BP 2014 Annual Report Download - page 160

30. Capital and reserves – continued
Share capital
The balance on the share capital account represents the aggregate nominal value of all ordinary and preference shares in issue, including treasury
shares.
Share premium account
The balance on the share premium account represents the amounts received in excess of the nominal value of the ordinary and preference shares.
Capital redemption reserve
The balance on the capital redemption reserve represents the aggregate nominal value of all the ordinary shares repurchased and cancelled.
Merger reserve
The balance on the merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares issued in
an acquisition made by the issue of shares.
Treasury shares
Treasury shares represent BP shares repurchased and available for specific and limited purposes.
For accounting purposes shares held in Employee Share Ownership Plans (ESOPs) to meet the future requirements of the employee share-based
payment plans are treated in the same manner as treasury shares and are therefore included in the financial statements as treasury shares. The ESOPs
are funded by the group and have waived their rights to dividends in respect of such shares held for future awards. Until such time as the shares held
by the ESOPs vest unconditionally to employees, the amount paid for those shares is shown as a reduction in shareholders’ equity. Assets and
liabilities of the ESOPs are recognized as assets and liabilities of the group.
At 31 December 2014, the ESOPs held 34,169,554 shares (2013 32,748,354 shares and 2012 22,428,179 shares) for potential future awards, which
had a market value of $219 million (2013 $253 million and 2012 $154 million). At 31 December 2014, a further 6,024,978 ordinary share equivalents
(2013 12,856,914 ordinary share equivalents) were held by the group in the form of ADSs to meet the requirements of employee share-based payment
plans in the US.
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising from the translation of the financial statements of foreign operations.
Upon disposal of foreign operations, the related accumulated exchange differences are recycled to the income statement.
Available-for-sale investments
This reserve records the changes in fair value of available-for-sale investments except for impairment losses, foreign exchange gains or losses, or
changes arising from revised estimates of future cash flows. On disposal or impairment of the investments, the cumulative changes in fair value are
recycled to the income statement.
Cash flow hedges
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge. For
further information see Note 1 – Derivative financial instruments and hedging activities.
Profit and loss account
The balance held on this reserve is the accumulated retained profits of the group.
156 BP Annual Report and Form 20-F 2014