Inchcape’s proposed 1 for 10 consolidation of Inchcape plc ordinary shares was approved by shareholders at our AGM last Thursday, 13 May 2010.
The purpose of the share consolidation, which is in line with the actions taken by a number of other companies, was to reduce the total number of shares in issue following the Rights Issue undertaken in 2009 and to increase the price of the Company’s shares to a figure more appropriate for a listed company of its size and nature in the UK market.
If you have any questions about the share consolidation, please contact our share registrars, Computershare, who provide a dedicated help line for any shareholder queries, available from 0830hrs to 1730hrs on +44 (0)870 707 1076.
Frequently Asked Questions
Q: Why did you seek a share consolidation?
A: Following our rights issue in 2009, the Company has a very large number of one penny shares in issue. The purpose of the proposed consolidation was to reduce the total number of Inchcape shares in issue and to increase the price of each Inchcape share to a figure more appropriate for a listed company of its size and nature in the UK market. .
Q: Did shareholders to approve the consolidation?
A: The share consolidation was approved by shareholders at the Annual General Meeting on 13 May 2010.
Q: Why did you undertake a consolidation now, why didn’t you do this at the time of the rights issue or at last year’s AGM?
A: The AGM is a natural point for us to undertake the share consolidation as it minimises costs and administration burden. At the time of the rights issue in early 2009 and for the period thereafter, the company was focused on ensuring that it had the appropriate capital structure for the prevailing global economic backdrop and the group’s operational performance for 2009 and did not want to risk confusing matters by implementing a share consolidation at that time.
Q: Why have to you chosen the 1 for 10 ratio?
A: There is no right or wrong answer when choosing a share consolidation ratio. However, a 1 for 10 ratio, based on the current share price, implies a post-consolidation price of [share price x 10]p, which is very comfortably in the range of 100p – 500p, which the majority of FTSE 350 companies trade within. We do not wish to have to make another change soon.
Q: Am I correct in saying you recently undertook a share split, isn’t this just reversing that?
A: Inchcape implemented a rights issue in 2009. As part of the rights issue Inchcape’s existing ordinary shares (which at that time had a nominal value of 25 pence) were sub-divided into new Inchcape ordinary shares of 1 pence each and deferred shares of 24 pence each. The sub-division was necessary to enable the rights issue shares (being new ordinary shares with a nominal value of 1p) to be offered and issued to shareholders at a price of 6 pence per share – shares cannot be issued at a discount to nominal value under English company law.
Q: How many ordinary shares are in issue now?
A: Approximately 460million.
Q: What is the new nominal share value?
A: The nominal value of our shares is 10p.
Q: What happens if the number of shares a shareholder owned was not divisible by 10?
A: If a shareholding was not exactly divisible by 10, the consolidation generated an entitlement to a fraction of a new 10p ordinary share. Any fractional entitlements so arising are sold in the market on behalf of the shareholder so entitled, save that where the net proceeds are less than five pounds (£5) per entitled shareholder, the net proceeds of such sale are retained for the benefit of the company.
Q: Does this change shareholders’ rights in any way?
A: Each shareholder’s proportionate interest in Inchcape’s issued ordinary share capital will remain unchanged as a result of the consolidation (save for fractional entitlements). Aside from the change in nominal value, each new 10p ordinary share will have the same rights (including voting and dividend rights and rights on a return of capital) as each existing ordinary share has at the moment.
Q: Will shareholders get new share certificates to reflect the consolidation?
A: Yes. New share certificates to replace existing certificates will be issued. Old share certificates showing a nominal value of 25p or 1p should be destroyed.
Q: You are also cancelling the 24p Deferred Shares. What are these?
A: The 24p Deferred Shares were created as part of subdividing the Company’s previously issued ordinary shares of 25 pence into the current one penny shares in connection with the rights issue. This sub-division was necessary to enable the rights issue shares (being new ordinary shares with a nominal value of 1p) to be offered and issued to shareholders at a price of 6 pence per share – shares cannot be issued at a discount to nominal value under English company law. These deferred shares (which have very limited rights, are not listed and are not freely transferable) are effectively worthless.
Q: What is the impact of cancelling the Deferred Shares – are you taking rights away from shareholders?
A: No. The deferred shares have very limited rights, are not listed and are not freely transferable, rendering them effectively worthless. We stated in our rights issue prospectus in 2009 that we would cancel them and create an appropriate reserve in due course. We are currently taking steps to do so in accordance with the rights attaching to the deferred shares and will make an announcement on our website when this cancellation has been completed.
Q: Has the ISIN changed?
A: Yes. The Existing Ordinary Shares (existing ISIN: GB00B10QTX02) have been consolidated on a 1 for 10 basis into New Ordinary Shares under the new ISIN code GB00B61TVQ02.
Q: Why was a Prospectus not issued:?
A: A prospectus is not required to be published pursuant to the Financial Services and Markets Act 2000 in connection with the Share Consolidation
The New Ordinary Shares will be issued in substitution for the Existing Ordinary Shares already listed on the Official List and admitted to trading on the Main Market of the London Stock Exchange, and there will be no increase in the issued share capital of the Company as a result of the Share Consolidation.
Q: Will any new ordinary shares be admitted to trading?
A: No. We confirm that no new ordinary shares will be admitted to trading on the Main Market of the London Stock Exchange or listed on the Official List of the UK Listing Authority.
Q: What was the date that the newly consolidated shares were admitted to listing?
A: 17 May 2010
