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Demerger tax information
The following information is intended to assist persons in calculating the base cost of their holding of Bunzl plc shares in the context of Bunzl’s demerger on 6 June 2005 of its Filtrona business. Additional information has been prepared for shareholders in the US, which may be accessed using the link below.
This information should be read in conjunction with paragraph 15 of part 8 of the Filtrona plc Listing Particulars (UK taxation). A link to the Listing Particulars appears below.
Creation of Filtrona plc
Upon demerger of the Filtrona business, Filtrona plc was created, having shares of nominal value 62.5p each. Immediately after demerger, the shares of Filtrona plc were consolidated (on a two for one basis) into shares having a nominal value of 125p each and were listed on the London Stock Exchange (“Filtrona shares”).
Award of Filtrona shares
To compensate Bunzl ordinary shareholders for the demerger of the Filtrona business, each such shareholder received 9 consolidated Filtrona shares for every 18 non-consolidated Bunzl shares held by them at demerger.
Consolidation of Bunzl shares
Immediately after the demerger, the Bunzl shares of 25p each were consolidated into Bunzl shares of 321⁄7p each. For every 18 shares of 25p each held before the demerger, 14 consolidated Bunzl shares of 321⁄7p each were created.
Illustration table
The table below shows the number of Filtrona shares and consolidated Bunzl shares that shareholders with differing numbers of non-consolidated Bunzl shares would have held immediately following the demerger:
| Before the demerger and share consolidations |
Immediately after the demerger and share consolidations |
| Holding of Bunzl shares of 25p each |
Consolidated Bunzl shares of 321⁄7p received |
Filtrona shares received |
| 100 |
77 |
49 |
| 250 |
194 |
124 |
| 5,000 |
3,888 |
2499 |
For further information on the allocation of shares, please refer to:
The Listing Particulars (PDF 388K)
The Shareholder Circular (PDF 132K)
US shareholders: Important tax information on Filtrona demerger
Amount of base cost
For the purposes of calculating the taxation of chargeable gains, the aggregate base cost of the Bunzl shares and the Filtrona shares immediately after the demerger and share consolidations should be the same as the base cost of the Bunzl shares immediately before the demerger.
IMPORTANT: The following information is intended as a general guide only and is based on legislation current as at 6 March 2006. The information is relevant to individuals who are resident or ordinarily resident in the UK for tax purposes, who are the beneficial owners of their shares and who hold their shares as investments. 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.
Apportioning base cost in the UK for Bunzl shares and Filtrona shares
The precise basis on which the apportionment should be done will depend on a number of factors, including the type of share pool or holding the Bunzl shares comprised for the purposes of UK capital gains tax legislation.
Fractional shares
Only whole Filtrona shares were issued by Filtrona plc as a result of the demerger 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 shares. The cash received will not be taxable because its receipt falls within a particular relieving provision of UK capital gains tax legislation. The amount of cash received should, however, be deducted from the shareholder’s original aggregate base cost in order to determine the revised aggregate base cost. The revised base cost should then be allocated across the Bunzl consolidated shares and new Filtrona shares.
Method of allocation
In most cases, the base cost should be apportioned between the Bunzl consolidated shares and the Filtrona shares by reference to their respective market values on the first day on which prices were quoted or published for such shares.
The market value is found by taking the lower of:
- the lower of the two prices shown as the quotations for the shares on the London Stock Exchange Daily Official List plus one quarter of the difference between those two figures, and
- the halfway point between the day high and the day low.
The following information is taken from the London Stock Exchange Daily Official List for 6 June 2005:
| Bunzl plc |
Closing spread |
High |
Low |
| |
535.50 to 536.50p |
548p |
517.50p |
| |
(a) = 535.75p |
(b) = 532.75p |
(b) is lower than (a) therefore market value is 532.75p |
| Filtrona plc |
Closing spread |
High |
Low |
| |
231.75 to 232.25p |
253p |
229p |
| |
(a) = 231.875p |
(b) = 241p |
(a) is lower than (b) therefore market value is 231.875p |
The base cost in the UK of the new Bunzl shares is:
| 14 x 532.75p |
x 100 |
= |
78.14% of the aggregate base cost |
(9 x 231.875p) + (14 x 532.75p) |
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The base cost in the UK of the new Filtrona shares is:
| 9 x 231.875p |
x 100 |
= |
21.86% of the aggregate base cost |
(9 x 231.875p) + (14 x 532.75p) |
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Example UK allocation of base cost for a simple holding of shares
Before the demerger on 6 June 2005, a shareholder held 1,800 Bunzl shares having an aggregate base cost of £6,000.
Following the demerger and the share consolidations the shareholder would have held 1,400 Bunzl shares and 900 Filtrona shares.
The base cost of the 1,400 consolidated Bunzl shares would be:
78.14% of the aggregate base cost of £6,000
i.e. £6,000.00 x 78.14% = £4,688.40.
Each new consolidated Bunzl share would have a base cost of:
£4,688.40 / 1,400 = £3.3489 (i.e. 334.89p)
The base cost of the 900 consolidated Filtrona shares would be:
21.86% of the aggregate base cost of £6,000
i.e. £6,000.00 x 21.86% = £1,311.60.
Each new consolidated Filtrona share would have a base cost of:
£1,311.60 / 900 = £1.4573 (i.e. 145.73p)
Shares may have different base costs
If you acquired different blocks of Bunzl shares at different prices, you may need to calculate a separate tax basis for each block of Bunzl shares as well as for Filtrona shares held after the demerger. You should retain your allocation calculation to demonstrate your basis if needed in the future.
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