REFS is
a mine of invaluable information for the private investor.
Selecting shares without its help is like trying to
clap with one hand tied behind your back.
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Scrip
issues
Formula
for calculating a scrip factor:
Where ‘old
shares’ is the number of shares in issue beforehand, and ‘new
shares’ is the number of shares in issue afterwards, the factor
is simply:
OLD SHARES
--------------
NEW SHARES
Example
of scrip issue details:
A company
decides to capitalise £x million of reserves by way of a bonus
issue of 2 new ordinary shares of 25p nominal value for every
3 existing shares held (a 2 for 3 scrip issue). In other words
after the bonus issue any shareholders who previously held,
for example, 3,000 shares of 25p each would now hold a new total
of 5,000 shares of 25p.Calculating a scrip factor for the above
example:
OLD SHARES
3
--------------
= -- = 0.6
NEW SHARES
5
Applying
the scrip factor:
If, for example,
the dividend per share for the previous period was 15.5p, and
the scrip issue above occurred after the year-end, the scrip
factor of 0.6 would be applied to give the following adjusted
dividend per share:
15.5p X 0.6
= 9.3p
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