British Gas plc to BG Group plc (October 2000)

Changes to the CGT Status of Shares

The information in this fact sheet covers the CGT events that have affected BG shareholders from the privatisation of British Gas in 1986 to the completion of the demerger of Lattice Group in 2000. The information is primarily provided for the purpose of individual shareholders resident in the UK calculating their personal tax liability.

Schedule of events

* This is the split for the large majority of shareholders who received cash only (i.e. not Bonds). For those who received Bond packages the split is 88.929% to the shares and 11.071% to the Bond package (split 3.698% index-linked, 3.714% floating rate and 3.659% fixed rate). The Bonds are 'qualifying corporate bonds' for tax purposes.

Impact on Shareholders

1. Privatisation shareholders . The base cost for CGT purposes can be calculated by taking the base cost of the shares (and if appropriate the bonus shares) and applying the changes to the RPI index and the changes from the successive restructurings. The result will vary depending on whether bonus shares were received and whether or not the B shares were sold or held until they were converted back to ordinary shares. The table below shows the CGT base cost at October 2000 for those shareholders who have held their shares continuously since the privatisation of British Gas in 1986 (and not made any other acquisitions or disposals of British Gas/BG/BG Group shares).

2. Other shareholders. The base cost for CGT purposes depends on the timing of the share purchase and the price paid for the shares, and so will vary from shareholder to shareholder. The impact of each restructuring can be calculated using the factors shown in the table overleaf.

Base Cost of BG Group shares held since the privatisation of British Gas

The following table shows the position immediately after the demerger of Lattice Group in October 2000, for those individual shareholders who have held shares continuously since privatisation, and who have made no other acquisitions or disposals of British Gas/BG/BG Group shares.

Following the restructuring in December 1999 shareholders may elect to claim small shareholder relief on the fractional cash payment they received in respect of their fractional entitlement to a Bond package. In such cases the base cost attributable to the bond cash fraction will be deducted from the relevant base cost for the shares shown in the table.