dealtn wrote:Yes, I get the Rights issue (and the maths but thank you). But why are they, and you adjusting 18.7p anyway is my question?
You asked how the adjustment to 17.75p is explained, not why they are doing the adjustment, and I'd already said why they (and I) do it in post #263267 above. So I answered the question you asked, and even if I had somehow discerned the question you intended, I wouldn't have repeated myself!
dealtn wrote:We are talking about 2019 when the dividends are (interim) 6.8p and (final) 7.1p giving a total of 13.9p, which you may or may not now want to adjust.
As I said in the same post above, rights-issue adjustments apply to all pre-rights-issue dividends. The dates that matter for that purpose are the ex-dividend date and the date that a shareholder who went through it in a capital-neutral way, i.e. neither adding nor removing capital overall. The interim of 6.8p went ex-dividend long before any part of the rights issue, so the rights issue adjustment definitely should be applied to it. The final of 7.1p is rather messy: that dividend went ex on May 30th, and the rights came into existence on May 29th. For most capital-neutral methods of getting through the rights issue, the dividend would have gone ex before the shareholder could acquire the extra shares, so that the dividend would effectively have been pre-rights-issue and required an adjustment. But it would have been just possible for a shareholder to sell their rights on May 29th and use the proceeds to buy the extra shares on the same day, in time for them to get the dividend on the extra shares. So for any shareholder who did that, the final dividend would have effectively been post-rights-issue and so would not have required an adjustment - but I would expect only a small minority of shareholders to have done that, so adjusting both dividends seems most appropriate to me for anyone providing dividend history data for shareholders in general. (As I also indicated in that post, exactly what adjustment is most appropriate depends on the shareholder. Must admit though that this is the first rights issue I remember encountering where a dividend went ex in the middle of the subscription period, so that an adjustment of 0% - i.e. no adjustment - would be appropriate for some capital-neutral shareholders and a normal rights-issue adjustment for others... To forestall a possible comment (from anyone reading, not just you) this is not a case of the company treating some shareholders differently from others - it's the shareholders themselves whose actions produce the difference, not the company.)
dealtn wrote:... we have had a Rights issue that has changed the number of shares, and a change in dividend policy that has reduced the pay out (per share), to take into account when looking at the affordability from cash flow of the dividend expense going forward. If you, or others, want to look at this kind of affordability by some kind of averaging of the last 5 years perhaps you can explain why 13.9p isn't the (adjusted) appropriate entry. ...
Since I don't do that and AFAIAA have never said either that I do it or that I want to do it, I'll leave it to those who do/have to answer it if they want. I will comment though that if I did, both unadjusted and adjusted DPS records are basically useful for a specific-shareholding perspective on what's happened to the dividends. Dividend affordability is however essentially a matter of how much net cash the company is generating in its bank accounts vs how much cash it is paying out from them as dividends and so requires a whole-company perspective. So for instance, the appropriate figures to use for dividend affordability from the quote "The directors have approved an interim dividend of 3.9p per share (last half year 6.5p per share (restated)) which, in line with the requirements of IAS 10 - Events after the Reporting Period, has not been recognised within these results. This interim dividend of £76.1m (last half year £110.4m) ..." in these latest interim results are not 3.9p down from 6.5p (a 40% drop), but £76.1m down from £110.4m (a 31% drop) - the difference between the two percentage drops being due to the fact that collectively, shareholders added about £600m to their investment in the company rather than acting in a capital-neutral way.
dealtn wrote:... For what its worth Stockopedia use 17.2 17.9 17.9 17.9 and 13.6 for the last 5 years.
That looks as though Stockopedia adjusted the interim but not the final - it matches the adjusted interim 6.53p and the unadjusted final 7.10p given by Dividenddata other than being rounded to one decimal place fewer. There is an argument for doing it that way, in that the final dividend went ex 1 day after the rights were split off from the shares and 8 days after the shares went ex-rights, but there is also the argument that the final dividend should be adjusted because it went ex before shareholders got much of a chance to deal with the rights issue in a capital-neutral way. As I said, rather messy... The saving grace is that whether one adjusts the final or not only makes a difference of 0.28p (6.82p adjusted vs 7.10p unadjusted), which produces a difference of a bit over 2% in the year's total - noticeable, but not major.
dealtn wrote:I acknowledge the future is unknown so might decide to use figures from the past to form an estimation of what "might" happen going forwards, but a simple average, even with figures I am happy with, is too simplistic to me. I might decide to weight them giving greater worth to more recent ones, for instance. It might hold for all companies, but for MKS in particular given the Rights Issue, and part purchase of the Ocado business, the company looks different to that of even a year ago, and certainly much different to 5 years ago.
A perfectly reasonable point of view about whether/how to use the figures, but I wasn't trying to argue either way about that - just to explain how they are produced and why it's done that way.
Gengulphus