If you held Old Mutual shares on the 20th of April this year, then you're in line to receive a special dividend payout. This special dividend, as well as the normal dividend, will be paid on the 7th of June. For some of us it's financial relief in these stressful economic times. For others, it could be the opportunity to kickstart an investment in education or top up a retirement plan.
Use the calculator below to find out how much you could be receiving in special dividends and normal dividends.
This calculator is for illustrative purposes only. It calculates the gross dividend and does not consider any taxation implications. Old Mutual shall not be responsible and disclaims all liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon any information, links or service provided through this calculator.
What is share consolidation and why is Old Mutual consolidating its shares?
A share consolidation has been done to reverse the price drop in the Old Mutual share price that would have happened because of the payment of the special dividend to our shareholders.
When a special dividend payout is equal to 10 per cent or more of the market value of a company, it is common international practice to combine it with a share consolidation. That’s because paying a special dividend reduces the net assets of the company by the amount of the dividend.
- So one purpose of the share consolidation is simply to keep the share price consistent so that the market price of each of your replacement ordinary shares is approximately the same as the market price of each of your existing ordinary shares (subject to normal market movements).
- It allows you to compare earnings per share and share prices with previous financial periods, without having to adjust for the effects of the special dividend.
How will the consolidation work?
To consolidate shares, the number of individual shares held by all shareholders is reduced according to a specific ratio, while leaving the percentage of their ownership of the group intact. The company’s market capitalisation would have included the special dividend up until the date of the consolidation but not afterwards.
- In this instance, the ratio is 7 new ordinary shares for 8 ordinary shares, because the special dividend amount is equal to approximately 1/8th of the total value of the company before the consolidation. The 7 for 8 ratio is based on the relationship between the special dividend amount and Old Mutual’s market value.
For more in-depth questions and answers, please visit the Old Mutual plc site.
When will the special dividend be paid?
The special dividend will be paid to shareholders on 7 June 2012, the same payment date as the ordinary dividend.
All shareholders participate in the special dividend according to the size of their holdings before the consolidation.
What’s the difference between a special dividend and a normal dividend?
A special dividend is a once-off distribution of company assets, usually in the form of cash, to shareholders. It is usually larger than an ordinary dividend, which is a share of annual profits.
Podcast: Share consolidation explained
The Money Show presenter and leading financial journalist Bruce Whitfield interviews Old Mutual Group Chief Executive Julian Roberts about the Old Mutual share consolidation and special dividend declaration.
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