Tesco 2007 Annual Report Download - page 110

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108 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate
Notes to the Parent company financial statements continued
Note 13 Called up share capital continued
Share buyback liability
Insider trading rules prevent the Group from buying back its own 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 beween the
Group and a third party, they can continue to buy back shares on behalf of the Group. Two such arrangements were in place at the
year end and in accordance with FRS 25, the Group has recognised a financial liability equal to the estimated value of the shares
purchasable under these agreements. A liability of £90m (2006 – £nil) has been recognised within other creditors for this amount.
Capital redemption reserve
Upon cancellation of the shares purchased as part of the share buyback, a capital redemption reserve is created representing the
nominal value of the shares cancelled. This is a non-distributable reserve.
Note 14 Reserves
2007 2006
£m £m
Share premium account
At the start of the year 3,988 3,704
Premium on issue of shares less costs 152 120
Scrip dividend election 236 164
At the end of the year 4,376 3,988
Profit and loss reserve
At the start of the year 1,764 1,771
Gain on foreign currency net investments –17
FRS 20 ‘Share-based payment’ 205 186
Dividend (706) (609)
Decrease in fair value of available-for-sale financial assets (1) –
Share buyback (475) –
Share buyback – capital redemption 5–
Losses on cash flow hedges (38) –
Profit after tax for the year 988 399
At the end of the year 1,742 1,764