.
Roll on 23 July.
Does that apply to AIM shared Jambo?
There is a 50% reduction of Capital gains if asset is held for 12 months. Perhaps this may be part of the equation
There must be more to these tax rules. Hopefully, someone with an Australian connection will be able to clarify.
As I said on previous occasions when we got an RNS about the directors' options: I won't worry unless Starvest start to offload their shares!
With you Jambo.
I don't understand all the details here but my assumptions are as follows:
- Company directors based in Australia are subject to the Australian tax regime.
- If the vesting date is used as the deferred taxing point, then the value of the options on the vesting day is added to their income for the corresponding tax year.
- When they sell their shares, they need to pay the CGT on the difference between the price on the sell date and the price on the vesting date.
May be wrong but this suggests they expect a full buy out of GGP, they just don’t know what the price will be but have a good idea on the timing.
Gone off you TMT!
@Enrico, good research, but are UK companies eligible for Australian ESS schemes, so is that relevant? I certainly don't know.
And I read something on deferred tax point that suggested options issued after 2016 used the exercise date, not the vesting date, as the deferred tax point. If the deferred tax point is the vesting date, why have they been selling shares to pay tax when exercising their other options?
Maybe hydro's Oz tax source will help us out. But it almost has to be for tax reasons.
And I'm virtually certain it tells us the path ahead does not include an early sale of Hav and a large dividend.
I'm no Aussie tax guru but a quick googling for Australian ESS (employee share schemes) allowed me to come across some information on upfront-taxed schemes and those with a deferred taxation date. My guess is that, for GH's and CB's options, the vesting date is used as the deferred taxing point, and this extension allows them to push the taxable benefit to the following year. (Note this is not the CBT tax, which is due when the shares are actually sold.) Here's an excerpt:
"Employee share schemes
ESS and capital gains tax
In most cases, ESS interests are exempt from CGT implications until the discount on the ESS interest has been taxed.
When you sell your ESS interests (or resulting shares) they are taxed under the CGT rules (or if you are a share trader, the trading stock rules).
CGT treatment of an ESS interest after the deferred taxing point
For an ESS interest that is taxed upfront, the interest is taken to have been acquired for its market value on the date of acquisition.
For an ESS interest for which tax is deferred, the ESS interest (and the share or right that it forms part of) is taken to have been re-acquired immediately after the deferred taxing point. This resets the cost base of the ESS interest to its market value at this time, and resets the acquisition date, which will be relevant to your eligibility for the 50% CGT discount."
Ah, missed that, Paddy, thanks.
TMT, Quote from the RNS
The Company and both executive directors have agreed to extended the vesting date for the options listed above from 25 September 2020 to 5 July 2021. All other terms of the options including the expiry date remain unchanged
They have 3 years after they vest to be able to exercise them.
They could have delayed exercising them until the next tax year regardless of this vesting date being delayed.
Something else is going on
@Paddy "It's given them less breathing space rather than more because they haven't extended the expiry date."
I don't think this is right. It specifically says it extends "the vesting date." The original announcement said, "All options have a life of three years from the vesting date." So I would assume the expiry date is also extended.
@RA, good catch on the specific date and the Oz tax year. It's got to be tax.
Jerry, I think you are spot on. It seems to me that previously when they have taken up their rights unde the options previously granted, they have sold shares to the value of the option price, and the tax due on the disposal, then taken up the option thereby increasing the number of shares held for no additional cash outlay.
By extending the option period I assume that their hope or expectation is that the SP will increase during the period of the extension, as a result of which they will require to sell fewer shares in order to pay the option price, thereby resulting in an increase in the total number of shares held by that stage, than would be the case if they were to excercise their options now
WF - I suspect that you are correct that this is for Tax reasons. The Australian Yax year runs from 1 Jul to 30 Jun. This extension is for 9 months and 5 days to 5 July. Mmmmm. Someone here has a friend who is an Australian Tax guru, could they be about to blow a tax allowance if they exercise these options in the same year as those they have already exercised.
That doesn't negate the argument that this could simply be to avoid questions regarding Director trading with privileged information.
Regards
RA
Read the original announcement and it will clear up some of this. https://www.lse.co.uk/rns/GGP/grant-of-options-yu3jkribcf6yrx5.html
The share options were granted 26 September 2020, vest 12 months later, and expire 3 years after the vesting date. The vesting date is when they actually own the options (if the company were sold, they would immediately own the options). Owning the options is not owning the shares. They cannot use the options to buy the shares at the agreed price until the options vest.
The option vesting date has been moved out an additional 9 months, to approximately the end of June, 2021 (maybe start of July). That moves the option expiry date out an additional 9 months as well, to June-July 2024.
What this means for the company is that these executives don't own these options yet, they aren't vested, so they can't exercise them and buy the shares yet. That means if Hav is sold now and a dividend paid, they can't exercise these options and get the dividend. (If GGP is sold, they can exercise these options and get the payout.)
This certainly is not negative for investors. The dilution is delayed further.
There may be tax ramifications, for both the individuals and the company, on the vesting of the options, and that may be the reason they've done this. I would also say they would not likely have agreed to this if they anticipated an early dividend. If you thought Hav was going to be sold and a 15p / share dividend paid, would you take away your option to receive it on 9 million shares that are going to cost you a lot less than that? I wouldn't. They don't expect to sell Hav and pay a dividend anytime before mid 2021.
That suggests to me this:
There is unlikely to be a deal to sell GGP's share of Hav until we know more about just how big it is.
Whether that means there might be a deal in the works to acquire GGP entirely, or a purchase of our share of Hav is still on the table but not until we know more, or it means they think we are going to mine, I don't know. But I am pretty sure we aren't going to see a big dividend in the next 12 months. If that was likely, this wouldn't have happened.
It's all good in any case.
I still think it's more of a wiggle room move. It's only 36m options in total vs a circa 3.8bn shares in issue. Only a small number of the 36m will need to be sold to take up the remainder options, so limited effect on price IMO.
summat's afoot anyway!
A positive then..thanks all
All good stuff and as others have mentioned protects all parties.
San
Could also be that the elephant is so big they need more time to compile mre and pfs.
My take is that they are telling the mkt that they won’t be exercising these options, and therefore selling any shares associated with the option exercise, for the next year. Maybe in response to an institution querying whether, if they bought, they would be buying against director sales, which is never very nice.
So, good news I think.
It's given them less breathing space rather than more because they haven't extended the expiry date. It could be to placate institutional investors who may be afraid of the directors selling into any perceived rise when the options vested in September. This way they would know that could not happen for at least 12 months from now.
Paddy
*Board of directors not bots