Demerger of Biffa Plc
On 9 October 2006 the demerger of Biffa Plc was completed and, for each existing Severn Trent Plc share of 655 / 19 pence each held at the Record Time of 6.00pm on Friday 6 October 2006, shareholders in the Company received: One Biffa Plc share of ten pence A Special Dividend of 165 pence At the same time as the demerger, every three Severn Trent Plc shares of 655 / 19 pence each were consolidated into two new Severn Trent Plc shares of 9717 / 19 pence each. The Special Dividend was paid on 20 October 2006. At the same time, share certificates for the new Severn Trent Plc shares and the Biffa Plc shares were sent to shareholders.
Capital gains treatment
For the purpose of Capital Gains Tax (CGT) calculations the base cost of the old Severn Trent Plc (“Severn Trent”) shares held immediately prior to the demerger and share consolidation must be apportioned between the new Severn Trent shares and the Biffa shares received in the following ratio: new Severn Trent shares 78.7%, Biffa shares 21.3%. This is based on:
For example, if 1,000 old Severn Trent shares were held immediately before the demerger and share consolidation, with a previous base cost of £5.00 per share (a total base cost of £5,000) the base cost for CGT purposes of the 666 new Severn Trent shares held after the demerger and share consolidation would be £3,935 (less the fractional entitlement payment) and the base cost of the 1,000 Biffa shares received in the demerger would be £1,065. For CGT purposes the base cost of the new Severn Trent shares is adjusted to reflect any fractional payments received.
Please note that if the old Severn Trent shares were acquired in a number of transactions at different prices, or if other Biffa shares are owned, the determination of the base cost of the shares sold will also depend on the CGT matching rules. If you are in any doubt about your taxation position you should obtain professional advice.
However, if you require further information regarding the tax treatment of your shares in Severn Trent or are in any doubt about your taxation position you should obtain professional advice.