Ann: Update - Consolidation/Split - BOE, page-69

It’s very simple really, @Goldrocks

Yes the price per share has gone up 8x, but the number of shares on issue has gone down 8x. Very simple arithmetic. You will notice that if you previously had 80,000 shares, you now have 10,000. But each individual share is worth 8x more. So the dollar value of your overall investment is unchanged.

If your previous average was 26c then yes it is now equivalent to $2.08. To labour the point, here’s an example:

Old regime:
80,000 shares @ $0.26/sh = $20,800

New regime:
10,000 shares @ $2.08/sh = $20,800

The share consolidation means nothing in terms of the value of your portfolio and the ability for it to go up x2, x5, x10 and so on. It is a simple question of perception. In the US, many investors consider stocks with a SP under US$1.00 to be a ‘penny dreadful’, so to improve the prospects of US investors getting on board, it is best to consolidate when you have shares in the billions, to make it look a bit more attractive. But to existing investors in Australia, the change means diddly squat.

Cheers
m