CGB (ASX) Ann: Q&amp;A on the merger of QBL MCL and Medcan

Originally posted by Tomasp ↑

I think both what @BigDaniel and you say are great points, but I must disagree on your talk about a consolidation fixing the problem.

Please correct me if I'm wrong, but in my mind a consolidation doesn't fix anything, but just artificially increase the SP in direct proportion to decreasing individual holdings.

If I held all 100 out of a total 100 shares before a consolidation (just for simplicity sake) at a share price of $1, I held a value of $100 in the company. After say a 10 to 1 consolidation, the value of the company would still remain at $100 as there was no material change in business, revenues etc. But now I would only hold 10 shares but the share price would rise to $10.

There is no difference to the value of my holding other than holding a lower number of shares at a higher price?

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Cheers @Tomasp,

I could be off & you may be right but let me have another crack.

If you discount the Bauxite for a second.

In this scenario lets say we make $55 dollars profit from our 55% stake in QBL to be divided by 55 shares, thats $1 a share.

If we are diluted by 45% for purchasing remaining 45% of MCL we would have...

$100 dollars profit due to owning 100% of MCL which would be divided by 100 shares now instead of 55, still $1 a share dividends.

It would be different if we were issuing shares for a capital raise or purchasing a new business outside of MCL however because 100% of QBL profits are derived from MCL the value impact on each share is mirrored.

Hope I'm making sense lol.

Ann: Q&A on the merger of QBL MCL and Medcan, page-510