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In simple terms, if share consolidation happens to retain the same share price after the special dividend is paid out, for every 100 shares you owned before you will get 78.89 of new shares after consolidation. Special divi is 51p/241 = 21.1% of current share price, so the same ratio to apply for share consolidation. However in real life, it's not that easy. It all depends on how many people are still happy to hold onto the shares after the divi and consolidation. I'm happy to hold for long term for the decent dividend at 4% it's good enough for me.
lots of great feedback . thank you all.I look forward to getting the circular on 25th January, where all will be revealed .
Nigella
No, you are not missing anything. Nor has it been hidden. The special dividend and the share consolidation has been there from the first time the circular was published all those months ago. People have concentrated on the dividend and some were unaware of the consolidation and needed reminding.
Anyone who is not aware of this should really read the RNS and take time to understand it, after all, it is your money. If you don't like it, you can always vote against any relevant resolution at the General Meeting.
As for consolidation, yes, it means fewer shares but it also means higher dividends in the future. We do not know what the ratio will be until the circular is published shortly. One thing I am confident about and that is that it will not be calculated to bring the share price back to £2.40. My view has always been that the ratio will be 5:3 or 5:2.
Thank you mpw33cfr and leas for the links, they explain it very well
Some people over the last few days have made it sound like the share price will drop by 51p after ex dividend, which it could but........ who knows
These 2 links make it sound like they are buying your share/s, giving you the money and your holding will be less afterwards! I don't mind that, oh course if you have to pay tax on the money that's a different matter
Thanks everyone
I found the document from Ferguson (see link below) useful in understanding the special dividend & share consolidation. Based on 51p special dividend and 240p share price, the consolidation works out @ 63 new shares for every 80 old shares held (approx). DYOR, of course...
https://www.fergusonplc.com/content/dam/ferguson/corporate/investors_and_media/Shareholder-centre/AGM/2018/Ferguson%20plc%20Share%20Consolidation%20illustration%202018.pdf
Maybe the following article may help some shareholders. I think if you are investing on the hope that you can pocket the dividend and sell your shares at the same value then you have to be aware that will not happen. I would suggest hoping for a rise before the 11th Feb and sell into any rise is the best way to return a profit. Not forgetting that it has to rise.
The large trades reported at the close of recent trading suggests institutional money is moving around which is being supported by all the algo trades we see.
Land Securities sold 20 Fenchurch Street in 2017 and presented it's shareholders with the same scenario. The following link together with ggplyr should give a good insight into the SD and consolidation.
https://money.stackexchange.com/questions/85398/as-a-shareholder-what-are-the-pros-and-cons-of-a-share-consolidation-and-return
No worries, I'm happy i finally managed to explain it in a way that made sense.
The question seems to get asked at least daily here and no one who asks the question is never convinced of the answer.
I didn't read why they are consolidating the shares, perhaps for people who don't like the idea of she price dropping, but that does just seem to worry people that something untoward is going on.
Thank you
I too was interested in the answer to her questions
If we all knew all the answers there would be no need for chat and that would be a shame
Enjoy the rest of your day
Its an extreme example to attempt to make a point clear, evidently it failed.
Nigella's point summarised is: "we are paying for our dividend out of the shares"
My point is: "yes you are, and this is not news"
The consolidation is mudding the waters, Nigella’s implication is that after the dividend the value of the shares should be the same as before the dividend. This is incorrect.
I’ll try from a different angle. Do you agree that the value of a business is: all its assets less its liabilities + an assumed value of future earnings?
Once the share goes ex divi the liabilities are £5bn more, so the value of the company is £5bn less.
So yes you the dividend is coming out of the value of the shares.
Ggplyr, I dont think that's the same example Nigella is asking about, they are not going to stop trading???
Yes, welcome to real world where you don't get richer by a) a company paying you a dividend or b) a company consolidating your shares.
I really don't understand why this isn't obvious. Lets take an extreme example of a dividend.
Lets say today the market value a share of a company at £100.
Tomorrow the company announces its going to stop trading in a months time, in a months time it will go ex divi and then a little later on pay a dividend of £120 per share. What do you think happens to the share price?... its obviously worth £120/share now up until the ex divi date. so the share price goes up.
So yes, you pay for a dividend out of today's share price.
Yes we are getting a 10% bonus but it's for turning in at work during this pandemic if u are shielding u get nothing
Have they even said that’s what they intend with the consolidation?
Hi....does anyone else out there think like I do , That when Tesco consolidate our shares to create 50p to hold the share price up when it goes ex divi (for50p).... basically we will be paying for the divi by losing shares to that value ?????
we end up with a yummy 50p cash divi .... but a LOT less shares.
Am I missing something here ??
Has anyone worked out what the Tesco consolidation ratio will be .
As I understand it they will consolidate the shares to create a 50p uplift in the share price , when it goes ex dividend for 50p.
my maths is hopeless and i dont know how to work it out .I do not like or trust the idea of losing part of my shareholding .
It seems to me that we will actually be paying for the 50p dividend , by losing shares through consolidation.!!???
Dava
No, they got an extra 10% payable shortly
Employees didnt get a xmas bonus this year
I am all for getting a fair pay for a fair days work. Rather being critical of the company you should also look at the positives.
My understanding is that employees got a bonus this Christmas not to mention any staff discounts at the till. It also recognises employees strength and the opportunity to progress their way into managerial roles.
Retail has had enough ‘bashing’ in the last few years, TSCO has given many people young and old a secure future.
I know many people that would be grateful to work even though it may be at the minimum wage rate.
hully
11th February
to receive the special dividend hopefully in February, when would you have to have been on the share register??
The depot’s I agree your looked after really well and unite union do a good job
Sadly stores seem to be less looked after and Usdaw are in bed with Tesco,
Two different worlds in the same company hence the equal pay claim going through the courts,
So many people are on 12-21 hour contracts “ flexi as well “ Tesco could pay the same overtime rates as the depot and I don’t think many would get over 36.5 hours to get the decent rate as Tesco can flex others before they get there reintroduce the bonus , Bob’s your uncle no problem.
Otherwise you get what happens in that no one’s interested in overtime at Xmas , so they came from the depot ( as it’s a mile away )to do some at £16:50 an hour as one boasted compared to £11.which went down like a lead ballon and they needed help to finish the aisle where as the regular person would of done it and cheaper ,
I just don’t get Tesco’s logic sometimes.
Agree.
I like this board. Decent people with real world views. Some boards seem to have had a humanity bypass.
Current pension deficit will disappear as 2.5 billion of sale being placed. Annual savings for Tesco in the region of £260 million
I worked for Tesco for 19 years, and after shutting my depot, and making us all redundant, Tesco really looked after us all, I earned really good money for 19 years and they went above and beyond to look after us, the special dividend will not be detrimental to shareholders, in these strange times we live in, we are invested in a profitable company, with a good bod, I think 21 will see us at £3+ including SD?