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Essentially the whole consolidation is a zero sum game for holders. The downside is we end up with some money and would need to repurchase the shares lost to consolidation to maintain dividend income. That costs money in terms of dealing and stamp duty costs. If your not in an ISA the equation is significantly worse as it may force a tax event on the special divvy income.
Think I will sell and maybe try and buy a dip- just don't know for sure if that will work as moving target!
Speaking for myself i have (sort of) decided to sell my shares if there is a run up in the SP leading up to Special XD
Bought @ 961p so will take the profit
1150p would lock in a 20% return.....
CJ66, it could have been 1 for 2 and a bigger cash return or a whopping buyback.
They have overpaid for Bristol and I wish they hadn't sold Viridor without having something else lined up.
Now I have to find something to replace the missing income. Wondering if something like Ulvr might be better, same yield, maybe a tad bigger but more potential to grow. Except I have just upped there.
Reits if yield income is the main driver but this was a steady Eddie. Hopefully after ex divi the pressure will drop a while before the buybacks kick in.
Then again with the real divi coming along so soon after people are likely to still be buying.
Choices Choices
I think you make a good point Gerry - they give on one hand and take away with the other - give you £3.55 x3 = £10.65 and then take away one of your shares.
Now if Costa wants to use the equivalent money to buy back his share it is currently £11 - i.e. he has lost out by getting the £10.65 but then having to pay £11 to get it back.
To work the share price must fall below £10.65.
It all sounds rather like a game of smoke and mirrors and just takes a load of shares and money away - but it is left in a good condition overall despite this....
I bought last year at £11 but have received a few dividend payments already. My strategy is to buy the equivalent of the 1/3rd I will be reduced in the consolidation, after the ex dividend date but before the special dividend date. There will be dividends in the future
"So, have i got this correct? Say the SP is at £11 on the day. Giving the market cap of X amount. Then you get 2 shares for every 3 you hold; so 33% less shares around. Would you expect that £11 to increase by c33% so that the market cap remains equal? Or will the consolidation wipe out the 355p special ? Sorry if this make no sence, am new to this stuff"
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No the £11 wont increase to keep market cap equal. The market cap will fall by approx 1/3rd as they are paying out approx 1/3rd in cash out of the business. Effectively its a forced sell of your shares so they can give you your own money back.
The SP would normally fall by the same £3.55 amount on ex divi date. This big drop makes yearly comparisons difficult and there appears to be a big drop in the SP graphs. So to try and keep the SP the same they are doing the 2 for 3 consolidation to try and maintain it.
Assuming the deal get agreed then the dividend amount in Sep will also increase per share but it will be on less shares. Therefor the dividend cash will be the same pre or post the deal, give or take a fraction of a share.
I suspect the announcement will anchor the share price around the 1086p amount. If it drops too much, ie to 3.55 you will be getting your shares for free. If it rises too much, 1441 then you might as well sell as your getting a free cash back.
There might be a slight rise from freeloaders reading "massive dividend windfall" headlines thinking they are getting a free lunch on the run up to the deal, only to find they get given their money back or slightly less. Im surprised its a fixed 2 for 3 not based on actual SP on the day.
The upside is dependant on how much you paid initially for your shares.
The lower the price the better the deal. If you paid 3.55 you get back all your start money and you are left with 2/3rd for free.
If you paid more than 10.68 not so good as you are just getting your own money back. You could argue you are left with a stronger water company than it was pre deal so should be better going forward.
I liked the Viridor side and its a pity its gone. I held some with two brokers and sold the smallest lot this morning. Saves the being in two places issue. Nor sure yet if I will sell the rest, take the offer cash and run or buyback my shares with the cash I get to re up my holdings. The price will have to drop though as the yield is still on the low side post consolidation. Also If Im not happy buying, why would I be happy with the buyback.
They can't assume .... typo
You wont get 2/3rds of the dividend. Its 21.74 on all unless the consolidation is agreed.
If so, then its 32.61 on 2/3rds
They can assume it will be agreed so gave both sides.
The increased divi base will be 2p unless agreed also then its 3p
StarKnight
Cant see any upside to this. Once I pay tax on the Special Dividend and receive 2/3'ish of previous dividend, I think I will be a tad disappointed!
Hi Millie / Pig
Look at this link from Pennon’s website, go down to page 4 heading
Example using 1,000 ordinary shares
https://www.pennon-group.co.uk/sites/default/files/attachments/pdf/pennon-special-dividend-and-share-consilidation-overview.pdf
It shows that after the consolidation you will approximately the same amount of money but with only 666 shares instead of 1000 so I cannot see why shareholders would vote for this !! as in the future you will have one third less shares to receive dividends on but the annual dividend will; have 2p added it.
So the short answer to your question is you will get the special dividend on all your shares of which the record dates is Friday 2nd July at 6 pm and the share reduction from 3 of your shares to 2 of your shares will be effective on Monday 5th July so in my opinion you will not be able to get the special dividend on all your shares and then sell them before the consolidation as the market is not open at the record time of 6pm on a Friday night !! Also the cosolidation is effective from 8am on Monday 5th July so after that time you will be one thir of your shares down but hold the original value once the special dividend is paid on 16th July as I understand it
StarKnight
The special dividend will be worth 355p per share after a two-for-three share consolidation
It says 'after' the split
So won't it be the number of shares you hold 'after'??
On what you have now
Hi Millie
Look at this link from Pennon’s website, go down to page 4 heading
Example using 1,000 ordinary shares
https://www.pennon-group.co.uk/sites/default/files/attachments/pdf/pennon-special-dividend-and-share-consilidation-overview.pdf
It shows that after the consolidation you will approximately the same amount of money but with only 666 shares instead of 1000 so I cannot see why shareholders would vote for this !! as in the future you will have one third less shares to receive dividends on but the annual dividend will; have 2p added it.
So the short answer to your question is you will get the special dividend on all your shares of which the record dates is Friday 2nd July at 6 pm and the share reduction from 3 of your shares to 2 of your shares will be effective on Monday 5th July so in my opinion you will not be able to get the special dividend on all your shares and then sell them before the consolidation as the market is not open at the record time of 6pm on a Friday night !!
"The special dividend will be worth 355p per share after a two-for-three share consolidation announced Thursday."
So, just to be clear, will i get 355p per share on my holding now or 'after' i have a third less shares?
Just sold my non isa holding, bought back in isa after throwing something out to make space for it.... Can do without a chunk of additional div tax thank you very much
Hi StarKnight,
In my last post, I have stated the final dividend as 14.97p per share and after share consolidation this dividend will be 1.5 x 14.97p = 22.46p.
Furthermore, all the 422m shareholders will receive special dividend of £3.55 prior to consolidation.
See the news attached below:
++++++++++++++++++
Pennon also announced a GBP1.5 billion special dividend and GBP400 million share buyback programme.
The special dividend will be worth 355p per share after a two-for-three share consolidation announced Thursday.
In addition, Pennon will pay a final dividend of 22.46p per share, bringing the full-year total to 32.61p per share, after taking account of the share consolidation.
Pennon expects to increase its dividend base by 2p per share in its 2022 financial year to recognise the earnings accretion of the Bristol Water acquisition.
++++++++++++++
Hope this helps.
bbrq648
bbrq Hi
Thanks mate.
Also there will be an increase to the Group’s dividend level of c.9% (2p per share on a pre-share consolidated basis) from
2021/22 onwards.
I think the whole consolidation exercise will only benefit shareholders who got in very early at say below £4 as they will have their shares swapped for the Special Dividend. Any new investors will lose out in my opinion ,do your own research and Good Luck
StarKnight,
Your explanation is correct with respect to the special dividends.
After share consolidation of 3 shares to 2 shares, there is an additional final dividends of 14.97p per share if you hold until another month till the ex-dividend date.
bbrq648
....maybe they were just crap at their jobs?
Who knows......
Pennon took over Bournemouth water a while back, promising no great changes to the operation there. In reality they have practically emptied the offices and moved a very substantial number of staff to Pennon bases or got rid of them, promising efficency and critical mass savings etc etc. It went along the usual corporate line of 'your jobs moved 100 miles and been down graded, take it or leave' oh bye, shut the door on the way out. A lot of empty 'relocated' roles were then never filled with the spare cash going you can guess where!.
The same will no doubt happen at Bristol.
Id imagine this is why the directors have jumped rather than suffer this sort of indignation.
IAPR
Am going to assume the SP will drop more than the divi.
I have sold on the run up to ex day with BATS, LGEN & IMB over last few months, and it has paid off each time
ie; the SP dropped more than the divi & was able to lock in some cap gain & buy back in at a lower price.
This has been my experience but others may have other views....DYOR as always
See Pennon as a good company but the questions regarding what will happen to the SP around consolidation day leave me to worry my profit may evaporate......
Pig
@Pig.. I am not qualified to give any advice.
I think the only question you have to ask yourself is: Will the share price post-consolidation be lower than the current share price? I've taken the gamble that it will be lower than what I sold them for, but I could be wrong. I have been on many occasions!
If you think it will be, then you could sell, book your profit and then buy them all back, hopefully covering your stamp duty as well on the re-purchase. If it turns out it isn't lower then you've still booked your profit.
If it does turn out to be lower you will maintain your current holding with less shares in issue (i.e hold a larger percentage of the company). PNN have said they are aiming to increase the 2021/2022 dividend by at least 2p a share so you'd have the advantage of receiving a bigger dividend on 33% more shares than you would have held if you accept the special dividend.
Bearing in mind though, you have the advantage of holding your shares within an ISA wrapper so you do not have to worry about any tax on the special dividend. In my case the tax would have been £532.50 on 2,000 shares.
Good luck to you. Please DYOR.
@Star.. Those Zebra Mussels look gross!!
I wonder what happens to those who got 2 shares through the watershare thingy. Do they now get consolidated down to one? or rounded back up to 2..?
Pig
Look at the post I have just posted on Zebra Mussels ........at Bristol Water
A female Zebra Mussel can produce 1 million larvae in a spawning season!.....YUK
StarKnight