BT 2007 Annual Report Download - page 113

25. OTHER RESERVES AND RETAINED EARNINGS
Treasury
sharesaCash flow reservebAvailable-for -sale reservecTranslation reserved
Merger
and other
reservese
Total
other
reserves
Retained
earnings
£m £m £m £m £m £m £m
At 1 April 2004 (80) – – – 998 918 (2,439)
Profit for the year –––––– 1,829
Foreign exchange adjustments – – – 27 – 27 –
Share based payments ––––––20
Dividends –––––– (786)
Net purchase of treasury shares (176) ––––(176) –
Actuarial gain –––––– 294
Tax on items taken directly to
equity – – – (7) – (7) (72)
At 31 March 2005 (256) – – 20 998 762 (1,154)
Transition to IAS 32 and IAS 39f–77–––77 (286)
At 1 April 2005 (256) 77 – 20 998 839 (1,440)
Profit for the year –––––– 1,548
Foreign exchange adjustments – – – 53 – 53 –
Share based payments ––––––65
Dividends –––––– (912)
Net purchase of treasury shares (344) ––––(344) –
Actuarial gain –––––– 2,122
Net fair value gains on cash flow
hedges – 4 – – – 4–
Gains on available-for-sale
investments – – 35 – – 35 –
Fair value loss on net investment
hedge – – – (20) – (20) –
Recognised in income and expense
in the year – (204) (35) (9) – (248) –
Tax on items taken directly to
equity – 45 – – – 45 (633)
At 1 April 2006 (600) (78) – 44 998 364 750
Profit for the year –––––– 2,850
Foreign exchange adjustments – – – (93) – (93) –
Share based payments ––––––71
Dividends –––––– (1,053)
Net purchase of treasury shares (284) ––––(284) –
Actuarial gain –––––– 1,409
Net fair value losses on cash flow
hedges – (201) – – – (201) –
Recognised in income and expense
in the year – 364 – – – 364 –
Tax on items taken directly to
equity – (62) – – – (62) (342)
At 31 March 2007 (884) 23 – (49) 998 88 3,685
aDuring the year ended 31 March 2007 the company repurchased 147,550,000 (2006: 165,772,145, 2005: 101,280,000) of its own shares of 5p each representing 2% of the called-up share capital,
for consideration (including transaction costs) of £404 million (2006: £365 million, 2005: £195 million). In addition, 66,719,600 shares (2006: 10,221,961, 2005: 11,131,503) were issued from
treasury to satisfy obligations under employee share schemes at a cost of £120 million (2006: £21 million, 2005: £19 million). At 31 March 2007, 370,877,631 shares (2006: 290,047,231) shares
with an aggregate nominal value of £19 million are held as treasury shares at cost.
bThe cash flow reserve is used to record the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet
occurred.
cThe available-for-sale reserve is used to record the cumulative fair value gains and losses on available-for-sale financial assets. The cumulative gains and losses are recycled to the income statement
on disposal of the assets. The gross gain in the period amounted to £nil (2006: £35 million).
dThe translation reserve is used to record cumulative translation differences on the assets and liabilities of foreign operations. The cumulative translation differences are recycled to the income
statement on disposal of the foreign operation.
eThe merger reserve arose on the group reorganisation that occurred in November 2001 and represents the difference between the nominal value of shares in the new parent company, BT Group plc,
and the share capital, share premium and capital redemption reserve of the prior parent company, British Telecommunications plc. Other reserves included within this caption relate primarily to
unrealised gains and losses on the transfer of assets and group undertakings to a joint venture.
fThe total impact on reserves of the IAS 32 and IAS 39 transitional adjustment is a charge of £209 million.
Consolidated financial statements Notes to the consolidated financial statements
112 BT Group plc Annual Report & Form 20-F