Financial Statements
Notes to the consolidated accounts
38. Share capital and share premium
38 (a) Allotted, called up and fully paid share capital of the Company
| 2007 £m |
2006 £m |
|
|---|---|---|
| Authorised | ||
| 2,500m (2006: 2,500m) ordinary shares of 10 pence | 250 | 250 |
| Allotted, called up and fully paid | ||
| 2,341m (2006: 2,139m) ordinary shares of 10 pence | 234 | 214 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. In respect of the Company's shares that are held by the Group (Treasury shares), all rights are suspended until those shares are reissued. Treasury shares are available for use to settle liabilities in respect of share options for employee share schemes, at which point they are redesignated as ordinary shares.
There are no restrictions on the transfer of ordinary shares in the Company other than those imposed from time to time by laws and regulations.
38 (b) Changes to share capital and share premium during the year
| Treasury shares number (i) | Ordinary shares number | Total number |
Share capital £m |
Share premium £m |
|
|---|---|---|---|---|---|
| At 1 January 2006 | 40,108,255 | 2,099,036,704 | 2,139,144,959 | 214 | 2,038 |
| Employee share schemes | (17,478,172) | 17,478,172 | - | - | 13 |
| At 31 December 2006 | 22,630,083 | 2,116,514,876 | 2,139,144,959 | 214 | 2,051 |
| Employee share schemes | (4,505,799) | 4,505,799 | - | - | 5 |
| Allocation on Lombard earn-out payment | - | 32,382,520 | 32,382,520 | 3 | 57 |
| Conversion of convertible bonds (ii) | - | 169,590,604 | 169,590,604 | 17 | 259 |
| At 31 December 2007 | 18,124,284 | 2,322,993,799 | 2,341,118,083 | 234 | 2,372 |
-
Following demutualisation in 2001, share and cash entitlements that were not claimed were placed into two trusts. On 9 July 2004 the trusts were wound up and 61.4m shares and £25m cash were transferred to the Company for nil consideration in exchange for it accepting liability for any future claims in respect of demutualisation entitlements (which must be made by 9 July 2013) and a commitment to endow the Friends Provident Foundation, a registered charity, with cash or shares to a value of £20m.
The Company set up a provision of £10m, based on a best estimate, in respect of possible future claims from policyholders (which will only be paid out in cash). To satisfy the commitment to the charitable trust, 14.9m shares with a fair value of £20m (£1.35 a share) were transferred in 2004 to the Friends Provident Foundation for nil consideration. The combined effect of these transactions resulted in an increase in the share premium of £15m. At 31 December 2007 claims made and settled since the provision was established amounted to £1.8m (2006: £1.5m).
The remaining 46.5m shares were designated as Treasury shares. These shares do not carry any voting rights or entitlement to dividends and are available for use to settle liabilities in respect of share options for employee share schemes, at which point they are redesignated as ordinary shares.
Since the end of the year 202,732 Treasury shares have been redesignated as ordinary shares to satisfy liabilities in respect of various employee share schemes. As at 18 March 2008, the Company had 2,323,196,531 ordinary shares in issue and 17,921,552 Treasury shares.
- The allotment of 169.6m shares on conversion of convertible bonds into ordinary shares in 2007, resulting in additional share premium of £259m.
38 (c) Options
Outstanding options under the Group's option schemes at 31 December 2007 are set out in note 11.