I was gifted CRH shares at different times in the 1970s by my late father, for which I hold the paper certificates. As far as I understand, they were purchased directly from CRH.
I am having great difficulty trying to discover the book cost of these shares. I have contacted CRH and their registrars, Link Registrars Limited, in pursuit of this information. The latter advised me to visit the Euronext website to obtain a valuation. I did so, but without success. My stockbroker was also unable to help.
Does CRH have a legal obligation to make such information readily accessible? Could you suggest some other avenues I might pursue in my quest?
Ms M.S.
On the Money: the personal finance newsletter from The Irish Times
The key decisions now facing Donald Trump which will have a big impact on the Irish economy
‘I feel Irish Rail are just running down the time and hoping I will go away’
Pulling in top talent: Doggy day care, free lunches, pensions - not all perks are created equal
Your father clearly was an early believer in what has since become the largest stock on the Dublin market. CRH was only formed in 1970 when two existing public companies – Cement Limited (which dates back to 1936) and Roadstone Limited (established in 1949) – merged.
Back then, the group had annual sales of €70 million in today’s currency, of which 95 per cent was based in Ireland. It didn’t expand into continental Europe until 1973 as Ireland joined the European Economic Community (now the European Union) and took its first step into the US market in 1978.
More than 50 years on, it now has a physical presence in 28 countries across the world, employing over 77,000 people with sales of €30.5 billion and profits last year of €3.6 billion.
There’s been a lot of change regarding the shares in those years as well. Back in 2011, the company moved its primary listing to London and announced earlier this year that it will depart the Dublin Stock Exchange altogether as it moves its main listing to New York, with chief executive Albert Manifold telling shareholders at the group’s recent annual general meeting that the US now accounts for around three-quarters of group profits (on the basis of Ebitda – earnings before interest, tax, depreciation and amortisation), a figure that has grown dramatically over the past decade.
He told shareholders the company is now “de facto” a US business even as it keeps its corporate HQ in Dublin, which makes sense on tax grounds.
My guess is that, with the arrival of digitisation and the internet, much of the relevant historic paperwork no longer exists or, if it does, no one currently working in the area has any idea where they might find it
The argument from the company is that listing in New York better places it to compete for major US contracts. It helps that US-listed companies tend to trade at a premium to those on European stock markets.
That news saw the shares spike earlier this year. They have since calmed down but are still trading just over 20 per cent up so far this year, having lost about the same amount last year amid economic jitters.
Finding share prices
But from your point of view, it is as good a time as any to take stock of where you stand in tax liability terms on these shares. But, as you have found, getting the information to do so is something of a challenge. These are shares bought for you by your father on four separate dates starting in 1970 and running up to 1979.
You’ve clearly been round the houses and I have subsequently been in touch with Euronext, which now runs the Irish exchange, one of Ireland’s leading stockbroking firms and the company itself. My guess is that, with the arrival of digitisation and the internet, much of the relevant historic paperwork no longer exists or, if it does, no one currently working in the area has any idea where they might find it.
To be fair, the company has been helpful in as far as it can be. It reminded me, importantly, that in relation to the shares acquired in 1970, it is their value on April 6th, 1974, that is relevant. The Revenue Commissioners tax and duty manual confirm this, saying: “For CGT purposes, all assets which are held on April 6th, 1974, are deemed to have been sold and immediately reacquired at their market value at that date.”
CRH could not give me the daily prices for your share purchases on the other three dates, so I turned to the archive of The Irish Times, or more specifically the stock market reports that we have traditionally carried
The one small mercy of that is that it means I do not have to work out how to convert the share price – which in 1970 was in the old pre-decimal currency days – to the pre-euro decimal price.
Back on April 6th, 1974, the value of shares in CRH – then known as Cement Roadstone Holdings – was 36 pence and that is the relevant original purchase price for your purposes.
CRH could not give me the daily prices for your share purchases on the other three dates, so I turned to the archive of The Irish Times, or more specifically the stock market reports that we have traditionally carried on our business pages.
This informed me that the closing price on the other three dates that shares were acquired for on two occasions in the 1978/79 tax year were, starting with the earlier transaction, 129p and 80p. The closing price on the day the shares were bought in the following tax year was 104p. On all three occasions the shares moved up or down only by one penny, so I think you could be comfortable taking those prices and not worrying about any swings in price during the trading day.
These figures were subsequently confirmed independently by Euronext, the company that now runs the Irish Stock Exchange. Although the data you were looking for related to a time long before it ran the exchange, its team was able to recover the share price for the relevant days pretty quickly when I asked them.
At that time, you were allowed to index the price at which assets were acquired to reflect the impact of inflation on their value. Indexation ran out in 2003 but it still applies to assets bought before then up to that point. Revenue has a table which gives the indexation factors.
In your case, the multiple for the shares bought in 1970 but calculated on the basis of their 1974 price is 7.528. Taking your 1974 price of 36 pence, this gives you a new “purchase price” for capital gains purposes of 271 pence. We then have to convert that into euro, which you do by dividing that figure by 0.787564, giving you an updated euro base price of €3.44. Don’t get too attached to this figure.. We’ll be returning to it below.
For the shares bought in the 1978/79 tax year – remember, tax years back then went from April 6th in one year to April 5th the following year – the indexation factor is 4.148. That updates your 129p price to 535 pence which, in euro, is €6.79. And the other shares acquired that year at 80 pence will now have a purchase price of 332p or €4.21.
Finally the purchase price of the shares bought in the 1979/80 tax year at 104p are 389 pence after applying the relevant multiplier, 3.742, which then translates into euro at €4.94.
Bonus shares
The picture is further complicated by a couple of bonus issues of shares at no charge made by the company in its early years. This generally happened in lieu of dividend payments.
CRH helpfully gave me a list of capital issues in the company down the years. I am assuming you did not take part in any rights issues or placings as you are silent on those.
However, in May 1974, there was a bonus issue where existing shareholders got one additional share for every two shares they held at the time. And in April 1978, a further bonus issue gave shareholders two shares for every three ordinary shares held at the time.
In your case, the first tranche of shares bought for you are affected. As the second acquisition on your behalf was made on the same day as the second bonus issue, I am assuming the base price of those shares is not affected.
With bonus issues, the price paid for the original shares is now apportioned over the larger holding, meaning the unit cost of each share falls. The first 1-for-2 bonus issue in 1974 means that the original shares you bought now have an original base price of 24p, not 36p. The second 2-for-3 bonus issue would lower that base cost further, to 14.4p or, in euro terms after indexation, €1.38 rounded up to the nearest cent.
Bear in mind that share sales from holdings that were acquired at different times are generally treated on a first in, first out basis
Ultimately, for every two shares your father bought in that original 1970 purchase, you had three shares in 1974 and five after the second bonus offer.
As the shares are now trading at €44.74 at the time of writing, the ones acquired in 1970 each has a gain of €43.36; those bought in 1978/79 have a gain of €37.95 for the ones bought earlier that year and €40.53 for the other ones. Finally, those bought in 1979/80 have a gain of €39.80.
If you do sell, you’ll obviously need to work out those gains on the basis of the actual price you achieve for your shares. Bear in mind that share sales from holdings that were acquired at different times are generally treated on a first in, first out basis, so if you sell only part of your holding, the Revenue will assume the first shares sold are the 1970 ones (including the bonus shares).
You can offset any stockbroker and other expenses incurred in selling the shares. After that, you are entitled to a tax-free capital gain in any one year of €1,270. Above this figure, you will be taxed at 33 per cent and it is up to you to file a return and pay the tax due: it is not something Revenue will contact you about – or, at least, if they do, it will because they have become aware you didn’t pay the tax owing, which would not be good for you.
Of course, capital gains tax only becomes an issue if you sell the shares. If you hold on to them and they pass on to other people after your death, any capital gains due will die with you and the beneficiary will receive them at whatever their market value is on your death.
Getting back to the other element of your question – whether CRH has any legal obligation to make the information you seek readily available – the simple answer is that it does not. It is really the responsibility of the person acquiring shares or any other assets to keep a record of the purchase price. precisely because, with the passage, of time we tend to forget these things.
Finally, the stockbrokers – Davy – tell me they do have a probate unit that specialises in precisely this kind of information. I don’t know for certain but I suspect other brokers might have similar arrangements. That might be useful to others who find themselves in a similar position – often while tidying up the affairs of a family member who has died. No doubt there might be a charge for such services, especially for people who would not have been regular customers over the years.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.
