Member Info for ggplyr

Overall the lack of hedging has resulted in some periods the customer winning, some periods the customer losing, but over a long time its pretty much balanced out.
Overall PLUS has saved on hedging cost which make up a large chunk of Cost of sales for IGG and CMCX.
PLUS return a lot of the profits via dividend.
Its a trade off, they could hedge and pay c25% of revenue towards hedging, reduce the profit but increase the share price, or you can take the long term view that the high (sustainable) dividend yields will continue to flow at a suppressed share price, while they continue buying back shares cheaply.

I doubt you are comparing quite what you think you are comparing, the price of a share of one company vs the price of a share of another company isn't overly comparable. Although their relative movement is which is what you are implying.

Sainsburys has net assets of 7.8bn, it has a market cap of of 5.5bn. if it sold all all its assets and settled all its liabilities then in theory share holders would be better off than they are now.
whereas tescos net assets is 13bn (half of which are intangible), & has a market cap of 24bn.

Looking at this alone implies sainsburys is undervalued vs tesco.

Although tesco has a much better p/e ratio

(analysis only done on full year accounts which are coming up to a year old for both companies)

Regardless of whether you consider investing gambling.

Jaff asked - profits from gambling are tax free?
Answer - for you as an individual yes, if you win big on the horses through William hill or any bookie yes, if you win the national lotto* yes.

However - for William hill and any other bookie they not only pay corporation tax they also pay a gambling levy which is an additional tax on profits between 15-50% depending on the type of gaming. So HMRC still get their share. If the HMRC didnt do this then you would be able to win more because the likes of william hill would not need to absorb this cost so could decrease the spreads on the bets.

In summary - gambling is taxed but you dont notice it, its effectively taxed as source like your pay slip. if it wasn't taxed then you would be able to win £1.15m on the lotto for 5 numbers plus the bonus rather than £1m

*(Although I believe if you win on one of those scratch cards that pay 10k for life or anything for life that actually is classes as income because its a recurring payment)

Tesco made the sale not you. Tesco will treat it as a business disposal for tax purposes. You are an investor. You should treat it as dividend income as that is what it is. Do what ever you fancy on your tax return. Good luck if you get caught, but I'd take advice, sounds like tax evasion to me. If you haven't made use of Isa wrappers then do so. If you have, well you are probably sufficiently wealthy, probably not worth the risk of engaging in tax evasion.

Found something on it, but cba to read it all. I'm sure options were explored with regards to how to return the cash.

The fact that it's not usual way to return cash probably means it's either on risky ground in terms of tax evasion.

Have you got a link to explain what you mean by capital return or an example of it happening.

While they are tax free a gambling levy is applied which is paid by the gambling company, but ultimately the customer pays of course.

Taxes have to be raised from somewhere, capital gains tax is levied on the wealthy (relatively few will exceed the capital gains tax free amount)

A share buy back for 20percent of market cap would take a very long time.

Hi Ghost - agree with your points on the whole... but a couple of corrections/comments.

CMC year end is March 31st.

I don't see any mention of growth into 2021 (unless you are looking outside the RNS?), the full year company compiled consensus, is for FY 2021, i.e year ending 31/3/2021. Historically whenever they revise consensus they have tended to assume that revenue reverts to normal levels immediately, which has never been realistic in the the last year.

Sorry- i missed you had said £1.51.
Yes i doubt it matters, if they are consolidating the shares to keep the price per share the same it makes little difference i suspect. Either way, if you sell them straight away a nice tidy profit.

As a side note SAYE schemes are slightly dangerous imo, they encourage "risky" behaviour. Many people keep the SAYE shares once they mature but yet would not put £1 of their cash out of their bank account into the stock market.

For some reason once you have the shares they psychologically much harder to sell.

I assume you work at Tesco so are their SAYE scheme then? Suggest you read your documentation when you started the SAYE scheme to see what your clauses are.

That said, I'd be surprised if you profited or lost from it.
i assume you have been granted an option to buy shares at say 200p at some point in the future, so if shares are worth 240p now or on consolidation you still get the same discount so it makes no difference. It would perhaps be more complicated if they weren't consolidating to prop the price up.

Although do you actually get a choice on the date to use the options?

Mac, if you don't do a tax return currently and have no desire to do one then id sell to bring you under the 2k dividend allowance. Then rebuy once it goes ex divi (assuming you want to continue your Tesco holding, and that this doesn't put you over a cap gains tax threshold).

@IAPR
I assume the dividend is paid into your isa wrapper, then you opt for it to paid into your bank account?

If so can you just stop the auto payment to your bank account?
Once it leaves the ISA wrapper if you transfer it back in it will count as a contribution towards the 20k allowance this tax year.

https://www.gov.uk/tax-on-dividends
Tax free dividend allowance is 2k currently.

You shouldn't be worse off. You shouldn't be better off either. If you were to be better off then the share price would increase rapidly up until the point you are no better or worse off. If you were to be worse off the share price would go down rapidly until you are no worse off.

It does depend on your holding size though, if the dividend will be over 2k for you and its outside an ISA then yes you'd be worse off than if it was in an ISA.
Depending on whether you have used an ISA this year you can sell outside the ISA and then re-buy within the ISA if you wished.

Whether you sell or hold now really comes down to whether you think tesco is still a good investment for the future.

Breaking down the questions/comments:
What is the point of paying a 50p dividend- to return cash the company does not need or can not generate a decent return on back to share holders.

Why consolidation the shares- not sure, other than to prop up the share price, i don't actually see any point but then haven't looked in to it in great detail, perhaps because because a reduction in share price doesn't sit well with passive private investors who may pay little attention to anything other than occasional review of the share price.

This is giving our own money back - correct, no different to any dividend. A companies value = assets - liabilities + estimate future earning potential. Any dividend is a cash outflow so a reduction in assets (or at the date of ex divi its an increase in liabilities until the divi is paid)

Tax implication- your dividend is taxable as normal. Normally a share consolidation/split does not have capital gains tax implications because your tax base gets reallocated across how the shares are now split. I assume this is the same. However, the value of your shares is expected to drop once it goes ex divi so i assume you will now carry forward a capital gains tax loss if you sell them. But my personal tax knowledge is limited.

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.

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.

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.

It was 3.4 percent so actually pretty good.
Although absolutely irrelevant .