Tesco 2008 Annual Report Download - page 91

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Tesco PLC Annual Report and
Financial Statements 2008 89
Note 26 Statement of changes in equity continued
Share premium account
The share premium account is used to record amounts received in excess of the nominal value of shares on issue of new shares.
Translation reserve
The translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also
used to record the movements in net investment hedges.
Treasury shares
During the year, the qualifying employee share ownership trust (QUEST) subscribed for no shares in the Company (2007 – 1.5 million, a negligible
percentage of called-up share capital as at 24 February 2007). There were also no contributions (2007 – £nil) to the QUEST from subsidiary undertakings.
The employee benefit trusts hold shares in Tesco PLC for the purpose of the various executive share incentive and profit share schemes. At 23 February 2008,
the trusts held 47.4 million shares (2007 – 57.0 million), which cost £184m (2007 – £184m) and had a market value of £190m (2007 – £254m).
The voting rights in relation to the shares are exercisable by the Trustee, however, in accordance with investor guidelines the Trustee abstains from voting.
At 23 February 2008, the Group held 7.8 million of its own shares within treasury shares, which cost £20m.
Merger reserve
The merger reserve arose on the acquisition of Hillards PLC in 1987.
Share buy-back liability
Insider trading rules prevent the Group from buying backTesco PLC shares in the market during specified close periods (including the period between
the year end and the annual results announcement). However, if an irrevocable agreement is signed between the Company and a third party, they can
continue to buy back shares on behalf of the Company. Three such arrangements were in place at the year end and in accordance with IAS 32, the
Company has recognised a financial liability equal to the estimated value of the shares purchasable under these agreements. A liability of £100m
(2007 – £90m) has been recognised within other payables for this amount.
Capital redemption reserve
Upon cancellation of the shares purchased as part of the share buy-back, a capital redemption reserve is created representing the nominal value of the
shares cancelled. This is a non-distributable reserve.
Other
The cumulative goodwill written off against the reserves of the Group as at 23 February 2008 amounted to £718m (2007 – £718m).