Untitled - David Kronemyer

Taxation Consequences
(i) Shareholders
Purchases of Ordinary Shares by the Company will be made through The Stock
Exchange. Accordingly, the rax position of shareholders will not be affected. A disposal
by shareholders of Ordinary Shares will be subject to the usual tax liabilities.
(i i) Company
Except in respect of the part of the purchase price which represents a repayment of
share capital, the sums which the company pays to purchase its ordinary Shares wi be
treated as a distribution. To this extent, the company will have to account for advance
corporation tax ("ACT"). ACT may, however, be offset against corporation tax
(including deferred tax) on the profits ofthe Company.
Proposal
The authority which shareholders may confer upon the Company for purchasing its own
shares must specify a maximum number of shares authorised to be acquired and determine a
price range.
It is proposed that the authority should be limited to a maximum of20,74g,202
Ordinary Shares, representing not m ore than 7 Vz per cent. of the Company's issued
Ordinary Share capital.
The maximum price per Ordinary Share on any exercise o[ the authority would not be
more than 5 per cent. above the average of the middle market quotations taken from The
Stock Exchange Daily Official List tor the ten business days prior to making any purchase.
The minimum price for any purchase is 25p being the nominal value of an Ordinary Share.
The price in each case will be exclusive of any ACT payable by the Company and/or
expenses.
On 30 June, 1988 (the latest practicable date before the printing of this letter) the
middle market quotation for an Ordinary Share derived from The Stock Exchange Daily
Offlcial List was 657p. This compares with a high for the past twelve months of B06p per
Ordinary Share as derived from The Srock Exchange Daily Official List up to ilO June, l9BB.
Details of purchases will be notified to The Stock Exchange by l2 noon on the business
day following dealing and to the Registrar of Companies within 28 days of purchase and will
be disclosed in the Annual Report of the Company. All Ordinary Shares purchased will be
cancelled.
The authority will (if granted.) expire on 30 September, 1989. However it is the Board's
present intention that the necessary resolutions to renew the authority will be proposed at the
1989 Annual Ceneral Meeting and annually thereafter and at relevant Class Meetings. The
authority of the Warrant holders will be sought and will be valid until redemption o{ the
Bonds in 1992, subject to there not being any material issue of Ordinary Shares in the
intervening period.
'fhe Directors will only implement such purchases, which will of course reduce the
issued share capital of the Company, after careful consideration and provided that the
purchases would result in an increase in anticipated earnings per share. Furthermore,
account will be taken ofappropriate gearing levels and the overall financial implications for
the Company.
Implementation of the proposed power to purchase the Ordinary Shares of the
Company should not adversely affect the rights of conversion into Ordinary Shares of the
holders of the 7 per cent. Convertible Shares or the rights of the Warrant holders to
subscribe for Ordinary Shares. The Directors believe that any purchases of Ordinary Shares
which were to be made under the authority would be beneficial to the holders of the Z per
cent. Convertible Shares and to the Warrant holders by reason of the improvement in their
conversion or subscription prospects respectively. If the proposed authority were to be
exercised in full at the share price on 30 June, 1988, Shareholders' Funds would be reduced
by f136,315,687.
3. REDUCTION OF SHARI,] CAPITAL
If approval is given to the Company to make market purchases of its own Ordinary Shares,
your Directors will recommend that the 3.5 per cent. Prelerence Shares should be cancelled
and 78p for each of the 3.5 per cent. Preference Shares be returned to their holders in
respect of the paid-up capital on the 3.5 per cent. Preference Shares, together with accrued
dividends to date of payment.