Analysing cash retained by companies declaring scrip dividend on the Johannesburg Stock Exchange

Oosthuizen, Gerhard (2009-03)

Thesis (MBA (Business Management))--University of Stellenbosch, 2009.

Thesis

ENGLISH ABSTRACT: The research report investigated scrip dividends declared by companies on the Johannesburg Stock Exchange (JSE). Scrip dividends started becoming popular in 1993, due to the introduction of the secondary tax on companies (STC). The purpose of the study was to calculate the total amount of money not paid out as dividends, but retained within the company as cash. No single source could be found which provided sufficient dividend information. Eventually the JSE Monthly Bulletin, Reuters, McGregor BFA and the Hamman financial dataset had to be combined to collect a single set of scrip dividends. Changes in the number of shares issued were used as a way to calculate scrip dividends that were not available, or to crosscheck with the Hamman dataset. All along the way various validations were performed to ensure data consistency. For example, the percentage of shares for which scrip dividends were paid out was checked to ensure that the calculated amount of scrip shares issued were within acceptable boundaries. Furthermore, the equivalent scrip option value on the last date to register (LOR) was compared to the cash dividend option to ensure that the values were of equivalent sizes. In total, 754 scrip dividends were included in the report. For these dividends, R33 265 million was not paid out as cash dividends, but retained within the company. The equivalent share value of those shares on the LOR is R35 337 million. Only R19 576 million was paid as cash. This means that 63% of the total dividend payout was reinvested in the companies. Analysis of the LOR dates shows that 1995 to 1997 were the most popular years for scrip, with more than 130 cases every year. From 1994 to 2000, there were more than 40 scrip dividends every year. Not much has been written in South Africa about the impact and usage of scrip dividends. The research report has for the first time created a consolidated datasheet containing scrip dividend details, allowing further research. The R33 265 million reinvested in the economy has perhaps helped fuel the successful growth of the South African economy over the last 10 years.

AFRIKAANSE OPSOMMING: Die navorsingsverslag ondersoek skripdividende wat verklaar is deur maatskappye op die Johannesburgse Effektebeurs (JSE). Skripdividende het gewild begin raak in 1993 as gevolg van die bekendstelling van sekondêre belasting op maatskappye (STC). Die doel was om die totale kontantbedrag te bereken wat behou is in die maatskappy, en dus nie uitbetaal is as dividende nie. Geen enkele bron kon gevind word wat volledige inligting oor skripdividende bevat het nie. Uiteindelik is die JSE Monthly Bulletin, Reuters, McGregor BFA en die Hamman finansiele datastel gekombineer in 'n enkele versameling van skrip dividende. Veranderinge in the totale hoeveelheid uitgereikte aandele is gebruik as 'n manier om die skrip aandele wat uitgereik is te bereken, en te korrelleer met die Hamman datastel. Gedurende die dataversamelingsproses is daar verskeie toetsdatapunte bereken, om die data integriteit te verseker. Byvoorbeeld, die persentasie aandele waarvoor skrip uitgereik is, is geverifieer om seker te maak dat die berekende hoeveelheid skrip aandele binne geldige grense was. Verder is die kontantwaarde van die skrip aandeel, soos op die laaste dag van registrasie (LOR), vergelyk met die kontant dividendopsie, om te verifieer dat die waardes van soortgelyke groottes was. In totaal is daar 754 skripdividende ingesluit in die verslag. Vir hierdie dividende is R33 265 miljoen nie uitbetaal as kontant dividende nie, maar as skrip aandele. Die ekwivalente aandeelwaardes van hierdie uitgereikte aandele op die LOR was R35 337 miljoen. Slegs R19 576 miljoen is uitbetaal as kontant. Dit beteken dat 63% van die totale dividenduitbetaling herbelê is in die maatskappye as skrip-aandele. Analise van die dividend LDR datums wys dat 1995 tot 1997 die gewildste jare was vir skrip, met meer as 130 gevalle per jaar. Van 1994 tot 2000 is daar elke jaar meer as 40 skripdividende uitgereik. Daar is nog nie veel oor die impak en gebruik van skripdividende in Suid-Afrika geskryf nie. Die navorsingsverslag het vir die eerste keer 'n gekonsolideerde skripdividend datastel geskep waarmee verdere navorsing gedoen kan word. Die R33 265 miljoen wat herbelê is in die ekonomie het moontlik bygedra tot die ongekende groei in die Suid-Afrikaanse ekonomie oor die laaste 10 jaar.

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