£AV Valuing the Return of Capital & Consolidation

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4th May '22 by olayinka2015

3 comments 586 reads

I was wondering whether there are any views on how to assess the value of the Return of Capital and Consolidation scheme that is being offered to shareholders.

My query is how to value the new shares = (76/100 of your original holding) / how is the market going to react. From my illustration below to maintain today's value

post the return of capital/share consolidation, the new shares would have to trade at 3.3831. Is this a fair assessment of the likely value or will it trade higher or lower and why - your thoughts would be greatly appreciated?

My assessment:

Return of capital £1.0169

Value of consolidated share £3.3831 (balance value)

Market value as at 04-May £4.4000

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About the Author

Olayinka2015

Premium Member

3 comments

Surrey Steve

4th May '22

The notes I made following the 5 April announcement were £AV. plans "this return of capital through the issue of a new class of redeemable B shares which the Company expects to redeem in cash for 101.69 1 pence per ordinary share (the "B Share Scheme"). The B Share Scheme will be accompanied by a 76 for 100 share consolidation of the Company's existing ordinary share capital and the proposed final dividend for 2021, which is to be put to Shareholders at the Company's 2022 annual general meeting, is 14.70 pence per existing ordinary share in the Company, payable on or around 19 May 2022 to Shareholders named on the Company's register of members as at the close of business on Friday 8 April 2022
The B Share Scheme is intended to provide capital treatment for most UK tax-resident Shareholders. Shareholders should generally be able to subtract from the cash received a proportion of their base cost of their Existing Ordinary Shares. To calculate the tax due on a subsequent disposal of all or part of a Shareholder’s B Shares or New Ordinary Shares, that Shareholder’s CGT base cost of their holding of Existing Ordinary Shares will need to be apportioned between the B Shares and the New Ordinary Shares by reference to their respective values on the first day on which the New Ordinary Shares are listed. A worked example with details of the respective values will be made available on the Company’s website (https://www.aviva.com/investors) shortly after the implementation of the B Share Scheme and Share Consolidation."

My understanding of the 76 for 100 consolidation step is to leave the share price broadly the same.

Taking today's closing price of 434.40p

Deduct the return of capital 101.69

Value of "old" share 332.71

Consolidation 332.71 x 100 / 76 = 437.77p

Silver Moon

4th May '22

Having just checked our 3 holdings of £AV I'm reassured that all 3 are just about in profit not to count dividends paid but I would prefer to sell some of my shares when I want to sell some and not having a company doing that for me. Sure, the pay-out will join the list of capital gains to be reported to the HMCR in 12 months time. Now, didn't Berkeley Group (LON:BKG) do something like this a year ago? and seemingly hanging back from giving investors anything any time soon.

I hold shares in both

Silver

olayinka2015

6th May '22

Thanks for the insight.

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£AV Valuing the Return of Capital & Consolidation

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Olayinka2015

3 comments

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