Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
MrMath,
Aviva state (in the circular) that the intention is for the B shares to be redeemed on 17th May and for the proceeds to be paid on the 19th May. The message you got is correct and we should all expect payment of our £1.0169 to be paid on 19th May along with the ordinary dividend of 14.7p.
However, Aviva also caveat that (again in the circular) to suggest that the proceeds of the B share redemption will be paid NO LATER THAN 10 working days following redemption (17th May) and that the LATEST date this can be paid is 31st May.
They will also pay any funds accrued from part entitlement to shares following the consolidation, so a few pence, on 31st May.
My guess, and it is only a guess is that we will get both the ordinary dividend of 14.7p and the 101.69p together on the 19th May.
GLA
Hitman,
that doesn't paint a complete picture though does it as it?
Your statement implies that for the money you have invested today you will be enjoying around 7.25% returns via future dividends.
However, let's assume you bought 1000 shares today (we'll ignore all fees and stamp duty for ease).
1000 x £4.28 = £4,280. So, if you were to receive 31p for each of these 1000 shares you would receive £310, which is in fact approximately 7.25% return on £4,280.
However, by the time the 31p dividend is realised (if it is), you will only be holding 760 shares, so will receive a total dividend of £235.60.
You will also have received £1,016.90 (1000 x 101.69p) as a result of the return of capital. So the cost of the 760 shares you still own is £3,263.10 (£4,280 - £1,016.90).
Technically the yield you will be getting will be around 7.25% (£235.60/£3,263.10).
Pedantic, I know, but the way your post came across it may make people think that any money invested in Aviva shares today will earn them a yield of 7.25%, which is not true.
GLA
Postman,
according to the timetable in the circular you will receive the 14.7p ordinary dividend on 19th May, AND the 101.69p return of capital from B share also on 19th May.
Devon,
I wasn't meant to be stating the SP will be exactly the same following consolidation, I was simply trying to get the point across that it will not immediately fly up to approx £5.70 like a lot of people seem to.
The point of the consolidation is to maintain status quo, to leave the post consolidation SP the same as pre consolidation. i.e. to create an illusion that nothing has happened at all. However, this assumes no ordinary trading.
Obviously when the market opens the price can move in either direction and by any amount, as it does on any trading day. I think it will continue to float around the 420-450 mark.
I feel similar to you about this one. I intend using the capital return to by back the shares I have lost and based on previous experience am fairly hopeful I'll be able to get them back below the consolidation price, thus actually increasing my holding. Not sure we'll see sub 400p, but would not rule it out. I certainly see 400 being more likely than 570 in the short term.
If they can deliver the level of dividend and growth they have predicted then we will eventually see a significant rise in SP. I have my doubts though.
Good luck
Well if there's a leak and people have got wind of an offer and the price has only gone to 23.5p today, then I think we will be very underwhelmed with the terms.
Maybe an RNS tomorrow, but I very much doubt it will contain an offer.
Tacly,
spot on. It's all there in black and white.
Currently Aviva has this £3.75bn sat in the bank. They could do anything with it: leave it where it is, invest it via acquisition of something, or give it back to shareholders.
They've obviously looked around and decided there are no investments offering good enough value, there is no benefits to simply having it sit in the bank, so have decided they may as well return it.
Aviva has this £3.75bn currently but once they have given it away in May they will no longer have it. Clearly the value of the whole will have reduced by the £3.75bn they no longer have.
Many thanks
Easy Livin.
If the SP is divided by 0.76 then this really is Christmas for us all.
However, the SP will not be divided by 0.76, it will simply be the same as the day before (plus or minus any natural market movements).
Aviva even tell us this. In the literature they make it clear (clearish) that the whole point of the 76:100 consolidation is to maintain the share price at the current level. i.e. to avoid a sudden drop following the return of the £3.75bn.
The value of a persons shareholding will reduce by approx. 24% immediately following consolidation. However, they will have an equal cash amount in their pocket to replace the reduction the value of their holding.
Will the share rerate in the next year or so? If Aviva can indeed maintain and grow the aggregate dividend pot then it will. The big question is can they?
I hope they can because I'm holding on for the ride and hope to use the capital returned to buy the 24% of my shares back!
GLA
Maddmax,
the share price will not go to 550 immediately after consolidation, it will stay the same as it was the day before (with minor market fluctuations). The whole point of the consolidation is to keep the share price the same, not increase it by approximately one third.
The share price MAY go towards 550, or even higher in the longer term, but only IF Aviva are indeed able to pay, and more crucially, maintain the estimated future dividend of 31p.
Vind,
the circular states that they see 2022 FY at 31.0p and FY at 32.5p, but this is caveated as indicative only and in no way guaranteed.
Not sure about future years but seem to remember the initial announcement suggested an intended dividend policy of low to middle single digit dividend growth, so probably intend growing dividends at about 3-6%.
Morning,
not sure it is factored in to the price. The return of 101.69p is being followed up by the share consolidation for the express purpose of maintaining the share price at the same level, not to increase it by a third (lets say from 440 pre consolidation to 587 post). Were they not to do the 76:100 consolidation, when the 101.69p is returned the share price would fall by that amount to approx 338.
The intrinsic value of the company won't be the same, it'll have reduced by the £3.75bn given away. By that token, if it were remaining the same, a vote against it with the £3.75bn not being returned, but instead kept by Aviva, means you would expect the share price to go up by 101.69p immediately, to approx 542. Clearly this would not happen as the current price of approx 440 reflects the value of Aviva, including the £3.75bn that sits in the bank.
When this goes through shareholders should see no immediate effect, i.e. still have the same wealth but hold 24% of it in cash and 76% as shares, as opposed to 100% in shares before.
What happens in the future? Who knows?
The theory is that if Aviva is able to generate the same profits, thus a greatly increased EPS/dividend, then yes, the share price should increase considerably, leaving us clearly better off. However, this is not guaranteed.
As other posters have indicated, previous examples of capital return have not gone too well. I know of Vodafone and Tesco. These were not done in quite the same way, but the ensuing share consolidations didn't really have the desired effect. Another recent one was Standard Life, which did it in the same way, via a B share scheme and accompanying share consolidation. This has not really provided any true shareholder value either.
I believe the three examples I have mentioned above all did this following asset sales, the result of which was to reduce the companies' revenues and profits, thus there was never going to a great effect on dividends as the reduced numbers of shares were simply getting a slice of a smaller total payout. In other words, the whole process simply maintained the status quo. I'm simply trusting to memory here so could be wildly wrong abut these three examples.
The difference in Aviva's case is that they have have indicated revenues/profits will not be affected, in which case the same "pot" would be shared by fewer shares, thus having the desired effect of significantly increasing dividend / yield. It is this that should then drive an increase in share price and provide significant long term value for shareholders. However, it is in no way guaranteed.
I'm a shareholder and am going to hold until this hopefully goes through as I believe it will be worth it in the long run, it's just that previous experience of such things has left me less excited than some, who seem to think they are receiving a very generous payout. Personally, I hope to buy back my "lost" shares with the returned cash.
Good luck whatever you do.
SFH300
"From previous experience I think you will still have the same number of shares but at a lower share price."
NO.
You will have 25% less shares. If you had 500 before you will have 375 after. Aviva make that quite clear.
The price of those shares is up for debate. The intention is that it will be higher than now, reflecting a higher EPS and Divi PS. The reality is that they will probably be at a similar level to now, reflecting a smaller business following return of capital. Depending on world events they could even be lower than today's price.
No-one knows what the SP will be following consolidation, be you can be sure you will hold 25% less shares.
GLA
Capital return via share consolidation was the last thing I wanted.
My preference would have been for a straightforward buy back. They could potentially take upwards of 800m shares off the board with that amount of money, possibly a 1bn if you factor in the £1bn buyback already underway. That would be taking 30%ish of Aviva's shares out of the market and would have the same effect of ratcheting up the EPS and subsequent dividend. The only difference would be that the ones selling at current price would be doing so voluntarily. As it stands, I will be forced to sell 25% of my shares at a time and price I would not choose to sell then at, then will have to hope I can get the same or slightly lower market price to be able to buy them back again.
I understand the theory that the share price should also rise, leaving me with a similar valued holding, plus cash in the bank, but I have seen these things happen before and it doesn't seem to play out that way.
Good luck all
$30m
Dollars are worth a lot less than pounds.
Still a promising deal though
...and if the income misses target and the AAA publisher is underwhelming, make sure you've got a change of pants.
Azzurri,
I think people are simply estimating the final dividend announced later in the year to be twice the interim of this morning.
Therefore final to be 1.34p.
Added to today's interim of 0.67 will equal 2.01p for the year.
Simply a guess, but one third / two thirds split is fairly normal I think.
I personally think we will receive a nice surprise at final results in shape of special divi plus a buy back.
Sadly there were also a lot of images not to feel so proud of.
"whether you purchase at 4p or 6.4p will make little difference in 24 months time."
Would make 60% difference to eventual value.
He could do the presentation in Speedos for all I care, as long as it's inspiring.
GLA
That's correct scousemark. Frome the Jan Interim Results RNS:
"In December 2020, we announced the selection of our lead COVID-19 vaccine candidate, SN14. In light of the newly identified variants of the SARS CoV-2 virus, which are becoming increasingly prevalent and which may become more important in the transmission and community spread of COVID-19, more recent data has suggested that another of our lead candidates, SN15 (or SCOV1 for future reference), may confer even better protection against the virus than SN14. SCOV1 reproducibly elicited higher-titre anti-S virus neutralising antibodies (VNAbs) together with high avidity T cells against both the S and N proteins and further studies are underway to test SCOV1 against the variants identified in South Africa and Brazil."
I put the following into google "A universal Covid vaccine may be our best means of escape".
The first link was the FT one and it let me read it no trouble. Unlike the link in the thread which requires subscription.