1. What are C Shares?
C Shares are non-cumulative redeemable preference shares of 0.1p each in the capital of Rolls-Royce Holdings plc (the Company) that can, during defined periods, be redeemed for cash. The Company will generally issue C Shares to ordinary shareholders twice a year in lieu of a cash dividend.
2. How can I make sure that I receive cash payments from the Company?
You can make a standing instruction to the Registrar to redeem all C Shares issued to you for cash by completing a Payment Instruction Form. Once you have completed and returned your Payment Instruction Form you will receive a cash payment each time the Company issues C Shares. You are free at any time to change this instruction. If you do not complete a Payment Instruction Form you will receive C Shares.
3. How can I make sure that I receive additional Ordinary Shares from the Company?
You can make a standing instruction to the Registrar to redeem all the C Shares issued to you for cash, and to reinvest this cash into additional Ordinary Shares using the C Share Reinvestment Plan (the CRIP), by completing a Payment Instruction Form. Once you have completed and returned your Payment Instruction Form you will receive additional Ordinary Shares each time the Company issues C Share. You are free at any time to change this instruction. If you do not complete a Payment Instruction Form you will receive C Shares.
4. What is the C Share Reinvestment Plan (the CRIP)?
The CRIP is a facility, offered by the Registrar, whereby the Registrar will use the cash proceeds arising on redemption of C Shares to purchase additional Ordinary Shares in the Company on a shareholder’s behalf. Typically, this will offer a much more cost-effective way of purchasing shares than via a broker as there is no minimum charge. You can obtain the CRIP terms and conditions or a Payment Instruction form by calling the Registrar on 0870 703 0162 or by visiting the Registrar's website www.investorcentre.co.uk.
5. Why does the Company make payments in shares, and will it ever return to paying dividends in cash?
The Company has previously identified the importance and relevance of making payments to shareholders in a form that does not generate additional shadow Advance Corporation Tax (ACT). This will accelerate the recovery of the Group’s surplus ACT and improve future cash flow, to the benefit of all shareholders. Accordingly, all payments made to shareholders between June 2004 and July 2008 were in the form of B Shares. Since January 2009, the Company has made payments to shareholders in the form of C Shares rather than cash dividends. It is therefore unlikely that the Company will return to paying a cash dividend if it can make payments to shareholders in a form that does not generate shadow ACT.
6. Will the C Shares be listed on the London Stock Exchange?
No. Although B Shares were listed there was actually a very limited market for them. The fact that C Shares are not listed should have little impact on shareholders as the market value of the shares is unlikely to change significantly from their nominal value of 0.1 pence per share.
7. What is a C Share worth?
The nominal value and the redemption price of each C Share is 0.1 pence. Therefore, 1,000 C Shares are worth £1. In total, the C Shares issued to shareholders will have a value equal to the cash dividend we would have paid to them under normal dividend arrangements. For example, instead of a cash dividend of £15, a shareholder would receive 15,000 C Shares (15,000 x 0.1p = £15). C Shares are not listed on the London Stock Exchange.
8. I have received a C Share certificate; can I redeem this for cash?
You have received a C Share certificate because you have not completed a Payment Instruction Form (or your Payment Instruction Form was not received before the closing date). If you would like to redeem these C Shares for cash and either receive the cash or reinvest it into the purchase of additional Ordinary Shares then please complete the reverse of the C Share certificate and return it to the Registrar. Your C Shares will be redeemed at the next available opportunity, typically in January and July of each year. If you do not wish to receive C Shares in future it is important that you complete a Payment Instruction Form.
9. I completed a Payment Instruction Form yet I have still received C Shares.
Each time the Company issues C Shares, all completed Payment Instruction Forms must be received by the Registrar at least one month before the issue date (the exact closing date for each issue of C Shares can be found in C shares issues). If your form was received after this date then your instruction will not be carried out until the next issue of C Shares. You should also check with the Registrar that your Payment Instruction Form was received and has not gone astray in the post.
10. Will dividends be paid on any C Shares held?
Yes. C Shares are entitled to receive a dividend fixed at 75 per cent of the London Inter-Bank Offered Rate (LIBOR). LIBOR is widely used to set interest rates on the London wholesale money market.
11. What is the tax position on the issue and redemption of C Shares?
The allotment and issue of C Shares does not itself create any charge to UK income tax. However, if any capital gain an individual realises on redemption, when aggregated with other chargeable gains in the same tax year, including on the compulsory redemption of B Shares, exceeds the annual exempt allowance, the excess may be subject to capital gains tax, even if the redemption proceeds are used to purchase additional Ordinary Shares. You'll find information about the tax effects of C Shares on pages 7 to 10 of the Shareholder Guide
12. Where can I find out more information on C Shares?
You can find more information in the Shareholder Guide
THIS DOCUMENT DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER, OR ANY SOLICITATION OF AN OFFER, OR INVITATION OR INDUCEMENT TO SUBSCRIBE FOR OR PURCHASE ANY RIGHTS, SHARES OR OTHER SECURITIES. SECURITIES DISCUSSED IN THE THIS DOCUMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT IN TRANSACTIONS THAT ARE EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH LAWS.
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