Contact Energy - CEN Chart

[Crackity]

They gave shares instead of cash for dividends for a few years a while ago - maybe it is arising from this but if not it baffles me as well.....

[Harvey Specter]

They gave shares instead of cash for dividends for a few years a while ago - maybe it is arising from this but if not it baffles me as well.....

Could be. that was a good little tax dodge while it lasted and I guess could be refered to as capital.

[fish]

Could be. that was a good little tax dodge while it lasted and I guess could be refered to as capital.

I don't believe it was a tax dodge.I took the shares instead of cash and believe shares were paid on net dividend taking and imputation credits/withholding tax came with the shares

[Snoopy]

I don't believe it was a tax dodge.I took the shares instead of cash and believe shares were paid on net dividend taking and imputation credits/withholding tax came with the shares

I took Contact shares through the DRP when that was operative too fish. My primary motive was not to dodge tax, but to increase my holding in CEN which I considered as 'underweight' at the time. My memory on the matter does not co-incide with yours though.

I seem to recall getting a tax statement full of zeroes from Contact showing that I had paid zero tax on my 'dividend(s)' as a result, because I had received zero income - a fair trade off. IIRC, Contact structured their DRP so that shareholders got new bonus shares to the same value as if they had got their dividend as cash and invested that money on market in more CEN shares. But in reality, shareholders were never paid a dividend in any conventional sense. This resulted in a significant increase in market capitalisation of CEN, even as the share price remained largely static. Perhaps this is the answer to this 'imputation credit' capital raising conundrum?

Those imputation credits from 'virtual dividends' associated with the DRP days were never paid out. Thus the result was an increase in imputation credits on the books due to the 'capital raising(s)' from the DRP. The coming 50c special dividend will 'fix' those excess imputation credits that are now on the CEN books.

SNOOPY

[Harvey Specter]

I don't believe it was a tax dodge.I took the shares instead of cash and believe shares were paid on net dividend taking and imputation credits/withholding tax came with the shares

Of course it was which is why the IRD shut it down (required a law change as they had given binding rulings to the companies). It wasn't a DRP - you got the choose between bonus shares (not taxable income) or dividends (taxable income). You can do one or the other, not offer the choice. SkyCity also took advantage of it along with a couple of others.

[Aaron]

Those imputation credits from 'virtual dividends' associated with the DRP days were never paid out. Thus the result was an increase in imputation credits on the books due to the 'capital raising(s)' from the DRP. The coming 50c special dividend will 'fix' those excess imputation credits that are now on the CEN books.
SNOOPY

What you and Crackity suggest sounds reasonable. With the Bonus Shares I guess you effectively paid the company the dividend value for more shares instead of a dividend being paid out with imputation credits attached. I guess they accumulated imputation credits by doing this. Sadly not an owner anymore. With a normal DRP you receive the dividend and then purchase additional shares.

[GoldenStag]

I wonder how CEN will go this week prior to the registry recording. Some recent observations...
- I noticed some big off market trades at the end of last week.
- I have been a little surprised that the support for the share has been weaker than I expected after the announcement. The share price still seems a little lower where I would expect it to be given the resetting of the CEN plan. It is almost like only the special dividend is priced in, but not the future share buy backs etc. that they described in the announcement. Maybe people a little jaded from CEN announcements and an issue of trust?
- Someone (big) seemed to cap the share after the announcement at about 634 which meant they sold and held the price down. But no SSH 1% announcements. This coupled with the block trades last week should've meant someone is obliged to announce something? Maybe not considering the size/value of CEN.

hmmm...

[workingdad]

Not so good by the look of it.....

My thinking is along the same lines as yours, thought it would have gone up more, I am a bit in two minds, want to see it go up as I have some holdings, part of me wants to see it go down so I can get more not just for the special divy but anticipated additional benefit down the line. Maybe I am missing something here - wasnt long ago it was at $7.30 not struggling to stay above $6 with a 50c divy priced in.

hmmm indeed......

[PSE]

I don't believe it was a tax dodge.I took the shares instead of cash and believe shares were paid on net dividend taking and imputation credits/withholding tax came with the shares

My understanding is that the bonus share scheme was a tax dodge for the majority shareholder Origin, who weren't paying any NZ tax on their dividends by receiving them as bonus shares. Pretty darn offensive for the PAYE taxpayer but par for the course with our asset sell offs.
Workingdad, don't assume the market is always rational - short term fluctuations mean nothing.
I am very encouraged that management have yielded to the internal and external pressure and have cancelled the big payments for geothermal in third world countries.

[workingdad]

My understanding is that the bonus share scheme was a tax dodge for the majority shareholder Origin, who weren't paying any NZ tax on their dividends by receiving them as bonus shares. Pretty darn offensive for the PAYE taxpayer but par for the course with our asset sell offs.
Workingdad, don't assume the market is always rational - short term fluctuations mean nothing.
I am very encouraged that management have yielded to the internal and external pressure and have cancelled the big payments for geothermal in third world countries.

Rational..... when it comes to women and the market I would never have such an expectation


Certainly interested to increase holdings at some stage but waiting for the right (or rational) moment haha.