Arborbridge wrote:Gengulphus wrote:Arborbridge wrote:SLA does not have a five year record in this form- so he is taking Gengulphus's definition of continuity.
Sorry, I don't remember defining continuity (*) - so if I have done so, please remind me, and if I haven't, please tell me what you're talking about!
Sorry Gengulphus if I have taken you out of context, or misquoted.
Actually, on a quick look back at various threads, I cannot even find the conversation! However, what I
thought you wrote was in a discussion about whether SLA could be regarded as a continuity of either Standard Life or Aberdeen. You mentioned deciding this by using the company's registered number. Leading on from this, I posited that perhaps PYAD was treating SLA's history not as a new entity (which would therefore have too short a dividend record) but as a continuation of one of its previous company names - in which case the dividend record could be said to be greater than five years.
Thanks, I now recognise it from that description - it was
viewtopic.php?f=15&t=16727#p207426 (edit: I see that others found this during the long, interrupted period during which I wrote this post - the board software presumably tried to alert me to those posts, but it alerts one to new posts on both previews and submissions, and when a new post is alerted on a preview, it's
very non-obvious!).
But what I said there was that for most purposes, the answer depends on the HYPer. I.e. if there's any "Gengulphus's definition" that comes out of it, it's that it's the continuation of whichever of the two companies one feels appropriate - but I'd think of that more as a
non-definition! And indeed, that it implies that a definition (or at least a widely useful definition) is impossible...
The bit about using which company it is legally (which can be determined by the company number) is only important for a few limited purposes. I identified one of them in that previous post - it determines whether share certificates remain valid. But I did say that it was a technicality and only relevant to a minority of shareholders (specifically those who hold their shares as certificates) - it only seemed worth mentioning at all because I know some HYPers here have said they do have certificated holdings.
I have however realised as a result of the point coming up in this thread that there is a more widely-relevant practical purpose for which that technicality matters after mergers: at least by default, it tells you which original company the merged company will use in its annual report for comparatives, five-year histories, etc. E.g. if you look at Standard Life Aberdeen's 2017 annual report, it says the dividend was 21.30p, up 7.5% from Standard Life's 2016 dividend of 19.82p. And that's an accurate assessment from the point of view of a HYPer who originally owned Standard Life - and the company's 5-year dividend history for 2013-2017 is 15.80p, 17.03p, 18.36p, 19.82p, 21.30p, and 2018 has since added 21.60p to that, but that's been announced recently enough that either the 2013-2017 history or the 2014-2018 history might have been used by someone who looked at the company's 5-year record recently. A nice increasing record in either case.
On the other hand, from the point of view of a HYPer who originally owned Aberdeen Asset Management, there was an effective 1-becomes-0.757 share consolidation involved in the merger, so each SLA share they have now results from 1/0.757 = about 1.321 ADN shares before the merger. Multiplying by that factor of about 1.321 and rounding, Aberdeen Asset Management's 16.0p, 18.0p, 19.5p, 19.5p dividend record for 2013-2016 becomes 21.14p, 23.78p, 25.76p, 25.76p, making 21.30p for 2017 and 21.60p for 2018 a distinct cut to their dividend income (*).
Both of those viewpoints are basically "How has this holding performed for me in the past?" ones - whereas for purchases (certainly of new holdings, and IMHO also top-up purchases) the question that matters is "What clues can I get about what this holding will do for me in the future?". That to my mind is the only way that dividend records are relevant to HYP purchase decisions - and IMHO they only give some fairly mild clues, but that's offset by the fact that just about
all clues about what shares will do for one in the future (especially the long-term future, which is where the bulk of the value of a HYP lies) are mild ones. At best, one can only shade the odds in one's favour. And just what one should make of Standard Life Aberdeen's dividend record from that perspective? - well, people will have to make their own minds up about that without significant help from me, because I don't feel I can supply any!
(*) Though it has to be said that the 17.3% reduction between 2016 and 2017 is very much at the low end of real dividend cuts, and there's also a messy complication: Aberdeen Asset Management's financial year ended on September 30th, while Standard Life (Aberdeen)'s ended and still ends on December 31st. So for those HYPers who originally owned Aberdeen Asset Management, they essentially went through a 15-month 'financial year' from 30 September 2016 to 31 December 2017. And the terms of the merger ended up with them receiving three dividends for that 15-month period: an ADN interim of 7.5p on 15/06/17, an SLA interim of 7.0p on 18/10/17, and an SLA final of 14.3p on 30/05/18. Together, those were worth about 1.321 * 7.5p + 7.0p + 14.3p = about 31.21p for that 15-month period, which annualises to 24.97p per year. On that basis, the 25.76p to 24.97p reduction from 2016 to 2017 is only -3.1% - but of course that only shifts the bulk of the reduction to 2018, when 24.97p to 21.60p is a 13.5% cut. And for those who measure dividend income in other ways, yet other results are possible - e.g. if you do it as dividends received during calendar years, 2017 will have seen a nice rise, from about 1.321 * (12.0p + 7.5p) = about 25.76p in 2016 to about 1.321 * (12.0p + 7.5p) + 7.0p = about 32.76p in 2016 (a 27.2% rise), but that's followed by a fall to 14.3p + 7.3p = 21.6p in 2018 (a 34.1% fall).
Basically, it's an unavoidable complication that things can get messy around corporate actions, with how one sees the sequence of events depending quite a lot on how one looks at them. About all that's common to the above three ways of looking at the Standard Life Aberdeen merger is that overall, there was a reduction of about 16% between 2016 and 2018 - whether one sees it as a moderate reduction followed by a small increase, a small reduction followed by a very moderate reduction or as a substantial increase followed by a very substantial reduction is more a question of viewpoint than of fact. And there are probably other reasonable viewpoints besides those three...
Gengulphus