Bonus/consolidation question

[justakiwi]

Can someone please explain what this is/means? In relation to my USF holding. Screenshot from automated transaction in Sharesight.

13262

[Onion]

I don't know - but I've got a similar pair of transactions in Sharesight

[Onion]

May be relate to this announcement:

https://www.nzx.com/announcements/383331

[JayRiggs]

Here is some information about taxable bonus issues and unit cancellations from Smartshares FAQ:
https://smartshares.linkinvestorservices.co.nz/forms/FAQS

Specifically for your USF holdings:
https://www.nzx.com/announcements/383331

[JayRiggs]

From Smartshares FAQ:

Why are taxable bonus issues necessary?

Each Fund of the Scheme is a listed portfolio investment entity that pays tax at the corporate tax rate of 28%. When a Fund pays tax it generates imputation credits. These credits can be attached to ordinary distributions paid by the Fund and may also be attached to taxable bonus issues.

Due to the way New Zealand’s income tax legislation operates, a Fund may generate more imputation credits than can be attached to the ordinary distributions paid by that Fund to unitholders. Therefore, to ensure investors benefit from the full amount of imputation credits available, the Manager has determined that those excess credits should be distributed periodically by the relevant Funds via taxable bonus issues.

For more information on how the Funds are taxed, see the ‘Other Material Information’ document on the offer register at disclose-register.companiesoffice.govt.nz

[justakiwi]

So basically they issue bonus shares then cancel them? But why is the consolidation figure higher than the bonus figure? Why are the figures not the same?

[Onion]

There is also a dividend ex 29/11. Another part of the puzzle?

[iceman]

So basically they issue bonus shares then cancel them? But why is the consolidation figure higher than the bonus figure? Why are the figures not the same?

It is a 4.0 : 3.0 consolidation

[iceman]

There is also a dividend ex 29/11. Another part of the puzzle?

That is just a normal dividend payable on 20 December.

The already completed transactions are bonus issues (to use up imputation credits I think) followed by a 4 for 3 consolidation. All very confusing !!

[justakiwi]

I don't understand. So I am losing ​one share?


It is a 4.0 : 3.0 consolidation

[Onion]

I don't understand. So I am losing ​one share?

My numbers…

Start with 5551 shares.

Bonus (1 for 4):
5551 x 1/4 = 1387 (rounded down)
5551 + 1387 = 6938

Consolidation (3 for 4):
6938 x 1/4 = 1734 (rounded down)
6938 - 1734 = 5204

So 5551 shares becomes 5204 shares. And somewhere in there are some imputation credits!

[justakiwi]

Well that sucks. Thanks for the explanation.


My numbers…

Start with 5551 shares.

Bonus (1 for 4):
5551 x 1/4 = 1387 (rounded down)
5551 + 1387 = 6938

Consolidation (3 for 4):
6938 x 1/4 = 1734 (rounded down)
6938 - 1734 = 5204

So 5551 shares becomes 5204 shares. And somewhere in there are some imputation credits!

[Onion]

I don’t understand it right now. I’ve only got the Sharesight automatic transactions to go on. I haven’t actually seen the transactions on the platform that holds the units for me (InvestNow).

There surely can’t be a loss of value at the end of the day.

[iceman]

Well that sucks. Thanks for the explanation.

No it doesn't suck JK. There are now fewer shares on issue. If you look at the USF price today, it is slightly higher than it was last week, despite quite significant falls in the last few days https://www.google.com/search?q=s%26p+500+index&rlz=1C1NHXL_enNZ728NZ728&oq=S%26P+500&aqs=chrome.1.0i131i433i512j0i433i512j0i131i433i512 l3j0i512l5.5002j0j15&sourceid=chrome&ie=UTF-8

You are no worse off than you would have been