31. Shareholders' equity
| Group | Company | |||||
| 2006 £m |
2005 £m |
2004 £m |
2006 £m |
2005 £m |
2004 £m |
|
| Called-up share capital | ||||||
| At 1 January | 826 | 822 | 769 | 826 | 822 | 769 |
| Implementation of IAS 32 on 1 January 2005 | — | (2) | — | — | (2) | — |
| Shares issued during the year | 2 | 6 | 53 | 2 | 6 | 53 |
| Shares repurchased during the year | (13) | — | — | (13) | — | — |
| At 31 December | 815 | 826 | 822 | 815 | 826 | 822 |
| Share premium account | ||||||
| At 1 January | 11,777 | 12,964 | 8,175 | 11,777 | 12,964 | 8,175 |
| Reclassification of preference shares on implementation | ||||||
| of IAS 32 on 1 January 2005 | — | (3,159) | — | — | (3,159) | — |
| Currency translation adjustments | — | — | (231) | — | — | (231) |
| Shares issued during the year | 815 | 1,972 | 4,550 | 815 | 1,972 | 4,550 |
| Shares repurchased during the year | (381) | — | — | (381) | — | — |
| Redemption of preference shares classified as debt | 271 | — | — | 271 | — | — |
| Conversion of exchangeable undated loan capital | — | — | 460 | — | — | 460 |
| Other movements | — | — | 10 | — | — | 10 |
| At 31 December | 12,482 | 11,777 | 12,964 | 12,482 | 11,777 | 12,964 |
| Merger reserve | ||||||
| At 1 January and 31 December | 10,881 | 10,881 | 10,881 | — | — | — |
| Available-for-sale reserve | ||||||
| At 1 January | (73) | — | ||||
| Implementation of IAS 32 and IAS 39 on 1 January 2005 | — | 289 | — | — | ||
| Currency translation adjustments | (43) | 4 | — | — | ||
| Unrealised gains in the year | 2,652 | 35 | — | — | ||
| Realised gains in the year | (313) | (582) | — | — | ||
| Taxation | (695) | 181 | — | — | ||
| At 31 December | 1,528 | (73) | — | — | ||
| Cash flow hedging reserve | ||||||
| At 1 January | 59 | (9) | ||||
| Implementation of IAS 32 and IAS 39 on 1 January 2005 | — | 67 | — | (13) | ||
| Amount recognised in equity during the year | (109) | 18 | — | — | ||
| Amount transferred from equity to earnings in the year | (140) | (85) | 3 | 6 | ||
| Taxation | 41 | 59 | (1) | (2) | ||
| At 31 December | (149) | 59 | (7) | (9) | ||
| Foreign exchange reserve | ||||||
| At 1 January | 469 | (320) | 90 | — | — | — |
| Retranslation of net assets | (2,159) | 1,588 | (830) | — | — | — |
| Foreign currency gains/(losses) on hedges of net assets | 818 | (799) | 420 | — | — | — |
| At 31 December | (872) | 469 | (320) | — | — | — |
| Capital redemption reserve | ||||||
| At 1 January | 157 | 157 | 157 | 157 | 157 | 157 |
| Shares repurchased during the year | 13 | — | — | 13 | — | — |
| At 31 December | 170 | 157 | 157 | 170 | 157 | 157 |
| Group | Company | |||||
| 2006 £m |
2005 £m |
2004 £m |
2006 £m |
2005 £m |
2004 £m |
|
| Retained earnings | ||||||
| At 1 January | 11,346 | 9,408 | 7,269 | 4,794 | 4,675 | 3,646 |
| Implementation of IAS 32 and IAS 39 on 1 January 2005 | — | (1,078) | — | — | 81 | — |
| Currency translation adjustments and other movements | — | — | (8) | — | — | (1) |
| Profit attributable to ordinary and equity preference shareholders | 6,393 | 5,501 | 5,112 | 3,499 | 2,074 | 2,874 |
| Ordinary dividends paid | (2,470) | (1,927) | (1,588) | (2,470) | (1,927) | (1,588) |
| Equity preference dividends paid | (191) | (109) | — | (191) | (109) | — |
| Preference dividends – non-equity | — | — | (256) | — | — | (256) |
| Shares repurchased during the year | (624) | — | — | (624) | — | — |
| Redemption of preference shares classified as debt | (271) | — | — | (271) | — | — |
| Actuarial gains/(losses) recognised in retirement benefit | ||||||
| schemes, net of tax | 1,262 | (561) | (1,136) | — | — | — |
| Net cost of shares bought and used to satisfy share-based payments | (38) | — | — | — | — | — |
| Share-based payments, net of tax | 80 | 112 | 15 | — | — | — |
| At 31 December | 15,487 | 11,346 | 9,408 | 4,737 | 4,794 | 4,675 |
| Own shares held | ||||||
| At 1 January | (7) | (7) | — | (7) | (7) | — |
| Shares purchased during the year | (254) | — | (7) | — | — | (7) |
| Shares issued under employee share schemes | 146 | — | — | 7 | — | — |
| At 31 December | (115) | (7) | (7) | — | (7) | (7) |
| Shareholders’ equity at 31 December | 40,227 | 35,435 | 33,905 | 18,197 | 17,538 | 18,611 |
The merger reserve comprises the premium on shares issued to acquire NatWest less goodwill amortisation charged under previous GAAP. No share premium was recorded in the company financial statements through the operation of the merger relief provisions of the Companies Act 1985.
UK law prescribes that only reserves of the company are taken into account for the purpose of making distributions and the permissible applications of the share premium account.
The Group optimises capital efficiency by maintaining reserves in subsidiaries, including regulated entities. Certain preference shares and subordinated debt are also included within regulatory capital. The remittance of reserves to the parent or the redemption of shares or subordinated capital by regulated entities may be subject to maintaining the capital resources required by the relevant regulator.
At 31 December 2006, 6,497,502 (2005 – 772,917) ordinary shares of 25p each of the company were held by Employee Share Trusts in respect of share awards and options granted to employees.
© 2007