Download as PDFNotes to the accounts
For the year ended 31st December 2007
30 Retirement benefit obligations (continued)
Funding
The most recent triennial funding valuation of the UK Retirement Fund was performed in September 2004 and forms the basis of the Group’s commitment that the fund has sufficient assets to make payments to members in respect of their accrued benefits as and when they fall due. This funding valuation uses a discount rate that reflects the assumed future return from the actual asset allocation at that date, and takes into account projected future salary increases when assessing liabilities arising from accrued service. The funding valuation is updated annually on the basis of interim assumptions. The UK Retirement Fund recorded a funding surplus of £1.2bn as at 31st December 2007 (2006: £1.3bn).
The Group has agreed funding contributions which, in aggregate, are no less than those which are sufficient to meet the Group’s share of the cost of benefits accruing over each year. The Group has, in the recent past, chosen to make funding contributions in excess of this, more consistent with the IAS service cost.
Defined benefit contributions paid with respect to the UKRF were as follows:
Download table as excel file| £m | ||||||||||||||
| Contributions paid | ||||||||||||||
| 2007 | 355 | |||||||||||||
| 2006 | 351 | |||||||||||||
| 2005 | 354 | |||||||||||||
There is a triennial valuation currently in progress with an effective date of 30th September 2007. To comply with the requirements of the Pensions Act 2004, the Group and trustees plan to agree a scheme specific funding target, statement of funding principles, and a schedule of contributions which in 2008 will supersede those in place under the current actuarial funding valuation.
Excluding the UKRF, the Group is expected to pay contributions of approximately £2m to UK schemes and £41m to overseas schemes in 2008.
The total contribution to be paid in 2008 to the UKRF is not expected to be significantly different than in previous years.
31 Ordinary shares and share premium
Download table as excel file| Number of | Ordinary | Share | ||||||||||||
| shares | shares | premium | Total | |||||||||||
| m | £m | £m | £m | |||||||||||
| At 1st January 2007 | 6,535 | 1,634 | 5,818 | 7,452 | ||||||||||
| Issued to staff under the Sharesave Share Option Scheme | 19 | 6 | 62 | 68 | ||||||||||
| Issued under the Incentive Share Option Plan | 10 | 2 | 40 | 42 | ||||||||||
| Issued under the Executive Share Option Scheme a | – | – | 1 | 1 | ||||||||||
| Issued under the Woolwich Executive Share Option Plan a | – | – | 1 | 1 | ||||||||||
| Transfer to retained earnings | – | – | (7,223) | (7,223) | ||||||||||
| Issue of new ordinary shares | 337 | 84 | 1,357 | 1,441 | ||||||||||
| Repurchase of shares | (300) | (75) | – | (75) | ||||||||||
| At 31st December 2007 | 6,601 | 1,651 | 56 | 1,707 | ||||||||||
| At 1st January 2006 | 6,490 | 1,623 | 5,650 | 7,273 | ||||||||||
| Issued to staff under the Sharesave Share Option Scheme | 18 | 5 | 67 | 72 | ||||||||||
| Issued under the Incentive Share Option Plan | 25 | 6 | 96 | 102 | ||||||||||
| Issued under the Executive Share Option Scheme a | 1 | – | 3 | 3 | ||||||||||
| Issued under the Woolwich Executive Share Option Plan a | 1 | – | 2 | 2 | ||||||||||
| At 31st December 2006 | 6,535 | 1,634 | 5,818 | 7,452 | ||||||||||
The authorised share capital of Barclays PLC is £2,500m (2006: £2,500m), comprising 9,996 million (2006: 9,996 million) ordinary shares of 25p each and 1 million (2006: 1 million) staff shares of £1 each. All issued shares are fully paid.
Download table as excel file| 2007 | 2006 | |||||||||||||
| Called up share capital, allotted and fully paid | £m | £m | ||||||||||||
| Ordinary shares: | ||||||||||||||
| At beginning of year | 1,633 | 1,622 | ||||||||||||
| Issued to staff under the Sharesave Share Option Scheme | 6 | 5 | ||||||||||||
| Issued under Incentive Share Option Plan | 2 | 6 | ||||||||||||
| Issue of new ordinary shares | 84 | – | ||||||||||||
| Repurchase of shares | (75) | – | ||||||||||||
| At end of year | 1,650 | 1,633 | ||||||||||||
| Staff shares | 1 | 1 | ||||||||||||
| Total | 1,651 | 1,634 | ||||||||||||
Note
31 Ordinary shares and share premium (continued)
Issue of new ordinary shares
On 14th August 2007, 336.8 million ordinary shares with an aggregate nominal value of £84 million were issued for a cash consideration, before issue costs, of £2,425m. The shares were issued to Temasek and China Development Bank at a market price of £7.20 per share. The proceeds of the Temasek issuance in excess of nominal value and issue costs of £941m were credited to retained earnings. This resulted from the operation of section 131 of the Companies Act 1985 with regard to the issue of shares by Barclays PLC in exchange for shares in Odysseus Jersey (No1) Limited and the subsequent redemption of the no par value redeemable preference shares of that company for cash.
Share repurchase
During the year Barclays PLC purchased in the market 300 million of its own ordinary shares of 25p each at a total cost of £1,802m in order to minimise the dilutive effect of the issuance of Barclays shares to Temasek and China Development Bank on existing shareholders. These transactions represent 4.54% of the issued share capital at 31st December 2007. All shares purchased during the period were open market transactions.
At the 2007 AGM on 26th April, Barclays PLC was authorised to repurchase 980,840,000 of its ordinary shares of 25p. The authorisation is effective until the AGM in 2008.
Cancellation of share premium account
On 11th October 2007, the order of the High Court confirming the cancellation of £7,223m of the share premium account was registered with the Registrar of Companies. This created £7,223m of additional distributable reserves in Barclays PLC. The purpose of the cancellation of the share premium account was to create distributable profits in order to allow the payment of dividends following the completion of the share buy-back programme, the redemption of the preference shares which were to have been issued in connection with the proposed merger with ABN AMRO, and to provide maximum flexibility to manage the Group’s capital resources.
Shares under option
The Group has four schemes that give employees rights to subscribe for new shares in Barclays PLC. A summary of the key terms of each scheme are included in Note 44.
At 31st December 2007, 74.0 million (2006: 78.9 million) options were outstanding under the terms of the Sharesave Share Option Scheme (Sharesave), 1.4 million (2006: 1.7 million) options were outstanding under the terms of the Executive Share Option Scheme (ESOS), 0.5 million (2006: 0.7 million) options were outstanding under the terms of the Woolwich Executive Share Option Plan (Woolwich ESOP) and 20.5 million (2006: 77.5 million) options were outstanding under the terms of the Incentive Share Option Plan (ISOP), enabling certain Directors and members of staff to subscribe for ordinary shares between 2007 and 2016 at prices ranging from 176p to 562p.
Options and awards arising under the Executive Share Award Scheme, Performance Share Plan and Sharepurchase Scheme, which are described in Note 44 are not settled by the issuance of new shares but from shares held in employee benefit trusts. Details concerning the shares held in such trusts are provided in Note 32.
Notes to the accounts
For the year ended 31st December 2007
Other reserves – Barclays PLC Group
Download table as excel file| Capital | Other | Available | Cash flow | Currency | ||||||||||
| redemption | capital | for sale | hedging | translation | ||||||||||
| reserve | reserve | reserve | reserve | reserve | Total | |||||||||
| £m | £m | £m | £m | £m | £m | |||||||||
| At 1st January 2007 | 309 | 617 | 132 | (230) | (438) | 390 | ||||||||
| Net gains from changes in fair value | – | – | 480 | 182 | – | 662 | ||||||||
| Net (gains)/losses transferred to net profit | – | – | (560) | 198 | – | (362) | ||||||||
| Currency translation differences | – | – | – | – | 29 | 29 | ||||||||
| Losses transferred to net profit due to impairment | – | – | 13 | – | – | 13 | ||||||||
| Changes in insurance liabilities | – | – | 22 | – | – | 22 | ||||||||
| Net losses transferred to net profit due to fair value hedging | – | – | 68 | – | – | 68 | ||||||||
| Tax | – | – | (1) | (124) | 102 | (23) | ||||||||
| Repurchase of shares | 75 | – | – | – | – | 75 | ||||||||
| At 31st December 2007 | 384 | 617 | 154 | 26 | (307) | 874 | ||||||||
Download table as excel file| Capital | Other | Available | Cash flow | Currency | ||||||||||
| redemption | capital | for sale | hedging | translation | ||||||||||
| reserve | reserve | reserve | reserve | reserve | Total | |||||||||
| £m | £m | £m | £m | £m | £m | |||||||||
| At 1st January 2006 | 309 | 617 | 225 | 70 | 156 | 1,377 | ||||||||
| Net gains/(losses) from changes in fair value | – | – | 71 | (421) | – | (350) | ||||||||
| Net gains transferred to net profit | – | – | (308) | (51) | – | (359) | ||||||||
| Currency translation differences | – | – | – | – | (464) | (464) | ||||||||
| Losses transferred to net profit due to impairment | – | – | 86 | – | – | 86 | ||||||||
| Changes in insurance liabilities | – | – | 23 | – | – | 23 | ||||||||
| Net losses transferred to net profit due to fair value hedging | – | – | 13 | – | – | 13 | ||||||||
| Tax | – | – | 22 | 172 | (130) | 64 | ||||||||
| At 31st December 2006 | 309 | 617 | 132 | (230) | (438) | 390 | ||||||||
The capital redemption reserve and other capital reserve represent transfers from retained earnings in accordance with relevant legislation. These reserves are not distributable.
The available for sale reserve represents the unrealised change in the fair value of available for sale investments since initial recognition.
The cash flow hedging reserve represents the cumulative gains and losses on effective cash flow hedging instruments that will be recycled to the income statement when the hedged transactions affect profit or loss.
The currency translation reserve represents the cumulative gains and losses on the retranslation of the Group’s net investment in foreign operations, net of the effects of hedging.
Transfers from cash flow hedging reserve
Gains and losses transferred from the cash flow hedging reserve were to: interest income: £93m loss (2006: £7m loss), interest expense: £11m gain (2006: £73m gain), net trading income: £100m loss (2006: £15m loss), and administration and general expenses: £16m loss (2006: £nil).
32 Reserves (continued)
Retained earnings and treasury shares – Barclays PLC Group
Download table as excel file| Retained | Treasury | |||||||||||||
| earnings | shares | Total | ||||||||||||
| £m | £m | £m | ||||||||||||
| At 1st January 2007 | 12,169 | (212) | 11,957 | |||||||||||
| Profit attributable to equity holders of the parent | 4,417 | – | 4,417 | |||||||||||
| Equity-settled share schemes | 567 | – | 567 | |||||||||||
| Tax on equity-settled share schemes | 28 | – | 28 | |||||||||||
| Net purchases of treasury shares | – | (572) | (572) | |||||||||||
| Transfer | (524) | 524 | – | |||||||||||
| Dividends paid | (2,079) | – | (2,079) | |||||||||||
| Repurchase of shares | (1,802) | – | (1,802) | |||||||||||
| Transfer from share premium account | 7,223 | – | 7,223 | |||||||||||
| Arising on share issue | 941 | – | 941 | |||||||||||
| Other | 30 | – | 30 | |||||||||||
| At 31st December 2007 | 20,970 | (260) | 20,710 | |||||||||||
| At 1st January 2006 | 8,957 | (181) | 8,776 | |||||||||||
| Profit attributable to equity holders of the parent | 4,571 | – | 4,571 | |||||||||||
| Equity-settled share schemes | 663 | – | 663 | |||||||||||
| Tax on equity-settled share schemes | 96 | – | 96 | |||||||||||
| Net purchases of treasury shares | – | (425) | (425) | |||||||||||
| Transfer | (394) | 394 | – | |||||||||||
| Dividends paid | (1,771) | – < |