National Grid Share Discussion Threads

[bountyhunter] 20/4/2017 17:30

well explained PO, at the end of the day we end up with a leaner more focused company with a share price and future divis which may be compared to previous figures

[pierre oreilly] 20/4/2017 15:32

It's the increase in price when the sale was announced from what it would otherwise be.

If the sale fell through it would have dropped an equal amount, all other things being equal.

Once it's in the price, any return of cash by any means is simply reflected in the total value of holdings.

If they paid a 70p divi with no consolidation, the price would have dropped 70p, maintaining the same value for everyone's shareholding (divi + xd value), same as if they did nothing (no price change), or paid a divi with the correct consolidation (divi plus same share price but less shares).

Maintaining the same share price via consolidation means all the financial ratios stay the same, so easier to compare historic prices/ratios ect without having to adjust.

he advantage for shareholders is that the company has disposed a business it didn't wan to be in for some reason, so should perform better from now on that it otherwise would have.

The cost to the company of future divis drops by 1/12th, so increasing the chance of increasing dividends.

That's my take anyhow.

[dogdays] 20/4/2017 15:17

If we are going to pay for the special dividend with a reduced of shareholding value I think they would have been better keeping the gas transmission system and leaving things as they were. Where is the advantage in this sale to the shareholders?

[bountyhunter] 20/4/2017 09:31

Reinvesting the divis should result in about the same holding value post consolidation however this move should leave the company more focused and so in better shape going forwards.

[septimus quaid] 20/4/2017 09:21

Cheers UtyINV, the other big benefit of individuals taking income as dividends (as in the case of a limited company) is no NICs to pay.

[utyinv] 20/4/2017 08:45

Septimus

Income from dividends is classed as income with the exception of the nil rate band (how much you can earn before paying the appropriate tax).
So if the divi pushes you into 40% bracket you need to use the 40% criteria for that amount above the 20% band.
That's why so many self employed people, Directors even footballers etc were using a loop hole allowing them to be paid in dividends to avoid paying the appropriate tax. Unfortunately ordinary shareholders are caught as innocent victims.

Far from being perceived to give advice 😉What you can do and still have time to do, is bed and breakfast your shares into an ISA if you haven't used your ISA for 2017/18, the allowance is now £20,000. If you are married you can transfer stock to your Spouse for nil consideration (free transfer- no cost, no tax) that way you can shelter £40,000 worth of shares before looking at your tax liability.

[atlantic57] 20/4/2017 07:56

Dividend ordinary rate - for dividends otherwise taxable at the basic rate 7.5%
Dividend upper rate - for dividends otherwise taxable at the higher rate 32.5%
Dividend additional rate - for dividends otherwise taxable at the additional rate 38.1%

These are the rules for 2017/2018

You still have a £5000 Dividend allowance for this tax year but as i understand it,that allowance eats into the basic rate band.

You may not need an accountant but you will need to understand how to use software and government websites.

[septimus quaid] 20/4/2017 07:09

UtyINV,

..but what happens if your income from shares pushes your total annual income into a higher tax bracket?

Presume, for the amount over the threshold, you have to revisit the dividend tax liability at the higher rate?

For most PAYE people, outside an ISA, no need to employ an accountant. A basic understanding of the rules will do. Fill in your annual tax return as normal and be prepared to take it on the chin when the taxman sends you the bill.

National Grid has history with these silly share consolidations, the directors should stay more focused on running the business.

Regards

SQ

[utyinv] 20/4/2017 00:21

Pierre, the change introduced by Chancellor Hammond in his last budget relating to tax on divi do not change till April 2018. For this year 17/18 I posted the following in Dec:

As Atlantic,uknighted and speedsgh all correctly commented, will be regarded as income if not in a tax efficient platform like an ISA. If not in an ISA then as said treated as income, however since April of this year rules have changed. This all depends on what rate of tax your nominal rate is.
Basically; lower rate tax payers (20% rate) will pay 7.5% tax on income from shares above £5000.
Higher rate tax payer (40%) will pay 32.5% tax on income from shares above £5000.
Top rate tax payers (45% - income in excess of £150k/yr) will pay 38.1% tax on income from shares above £5000.

These new rules are not widely understood and is forecast to catch many investors out and if you do not employ an accountant and have significant holdings bringing in income, beware! Hope the above helps?

Ps from April 2018 the amount of income you can get before paying tax reduces. This was introduced in the Chancellors budget to stop Directors / Self Employed paying themselves in dividends in order to reduce tax bills. Unfortunately it also captures the ordinary prudent investor unless they have their investments in ISA's.

[atlantic57] 19/4/2017 22:27

Red5 my understanding is that yes you get a cash payment but this is reflected in a reduction in the number of shares you own.Over time if you are confident in the future of ng you would hope that the shares will recover the loss of capital value.

See earlier posts for detailed explanations

[red5] 19/4/2017 22:18

I was thinking of buying these shares last week, but held off due to wider world politics. I wanted to buy today but don't fully understand the story are the shares being reduced mean that there will be a loss in capital?
The dividend payment may make up for this, I wanted to put in £1000.00 what will this mean with this figure in mind red5 standing by.

[pierre oreilly] 19/4/2017 19:33

Mine are all in isas so i don't have to worry about tax, but isn't there a divi tax allowance these days of about 3k ish? If it is 3k, then that's a holding of £36k before any tax due ... i think. Perhaps an accountant could confirm/deny!

[pierre oreilly] 19/4/2017 19:28

Almost certainly see as divi income (since that is what it is), but i'm no expert. You could just sell before xd and buy back 11/12 just after if the dealing costs and spread are less than the tax you'll pay.

[davr0s] 19/4/2017 19:25

I sold out today after recent weakness and reckoned special already divi priced in - only time will tell. Why do they need to make it so complicated for shareholders ?!

[misanthropeterence] 19/4/2017 19:21

Tax implications anyone? I see this as an enforced partial sale of my holding which I did not want. So is this viewed as a return of capital and subject to CGT or as income.
Either way, all bad news to me. Why not a 'b' share alternative ffs?

[utyinv] 19/4/2017 19:08

So with the consolidation being a little higher than expected, I expect we should see the same share price, and no change from divi income per new share. Moving forward, I will be interested to see if concentrating attention on more profitable business will deliver greater growth in both income and share price. Maybe the elusive £13 / share, what a lot of analysts were forecasting three years ago, will be delivered.

[utyinv] 19/4/2017 19:02

share consolidation is 8.3%, little higher than I would have hoped. I thought the consolidation would be around 6%.

[bountyhunter] 19/4/2017 18:57

header financial calendar updated

[bountyhunter] 19/4/2017 18:53

so based on today's closing share price of ~997p we will lose 997/12 = ~83p as a result of the share consolidation and get ~84p in the special divi ;~)

[bountyhunter] 19/4/2017 18:48

I'll add that to the header.
Also:
"In order to maintain the comparability of the Company's share price before and after the Special Dividend, National Grid plans to undertake a share consolidation. The share consolidation will replace every 12 existing ordinary shares with 11 new ordinary shares."

[suetballs] 19/4/2017 18:19

RNS now out - special dividend 84.375p payable 2nd June.
Suet

[bountyhunter] 19/4/2017 18:15

maybe it will still be the 19th somewhere in the world ;~)

[misanthropeterence] 19/4/2017 18:02

Rang their IR department for clarification and was told that details would be published on their website after the Board meeting. EH ?! Then told maybe tomorrow morning which isn't the 19th as promised.
Obviously not that important to them - wonder if the yanks have been told ? Probably.
Ho- hum.

[misanthropeterence] 19/4/2017 18:02

Rang their IR department for clarification and was told that details would be published on their website after the Board meeting. EH ?! Then told maybe tomorrow morning which isn't the 19th as promised.
Obviously not that important to them - wonder if the yanks have been told ? Probably.
Ho- hum.

[utyinv] 19/4/2017 17:35

Skinny, investor relations have deteriorated recently. Aarti Singhal has only been with the Co a few years and her team are relatively inexperienced too.

How the Co interacts with Investors has changed too. Steve Holliday used to encourage Investor participation and answer questions directly. Everything is now passed through Aarti and as nice as she appears I believe she doesn't have the knowledge or background into giving meaningful responses. However, it may be the Board appearing to be a little more clandestine and hiding behind IR.