A scrip issue is usually done when a company does not have sufficient liquidity to pay a cash dividend.
A company declaring a scrip dividend gives the shareholders the option to either receive the dividend in cash or to receive additional shares.
Unlike DRIPs, however, scrip dividends are exempt from stamp duty and not subject to brokerage / dealing fees, because they are considered a stock issue by the company and not a reinvestment by the shareholder.
This means that the relative value of each pre-existing share has been reduced slightly.
This differs from a stock dividend in the United States, where the investor does not pay any tax on receipt of the shares and then only capital gains taxes on the stock dividend until the shares are sold.