RBS 2007 Annual Report Download - page 183

Group Company
2007 2006 2005 2007 2006 2005
£m £m £m £m £m £m
Retained earnings
At 1 January 15,487 11,346 9,408 4,737 4,794 4,675
Implementation of IAS 32 and IAS 39 on 1 January 2005 — — (1,078) ——81
Profit attributable to ordinary and equity preference shareholders 7,549 6,393 5,501 2,499 3,499 2,074
Ordinary dividends paid (3,044) (2,470) (1,927) (3,044) (2,470) (1,927)
Equity preference dividends paid (246) (191) (109) (246) (191) (109)
Shares repurchased during the year — (624) — —(624) —
Redemption of preference shares classified as debt (159) (271) — (159) (271) —
Actuarial gains/(losses) recognised in retirement benefit
schemes, net of tax 1,517 1,262 (561) ———
Net cost of shares bought and used to satisfy share-based payments (40) (38) — ———
Share-based payments, net of tax 8 80 112 ———
At 31 December 21,072 15,487 11,346 3,787 4,737 4,794
Own shares held
At 1 January (115) (7) (7) —(7) (7)
Shares purchased during the year (65) (254) — ———
Shares issued under employee share schemes 119 146 — —7—
At 31 December (61) (115) (7) —— (7)
Owners’ equity at 31 December 53,038 40,227 35,435 24,877 18,197 17,538
RBS Group • Annual Report and Accounts 2007 181
Financial statements
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 the reserves of the company are
taken into account for the purpose of making distributions and
in determining 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 2007, 10,474,782 (2006 – 19,492,506)
ordinary shares of 25p each of the company were held by
Employee Share Trusts in respect of share awards and options
granted to employees.
Paid-in equity represents notes issued under the company’s
euro medium term note programme with par value of
US$1,600 million and CAD600 million that are classified as
equity under IFRS. The notes attract coupons of 6.99% and
6.666% respectively until October 2017 when they increase to
2.67% above the London interbank offered rate for 3-month US
dollar deposits and 2.76% above the Canadian dollar offered
rate respectively.