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Notes to the consolidated financial statements
Year ended 31 July 2007
30. Shareholders’ funds and statement of changes in shareholders’ equity
| Retained earnings | |||||||
|---|---|---|---|---|---|---|---|
| For the year ended 31 July 2007 | Share capital £m |
Share premium £m |
Translation reserve £m |
Hedging reserve £m |
Own shares £m |
Profit and loss account £m |
Total £m |
| Profit for the year attributable to equity shareholders | – | – | – | – | – | 474 | 474 |
| Exchange loss on translation of overseas operations | – | – | (229) | – | – | – | (229) |
| Exchange gain on translation of borrowings designated | |||||||
| as hedges of overseas operations | – | – | 97 | – | – | – | 97 |
| Valuation loss on interest rate swaps (less amounts reclassified and reported in net income) | – | – | – | (1) | – | – | (1) |
| Valuation gain on currency swaps | – | – | – | 2 | – | – | 2 |
| Actuarial gain on retirement benefits | – | – | – | – | – | 70 | 70 |
| Change in fair value of available-for-sale-investments | – | – | – | – | – | (5) | (5) |
| Tax charge not recognised in the income statement | – | – | – | 1 | – | (18) | (17) |
| Total recognised income and expense | – | – | (132) | 2 | – | 521 | 391 |
| New share capital subscribed | 16 | 657 | – | – | – | – | 673 |
| Purchase of own shares by Employee | |||||||
| Benefit Trust | – | – | – | – | (27) | – | (27) |
| Credit to equity for share-based payments | – | – | – | – | – | 20 | 20 |
| Dividends | – | – | – | – | – | (198) | (198) |
| Net additions to shareholders’ funds | 16 | 657 | (132) | 2 | (27) | 343 | 859 |
| Opening shareholders’ funds | 149 | 288 | (49) | 1 | (46) | 2,249 | 2,592 |
| Closing shareholders’ funds | 165 | 945 | (181) | 3 | (73) | 2,592 | 3,451 |
| Retained earnings | |||||||
|---|---|---|---|---|---|---|---|
| For the year ended 31 July 2006 | Share capital £m |
Share premium £m |
Translation reserve £m |
Hedging reserve £m |
Own shares £m |
Profit and loss account £m |
Total £m |
| Profit for the year attributable to equity shareholders | – | – | – | – | – | 537 | 537 |
| Exchange loss on translation of overseas operations | – | – | (182) | – | – | – | (182) |
| Exchange gain on translation of borrowings designatedas hedges of overseas operations | – | – | 58 | – | – | – | 58 |
| Valuation loss on interest rate swaps (less amounts reclassified and reported in net income) | – | – | – | 8 | – | – | 8 |
| Valuation gain on currency swaps | – | – | – | 5 | – | – | 5 |
| Actuarial gain on retirement benefits | – | – | – | – | – | 7 | 7 |
| Change in fair value of available-for-sale-investments | – | – | – | – | – | (7) | (7) |
| Tax charge not recognised in the income statement | – | – | (7) | (4) | – | (2) | (13) |
| Total recognised income and expense | – | – | (131) | 9 | – | 535 | 413 |
| New share capital subscribed | 1 | 30 | – | – | – | – | 31 |
| Premium on share options issued through share symmetry arrangements | - | 17 | - | - | - | (17) | - |
| Purchase of own shares by Employee | |||||||
| Benefit Trust | – | – | – | – | (27) | – | (27) |
| Credit to equity for share-based payments | – | – | – | – | – | 36 | 36 |
| Dividends | – | – | – | – | – | (162) | (162) |
| Net additions to shareholders’ funds | 1 | 47 | (131) | 9 | (27) | 392 | 291 |
| Opening shareholders’ funds | 148 | 241 | 82 | (8) | (19) | 1,857 | 2,301 |
| Closing shareholders’ funds | 149 | 288 | (49) | 1 | (46) | 2,249 | 2,592 |
A ‘share symmetry arrangement’ is an option scheme under which options are granted to an employee benefit trust, which exercises them on behalf of employees. When rights vested under the stock appreciation plans, the parent company issued shares to the trust, which then sold them in the market. From the Group’s point of view, shareholders’ equity only increased by the proportion of the sale proceeds attributable to the original exercise price of the award, while the trust remitted the remaining amount to employees. The parent company, however, is required by the UK Companies Act to credit the full issue proceeds to share capital and share premium account, and consequently the proportion of the issue proceeds remitted to employees is accounted for as a capitalisation of distributable reserves.