Member Info for TheTrotsky

LTI, I still think you are missing the point. There are two ways to look at it; the market value of your cash and shares, and the dividend income that you generate. The dividend income gain is easier to see and explain; despite the number of shares you own having been reduced, the dividend per share is being increased, and your remaining shares are expected to generate the same dividend income as previously (recognising that no dividend is ever guaranteed and that the existing dividend would have been increased by a comparable percentage in any event). So, re-investing the capital return in more AV shares, or another dividend paying share, will increase the amount of dividend income you receive. QED you're better off income wise. The market value gain is less clear and more difficult to explain because it requires you to apparently create value from "nothing". As I said, the normally accepted maxim is that "value of your old shares equals the value of your new shares plus the cash received" all other things being equal (after allowing for a few market tribulations) and that is, I believe, the basis of SFH's statement. It's not unreasonable, because the idea that you can increase value by simply making a capital return (or special dividend) would seem, on the face of it, illogical. However, given that both the EPS and DPS will have been increased by the capital return (if the new shares trade at the breakeven price) it's then not unreasonable to assume that the new shares might eventually increase in price such that EPS and DPS return to pre-capital return levels. Now this is not a straightforward analysis because it assumes 1) that the original EPS and DPS figures were the "true" values, which they weren't (there was a premium built into the share price to reflect the expected capital return) and 2) that the premium fully reflected the capital return, which it didn't (substantially most but not all). The jury is still out on "proving" the market value gain but I think that the relative comparison to LGEN does support the proposition that there has been a gain (and that the "true" EPS is currently c0.5% less than LGEN's rather than the c2.0% it was before the capital return).

Been in Topps since 2003 and, since the capital reduction in 2006, we seem to have lurched from one economic malaise to another. Every time Topps has started to build some trading momentum (and the prospect of some share price recovery) we've been hit by one economic crisis after the other. Topps is nothing if resilient but it's never been able to regain the heights it reached post millenium and I'm resigned to the fact that the short/medium term outlook does not bode well for the bottom line. I continue to hold in hope rather than expectation.

LTI, Be reasonable and take SFH's post at face value. If you follow the maxim that the value of the business before = value of the business after + capital return, then in principle you are no better off (investment value wise). You say that people had the opportunity to buy at 390p but that is disengenuous. Nobody received their capital return on 16 May, so only those who were able to inject funds from other sources were able to afford themselves the opporunity to buy at 390p and a number of us were locked out for several hours, so weren't able to buy at the bottom (although a further opportunity did arise later in the day). Actually, on 16 May, those that held were worse off than they had been on 13 May (investment value wise) and it's only in the subsequent days that the value of the business after started to exceed the break even price of c404pps. We also can't quantify what impact the general market improvement has had on the AV share price. So, nothing is certain.

Now, I personally believe that we are (or will be) better off and that the maxim does not hold true because the surplus cash was not actually fully valued prior to the capital return (on a discounted cash flow basis) and that the overall value has been enhanced (it would have been likewise enhanced by a special dividend), however I would not disparage SFH's comments or suggest that they are without merit because, although the maths and the financials say we should (ultimately) be better off there is absolutely no guarantee.

In simple terms, after the capital return, even if you chose not to re-invest, every 76 new shares would continue to generate, a least, the same amount of dividend income as 100 old shares previously. The old dividend in new moeny would equate to c29pps (the equivalent dividend you'd need for your dividend income not to be less than before) whereas AV are planning to pay a minimum of 31pps for the current financial year. I bought some more AV shares after the reorganisation but didn't reinvest all my monies and yet will still receive more dividend income than I did before the reoganisation. Simples ;-)

DEC is actually a UK incorporated holding company (all its operating subsidiaries are US incorporated companies) and so, as far as I'm aware, it's shares should be subject to stamp duty BUT I've bought shares on the main market with both AJ Bell (SIPP) and ii (ISA) is the last 15 months where the former has applied stamp duty and the latter hasn't! So, go figure ;-) Your guess is as good as mine! Personally, I think ii got it wrong; there is an exclusion for non-UK incorporated companies listed on the main market which don't maintain a share register in the UK but no exclusion for UK incorporated companies that I am aware (even where business is conducted wholly outside the UK). It may well be that ii missed the fact that DEC moved from AIM to the main market back in 2020; don't know.

I appreciate that LTI that's why I said "for the most part". If you watch Level 2 you'll see that the bid/offer prices move far too rapidly to be simply accounted for by humans placing orders on SETS. There's a huge amount of programmed trading going on; hedge funds are particularly adept at price shaving. Recommend you read Flash Boys by Michael Lewis; it's a real eye-opener.

PS. Glad to see the the final UT trade settled above the last indicative trade. Perhaps next week, external factors aside, AV might be permitted to re-find its price relative to LGEN. Still think we should be looking at a minimum of 425pps just based on historic dividend yields and LGEN's closing price this afternoon.

We may actually finish in the red today once the closing auction is complete. Absolutely crazy!

It's actually quite mesmerising to watch on Level 2 as the bid-offer prices tick up and down without (for the most part) any trades actually being transacted (bit like a game of chicken to see if they can tempt you to buy/sell).

Trades on LSE are flagged as either A (Automated) or O (Ordinary). The former are (for the most part) programmed trades (autobots); the trades tend to be far too rapid for humans to input. Most of the large O trades (mostly PIs) today that I've seen are buys but the share price has still steadily fallen from its peak. I'm guessing that traders have been selling shares they don't own in the hope that they can buy them back cheaper later in the day. Stands to reason that a large number of investors would have been seeking to reinvest yesterday/today and traders have taken the opportunity to shave 5-10p from the unsuspecting (myslef included yesterday).

I'm still benching AV relative to LGEN and I reckon AV should be trading at least c425p.

It makes absolutely no sense to discount the AV's share price for the next expected dividend. That will happen when it goes ex-dividend.

Anybody else sick to death of the autobots? Programmed trading makes it impossible to get a handle on the share price. They appear to have pushed up the price this morning, selling shares they didn't own, to pick up the last vestiages of the reinvested dividends and capital returns and have been dropping the price ever since to try and buy back the shares to fill their orders and make a margin. Very frustrating.

Further to my earlier post, it appears that AJ Bell are using a share price of c390.30pps on 16 May to compute the proportion of the original acquisition cost attributed to the new shares i.e. c74.47% of original acquisition cost is being allocated to the new shares. Not sure what they are basing that share price on; the closing price on Google was 394.65pps.

The redemption price was never 106p. AV originally estimated c100p in the RNS issued on 2 March. This was subsequently changed to 101.69p when they confirmed that the number of new shares to be issued would be 76 instead of 75.

Pete, You are being totally disengenuous. Aviva and abrdn are completely different beasts, with totally different businesses. It remains to be seen whether ii was a bargain (and I say that as a abrdn shareholder). Aviva has just refocused its business and acquiring ii would have been (yet another) a diversification. Returning surplus capital to shareholders does not mean that Aviva can't do complementary acquisitions (to the extent that it is permitted by the competition watchdog) but it does mean that it doesn't have £3.75bn on its balance sheet desperately looking for an investment; it's investment decisions will be driven by business logic not by a need to invest its surplus capital. That is sound business logic; too often companies are pursued by investment bankers to do a deal, any deal, and often end up coming a cropper. Investment bankers won't be queuing up at Blanc's door to get a share of that £3.75bn and that's a good thing.

Aviva are supposed to be posting a worked example on their website at some point but, from a CGT perspective, the way to work out what proportion of your original acquistion cost to allocate to your B shares is provided by the following formula:

B share disposal proceeds / (Value of new ordinary shares + B share disposal proceeds)

As I understand, the value of the new ordinary shares would usually be determined by the closing price on 16 May, which was 394.65pps. So, assuming that you originally held 1,000 AV shares, the proportion of your original acuqistion cost that would be allocated to the B shares would be as follows:

(1,000 x 101.69) / (760 x 394.65 + 1,000 x 101.69) = c25.32%

QED c74.68% of your original acquistion cost should be allocated to your new ordinary shares. Hope this helps.

Jnkeir, Your future dividend return has increased by greater than 30% because AV are not only retaining their total dividend payout at the same level as the 2021 financial year (despite there being 24% less shares) but are planning to increase their total dividend payout by c7% for the 2022 financial year and a further c5% for the 2023 financial year. Plus, there appears to be scope for AV to also either increase their ordinary dividends above these planned amounts and/or pay additional special dividends because of surplus capital (according to today's Times article some brokers are already pencilling in an additional 6.25p in the 2022 financial year)

Pete, I'm clearly going to have to change my surname to Aadvark; the capital retun didn't appear in my ii account until after 12:30am, by which time I'd missed the opportunity early doors to buy sub-410p. It would appear that ii's chipmunks aren't automated and customer accounts are being updated manually in alphabetical order ;-)

Just received my capital return in AJ Bell. Bit slower than ii but both were slower than HL it would appear. It seems that HL has won the "best mainstream execution only broker contest (this time?)" unless anybody else has a contender.

Who are you with Warthog?

Have received dividend and capital return on ii.

Have received dividend on AJ Bell; still awaiting capital return.