Question: My question concerns QBE’s Bonus Share Plan. A bonus suggests it’s free? Is this the case and what is the purpose in doing this?
Answer (by Paul Rickard): No, it is not free – it operates just like a dividend re-investment plan.
It has a slightly different impact on the cost base for Capital gains Tax purposes (for a DRP, they are treated as new shares at the DRP issue price; for a bonus plan, they are treated as “top up” shares to the original shares, and the cost base for all the shares is proportionately reduced).
The reason they do keep offering bonus shares is that it suits some shareholders (generally, a very small number). Financially, the company (QBE) is indifferent – costs the same.
Question: Can you explain to me what is happening with APA Group Ltd?
Answer (by Paul Rickard): I don’t think there is anything going on with APA, apart from some profiting taking and reallocation from stocks, such as APA, that are potentially exposed to higher interest rates.
Its first half report came in at the top end of the range, and it reconfirmed guidance for the full year (at the top end of the range).
It didn’t, however, raise guidance about the full year payout.
Some brokers also see the agreement with Cooper Energy for APA to acquire and upgrade the Orbost Gas Processing Plant as a bit of a departure from their core business.
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