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Notice

Wesfarmers Limited (WES) $2.00 Capital Return – Adjustment Implication for ETOs

What's this about:

Notice reference number: 1641.21.11

Date published: 17/11/21

Effective as of: 18/11/21

Last updated: 17/11/21

Wesfarmers Limited $2.00 Capital Return – Adjustment implications for ETOs

ASX Notice No. 1571.21.11 dated 5 November 2021 outlines the ETOs adjustment methodology to reflect this corporate action for Wesfarmers Limited (ASX Code: WES).

Effective Date

The effective date of the adjustment is Thursday, 18 November 2021, when the underlying security commences trading on an ex-return of capital basis.

ASX determined that the last cum-dividend VWAP based on trading on ASX markets on Wednesday, 17 November 2021 was $60.4631.

Standard Method of Adjustment

For an old contract size of 100 shares, the new contract size will be adjusted, using TMC threshold truncation.

Theoretical New Contract Size = Old Contract Size + (total capital return paid per Old Contract Size)/(S – CR)

Theoretical New Contract Size = 100 + ($2.00*100)/($60.4631-$2.00)

=103.4210 truncated to 103 where the difference of 0.4210 will be cash adjusted based on the below formula.

Strike Factor = Old Contract Size/Theoretical New Contract Size

Strike Factor = 100/103.4210

= 0.966922

For an old contract size of 103 shares:

Theoretical New Contract Size = Old Contract Size + (total capital return paid per Old Contract Size)/(S – CR)

Theoretical New Contract Size = 103 + ($2.00*103)/($60.4631-$2.00)

=106.5236 truncated to 106 where the difference of 0.5236 will be cash adjusted based on the below formula.

Strike Factor = Old Contract Size/Theoretical New Contract Size

Strike Factor = 103/106.5236

= 0.966922

Cash Equalisation Adjustment Payments for Contract Size Roundings

The cash adjustment is calculated by taking the difference between the contract value of the option before and after the adjustment. Variants to the formula apply for rights style adjustments and when the adjustment occurs on the day of the option’s expiry.

Cash adjustment = (BOP * BUV) – (AOP * AUV)

Where

BUV =Before (adjustment) Unit Value = BP * BU rounded to nearest cent

AUV =After (adjustment) Unit Value = AP * AU rounded to nearest cent

BU = units per lot (multiplier) before the adjustment (old traded entity)

AU = units per lot (multiplier) after the adjustment (old traded entity)

BP = for rights style, =SP/Adjustment Factor, for non-rights style=SP.

AP = for rights style, =SP, for non-rights style=SP * Adjustment Factor.

SP = settlement price of the option if not the options expiry day, otherwise the intrinsic price (underlying price-strike price for calls, strike-underlying price for puts) if on expiry date. Refer Notes 1 and 2 below

BOP =pre-adjusted open position Refer Notes 1 and 3 below

AOP =post-adjusted open position Refer Notes 1 and 3 below

Note:

1. Cash adjustments on expiry will apply to exercised positions only.

2. The intrinsic price used for exercised positions on expiry is based on the adjusted strike price for rights style adjustments and the pre-adjusted strike price for non-rights style adjustments. Set negative intrinsic prices to zero i.e. if an out of the money is exercised, the intrinsic price and hence cash adjustment is zero.

3. Pre and post adjusted positions will be the same unless there is a position adjustment factor applied to the open position associated with the adjustment. For rights style use the start of day position (i.e. exclude any UA trading activity), for non-rights style use the (end-of-day) position prior to the adjustment.

4. Cash adjustments will also apply to LEPO positions.

5. For short positions, the result of the cash adjustment formula should have its sign reversed (multiply by -1). For non-LEPO positions the truncation approach ensures that the seller (writer) is always debited and the buyer (taker) is credited. Because the LEPO strike is usually returned to 1c after the adjustment, the holder of a short LEPO position may be credited and long position may be debited.

Refer to table below for adjusted strike and contract size

OLD SIZE	NEW SIZE	OLD STRIKE (CENTS)	NEW STRIKE (CENTS)	Exercise
100	103	1	1	E
100	103	2690	2601	A
100	103	2790	2698	A
100	103	2889	2793	A
100	103	2890	2794	E
100	103	2989	2890	A
100	103	2990	2891	E
100	103	3000	2901	A
100	103	3001	2902	E
100	103	3089	2987	A
100	103	3090	2988	E
100	103	3188	3083	A
100	103	3189	3084	E
100	103	3288	3179	A
100	103	3387	3275	A
100	103	3388	3276	E
100	103	3487	3372	A
100	103	3488	3373	E
100	103	3587	3468	A
100	103	3588	3469	E
100	103	3686	3564	A
100	103	3687	3565	E
100	103	3786	3661	A
100	103	3787	3662	E
100	103	3886	3757	A
100	103	3887	3758	E
100	103	3985	3853	A
100	103	3986	3854	E
100	103	4000	3868	A
100	103	4001	3869	E
100	103	4050	3916	A
100	103	4051	3917	E
100	103	4085	3950	A
100	103	4086	3951	E
100	103	4100	3964	A
100	103	4135	3998	A
100	103	4136	3999	E
100	103	4150	4013	A
100	103	4151	4014	E
100	103	4184	4046	A
100	103	4185	4047	E
100	103	4200	4061	A
100	103	4284	4142	A
100	103	4285	4143	E
100	103	4300	4158	A
100	103	4350	4206	A
100	103	4351	4207	E
100	103	4384	4239	A
100	103	4385	4240	E
100	103	4400	4254	A
100	103	4401	4255	E
100	103	4483	4335	A
100	103	4484	4336	E
100	103	4500	4351	A
100	103	4501	4352	E
100	103	4583	4431	A
100	103	4584	4432	E
100	103	4600	4448	A
100	103	4601	4449	E
100	103	4683	4528	A
100	103	4684	4529	E
100	103	4700	4545	A
100	103	4701	4546	E
100	103	4732	4575	A
100	103	4782	4624	A
100	103	4800	4641	A
100	103	4832	4672	A
100	103	4833	4673	E
100	103	4850	4690	A
100	103	4882	4721	A
100	103	4883	4722	E
100	103	4900	4738	A
100	103	4901	4739	E
100	103	4932	4769	A
100	103	4933	4770	E
100	103	4950	4786	A
100	103	4951	4787	E
100	103	4982	4817	A
100	103	4983	4818	E
100	103	5000	4835	A
100	103	5001	4836	E
100	103	5081	4913	A
100	103	5082	4914	E
100	103	5100	4931	A
100	103	5101	4932	E
100	103	5181	5010	A
100	103	5182	5011	E
100	103	5200	5028	A
100	103	5201	5029	E
100	103	5280	5105	A
100	103	5281	5106	E
100	103	5300	5125	A
100	103	5301	5126	E
100	103	5380	5202	A
100	103	5381	5203	E
100	103	5400	5221	A
100	103	5401	5222	E
100	103	5480	5299	A
100	103	5481	5300	E
100	103	5500	5318	A
100	103	5501	5319	E
100	103	5579	5394	A
100	103	5580	5395	E
100	103	5600	5415	A
100	103	5601	5416	E
100	103	5679	5491	A
100	103	5680	5492	E
100	103	5700	5511	A
100	103	5701	5512	E
100	103	5779	5588	A
100	103	5780	5589	E
100	103	5800	5608	A
100	103	5801	5609	E
100	103	5878	5684	A
100	103	5879	5685	E
100	103	5900	5705	A
100	103	5901	5706	E
100	103	5978	5780	A
100	103	5979	5781	E
100	103	6000	5802	A
100	103	6001	5803	E
100	103	6077	5876	A
100	103	6078	5877	E
100	103	6100	5898	A
100	103	6101	5899	E
100	103	6177	5973	A
100	103	6178	5974	E
100	103	6200	5995	A
100	103	6201	5996	E
100	103	6277	6069	A
100	103	6278	6070	E
100	103	6300	6092	A
100	103	6301	6093	E
100	103	6376	6165	A
100	103	6377	6166	E
100	103	6400	6188	A
100	103	6401	6189	E
100	103	6476	6262	A
100	103	6500	6285	A
100	103	6576	6358	A
100	103	6577	6359	E
100	103	6600	6382	A
100	103	6601	6383	E
100	103	6675	6454	A
100	103	6700	6478	A
100	103	6701	6479	E
100	103	6775	6551	A
100	103	6800	6575	A
100	103	6801	6576	E
100	103	6874	6647	A
100	103	6900	6672	A
100	103	6974	6743	A
100	103	7000	6768	A
100	103	7074	6840	A
100	103	7100	6865	A
100	103	7173	6936	A
100	103	7200	6962	A
100	103	7273	7032	A
100	103	7300	7059	A
100	103	7373	7129	A
100	103	7400	7155	A
103	106	1	1	E
103	106	2611	2525	A
103	106	2708	2618	A
103	106	2805	2712	A
103	106	2901	2805	A
103	106	2902	2806	E
103	106	2999	2900	A
103	106	3000	2901	E
103	106	3096	2994	A
103	106	3192	3086	A
103	106	3289	3180	A
103	106	3385	3273	A
103	106	3482	3367	A
103	106	3579	3461	A
103	106	3675	3553	A
103	106	3676	3554	E
103	106	3772	3647	A
103	106	3869	3741	A
103	106	3965	3834	A
103	106	3966	3835	E
103	106	4062	3928	A
103	106	4063	3929	E
103	106	4160	4022	A
103	106	4161	4023	E
103	106	4256	4115	A
103	106	4257	4116	E
103	106	4353	4209	A
103	106	4354	4210	E
103	106	4449	4302	A
103	106	4450	4303	E
103	106	4546	4396	A
103	106	4547	4397	E
103	106	4594	4442	A
103	106	4595	4443	E
103	106	4643	4489	A
103	106	4644	4490	E
103	106	4692	4537	A
103	106	4693	4538	E
103	106	4739	4582	A
103	106	4788	4630	A
103	106	4789	4631	E
103	106	4836	4676	A
103	106	4837	4677	E
103	106	4933	4770	A
103	106	4934	4771	E
103	106	5029	4863	A
103	106	5030	4864	E
103	106	5126	4956	A
103	106	5127	4957	E
103	106	5223	5050	A
103	106	5224	5051	E
103	106	5320	5144	A
103	106	5321	5145	E
103	106	5417	5238	A
103	106	5418	5239	E
103	106	5514	5332	A
103	106	5515	5333	E
103	106	5610	5424	A
103	106	5611	5425	E
103	106	5707	5518	A
103	106	5708	5519	E
103	106	5803	5611	A
103	106	5804	5612	E
103	106	5900	5705	A
103	106	5901	5706	E
103	106	5997	5799	A
103	106	5998	5800	E
103	106	6093	5891	A
103	106	6094	5892	E
103	106	6190	5985	A
103	106	6191	5986	E
103	106	6287	6079	A
103	106	6288	6080	E
103	106	6383	6172	A
103	106	6384	6173	E
103	106	6481	6267	A
103	106	6578	6360	A
103	106	6579	6361	E
103	106	6674	6453	A
103	106	6771	6547	A
103	106	6868	6641	A
103	106	6869	6642	E
103	106	6964	6734	A
103	106	7061	6827	A
103	106	7157	6920	A
103	106	7254	7014	A

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Issued by

Greg Fitzpatrick, Senior Manager, Clearing Operations

Contact information

Will Ward
1800 814 051
chesshelp@asx.com.au

Notice

Wesfarmers Limited (WES) $2.00 Capital Return – Adjustment Implication for ETOs

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