Example of disposal following a share capital reorganisation

This guidance applies only to reorganisations of share capital taking place before 6 April 2010

Eckusan plc draws up its accounts to 31 March. On 1 April 2003 it incorporates a 100% subsidiary in Switzerland, Eckusan (IP Holdings) SA, which does not carry on a trade.

The net asset value of Eckusan (IP Holdings) SA is approximately SFr 30 million, and Eckusan plc partially hedges its investment by a series of 3-month Swiss franc forward contracts. All gains and losses on these contracts are taken to reserves. Between 1 April 2003 and 1 July 2004, an exchange loss of £500,000 arises on the hedging contracts.

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