At the Annual General Meeting on 27 July 2006, shareholder approval was obtained to subdivide the Company's ordinary shares by way of a three for one share split (the "Share Split") which occurred at the end of July.
Each existing ordinary share of 122 1/10p in the share capital of the Company was subdivided into three new ordinary shares of 40.7p each.
In recent years the price of the Company's ordinary shares had risen to the point where they were one of the most highly priced ordinary shares compared with comparator companies quoted on the London Stock Exchange. It was hoped that the Share Split would lead to increased market liquidity of the Company's shares.
Each existing 122 1/10p ordinary share registered in your name at close of business on 28 July 2006 was divided into three new ordinary shares of 40.7p each. The effective date for dealings to commencing in the new ordinary shares was 31 July 2006.
You continue to hold the same proportion of Pennon immediately after the Share Split as you did before. It was expected that the market price of each new ordinary share would be approximately one third of the market price of an existing ordinary share which reflects the fact that you own three times as many ordinary shares in the Company. The aggregate value of your shareholding in the Company at the date of the Share Split should remain the same.
Your old ordinary share certificate for Ordinary shares of 122 1/10p was no longer valid once the new ordinary shares were listed. Therefore, you should have destroyed it or marked it as invalid upon receipt of your new ordinary share certificate.
New ordinary share certificates were dispatched on 9 August 2006.
You were able to sell your new ordinary shares from 31 July 2006, even though you did not have a new ordinary share certificate for them on that date. Pennon did not issue temporary documents of title. Instead, the new ordinary shares were certified against the register then held by Lloyds TSB Registrars, and now held by their successors, Equiniti www.equiniti.com.
If you held your existing ordinary shares in a PEP or an ISA, you should have been able to hold the new ordinary shares you received in place of your existing ordinary shares in a PEP or an ISA (subject to the terms and conditions of your PEP or ISA).
Based on the current UK legislation, the Share Split should not have given rise to a UK capital gains tax charge. After the sub-division of the existing ordinary shares, the base cost of those existing ordinary shares for the purposes of UK capital gains tax should have been apportioned between the corresponding new ordinary shares. If you are in any doubt as to your personal tax situation, you should consult your own professional adviser.
The final dividend for the year ended 31 March 2006 became 11.7 pence per new ordinary share and was paid on 3 October 2006 to shareholders on the register on 4 August 2006. This was equivalent to the recommended final dividend of 35.1 pence on the ordinary shares prior to the Share Split.
