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B shares were a class of share in the Company issued as an alternative method of making payments to shareholders. B Shares could, during prescribed periods, be redeemed for cash or converted into additional Ordinary Shares. The last time that the Company issued B Shares was 1 July 2008. All B Shares were compulsorily redeemed on 22 September 2008. All future payments to shareholders will be made in the form of C Shares.
Why does the Company make payments to shareholders in shares, and will it ever return to paying dividends in cash?
The Company has previously identified the importance and relevance of making payments to shareholders in a form that does not generate additional shadow Advance Corporation Tax (ACT). This will accelerate the recovery of the Group’s surplus ACT and improve future cash flow, for the benefit of all shareholders. Accordingly, all payments made to shareholders since June 2004 have been made in the form of B Shares (and with effect from January 2009, C Shares) rather than cash dividends. It is therefore unlikely that the Company will return to paying a cash dividend if it can make payments to shareholders in a form that does not generate shadow ACT.
Why is the Company now issuing C Shares instead of B Shares?
Following a strategic financial review, the directors concluded that the increase in the Company’s issued share capital which occurred when Shareholders chose to convert B Shares into Ordinary Shares was inconsistent with its strategy to maintain a more efficient balance sheet and limit Earnings Per Ordinary Share dilution.
Why has the Company carried out a compulsory redemption of B Shares?
The Board decided to close the B Share register before making a first issue of C Shares and accordingly exercised its rights to redeem compulsorily all remaining B Shares in accordance with Article 6A(d)(ii) of the Company's Articles of Association.
What was the consideration for the redemption?
The B Shares were redeemed at their nominal value of 0.1p (1,000 B Shares = £1). However, shareholders also received the dividend accrued on B Shares between 1 July and 22 September and paid at 75 per cent of the London Inter-Bank Offered Rate, commonly known as LIBOR. In addition, the Company took the opportunity to return to those shareholders who had previously chosen to convert B Shares into Ordinary Shares any residual cash balances arising from B Shares that were insufficient to convert into one whole Ordinary Share.
What is the tax effect of the compulsory redemption?
The redemption of B Shares may, depending on the shareholder’s individual circumstances, give rise to a Capital Gains Tax charge. No tax will be payable by individual shareholders if the chargeable gain on the redemption of B Shares (together with any other chargeable gains for the tax year) is less than their annual capital gains tax exemption (£9,200 for 2007/8 and £9,600 for 2008/9).
What should I do with my B Share certificates?
All B Share certificates will be invalid after 22 September 2008 and can be destroyed once redemption monies have been banked.
What is the difference between B Shares and C Shares?
The only material difference between B Shares and C Shares is that C Shares do not carry the option to convert directly into Ordinary Shares. C Shares can only be redeemed for cash. However, shareholders can authorise Computershare Investor Services PLC (the Registrar) to use the cash from redemption proceeds to make market purchases of additional Ordinary Shares on their behalf by participating in the C Share Reinvestment Plan. Also, unlike B Shares, C Shares will not be listed on the Stock Exchange.
How is the issue of B shares treated for tax purposes?
The CRIP is a facility, offered by the Registrar, whereby the Registrar will use the cash proceeds arising on redemption of C Shares to purchase additional Ordinary Shares in the Company on a shareholder’s behalf. Typically, this will offer a much more cost-effective way of purchasing shares than through a broker as there is no minimum charge. The terms and conditions applying to the CRIP can be obtained from the Registrar’s website.
What will happen to existing B Share evergreen elections?
Unless shareholders advise otherwise, elections already in place to redeem B Shares for cash will continue to apply to all future C Share issues so that shareholders will continue to receive twice yearly redemption payments accompanied by a redemption statement. Elections already in place to convert B Shares into additional Ordinary Shares will automatically be treated as elections to redeem all future C Shares for cash with the redemption proceeds then used to make market purchases of additional Ordinary Shares through the CRIP. Shareholders not having an election in place will receive a C Share certificate twice a year.
However, all shareholders are free to change their election at any time by contacting the Registrar. A ‘C Share Evergreen Mandate’ form can be obtained from the Registrar’s website.
THIS DOCUMENT DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER, OR ANY SOLICITATION OF AN OFFER, OR INVITATION OR INDUCEMENT TO SUBSCRIBE FOR OR PURCHASE ANY RIGHTS, SHARES OR OTHER SECURITIES. SECURITIES DISCUSSED IN THE THIS DOCUMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT IN TRANSACTIONS THAT ARE EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH LAWS.
Prices and values of, and income from, shares may go down as well as up. It should be noted that past performance is not a guide for future performance. Persons needing advice should consult an independent adviser
