US Tax Information

Important US Tax Information for Filtrona spin-off
The following information is provided to assist US shareholders who received shares of Filtrona plc ("Filtrona shares") on 6 June 2005. It explains how to allocate tax basis in Bunzl shares before the spin-off (often referred to as a demerger) between the Bunzl shares (or ADRs representing those shares) and the Filtrona shares received after the spin-off.

This information should be read in conjunction with paragraph 16 of part 8 of the Filtrona plc Listing Particulars (United States taxation).
The Listing Particulars (PDF 386 KB, opens in a new window)

IMPORTANT: The following is intended as a general guide only and is based on legislation current as at
6 March 2006. Bunzl accepts no responsibility for the use that may be made of this information. Anyone
who is in any doubt as to his taxation position should consult an appropriate professional adviser as to
how they report their receipt of Filtrona shares for US tax purposes.

Award of shares and ADRs
To compensate Bunzl ordinary shareholders for the spin-off of the Filtrona business, each such shareholder received 9 consolidated Filtrona shares for every 18 non-consolidated ordinary Bunzl shares held by them at spin-off.

To compensate holders of Bunzl ADRs (where each ADR represented 5 non-consolidated Bunzl shares) for the spin-off of the Filtrona business, each Bunzl ADR holder received 45 Filtrona shares for every 18 Bunzl ADRs held at spin-off.

Immediately after the spin-off, the Bunzl shares of 25p each were consolidated into Bunzl shares of 32¹/₇p each. For every 18 shares of 25p each held before spin-off, 14 consolidated Bunzl shares of 32¹/₇p each were created. Accordingly, each Bunzl ADR holder received 14 Bunzl ADRs (each representing 5 consolidated Bunzl shares) for every 18 Bunzl ADRs held at spin-off.

Tax treatment of the spin-off
The spin-off was not taxable to Bunzl or its shareholders for federal income tax purposes, except with respect to cash paid to shareholders in lieu of fractional shares.

Fractional shares
Only whole Filtrona shares were issued by Filtrona plc as a result of the spin-off and only whole Bunzl shares were created pursuant to the consolidation. To the extent a shareholder’s ownership would otherwise have resulted in the receipt of fractional shares, cash was paid in lieu of the fractional share. If you are subject to US federal income tax, the taxable gain or loss you will recognize with respect to any cash you received in lieu of a fractional share will be equal to the difference between the cash amount you received and your tax basis (described below) in the fractional share.

For shares held within the Bunzl Employee Stock Purchase Plan, fractional ownership is represented within a participant’s account.

Tax basis allocation in the US
US Federal income tax law requires that the tax basis of your Bunzl shares immediately before the spin-off be allocated between the Bunzl shares and Filtrona shares that you held after the spin-off.

This allocation is based on the relative fair market values of such shares at the time of the spin-off.

The following table includes information about the high and low trading prices on the London and New York Stock Exchanges on 6 June 2005.

Bunzl believes a reasonable method to use to allocate the tax basis of your shares is to rely on the mid point of the high and low trading prices on the day on which the spin-off took place. You may be allowed to use a different tax basis allocation methodology and should consider consulting your personal tax adviser in that regard.

Shares
Using the methodology described above, the tax basis of the Bunzl shares is:

and the tax basis of the new Filtrona shares is:

The allocation shown above includes any cash received in lieu of fractional shares.

Example US tax basis allocation for a simple holding of shares
Before the spin-off on 6 June 2005, a shareholder held 1,800 Bunzl shares, having an aggregate tax basis of $12,000.

Following the spin-off and the share consolidations, the shareholder would have held 1,400 Bunzl shares and 900 Filtrona shares.

The tax basis of the 1,400 consolidated Bunzl shares would be:
77.47% of the aggregate tax basis of $12,000
i.e. $12,000 x 77.47% = $9,296.40.
Each new consolidated Bunzl share would have a tax basis of:
$9,296.40 / 1,400 = $6.64.

The tax basis of the 900 consolidated Filtrona shares would be:
22.53% of the aggregate tax basis of $12,000
i.e. $12,000 x 22.53% = $2,703.60.
Each new consolidated Filtrona share would have a tax basis of:
$2,703.60 / 900 = $3.00.

ADRs
Using the methodology described above (and including a currency exchange calculation), the tax basis of the new Bunzl ADRs is:

and the tax basis of the new Filtrona shares is:

* $1.8209 was the noon buying rate for US Dollar/ Sterling on 6 June 2005 (Source: Federal Reserve Bank of New York).

Example US tax basis allocation for a simple holding of ADRs
Before the spin-off a shareholder owns 180 Bunzl ADRs at a cost of $7,200. All ADRs were bought on the same date.
As a result of the spin-off, the shareholder receives 140 Bunzl ADRs representing consolidated Bunzl shares and 450 Filtrona shares.
The cost would be allocated as follows:

Shares may have different tax basis
If you acquired different blocks of Bunzl shares or ADRs at different prices, you may need to calculate a separate tax basis for each block of Bunzl shares and Bunzl ADRs as well as for Filtrona shares held after the spin-off. You should retain this allocation to demonstrate your basis if needed in the future.

US treasury statement
Section 1.355-5(b) of the Treasury Regulations requires Bunzl shareholders who received Filtrona shares in the spin-off to attach a statement regarding the spin-off to their federal income tax returns for the taxable year that includes the date of the spin-off (generally calendar year 2005 for individual taxpayers). To assist you with this requirement, we have created a form of such statement which you can access using the link below. To complete the statement, fill in your name, taxpayer identification number and the blanks in item 6. The statement should then be attached to your federal income tax return for your taxable year that includes the spin-off.

Information statement pursuant to Treasury Regulations section 1.355-5(b) (PDF 68 KB, opens in a new window)

To view PDFs you need the Adobe Reader. This program is available free of charge from the Adobe website.