Notes to the accounts
23. Share premium and reserves
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(1)The retained reserve includes the unrealised surplus arising from revaluing freehold and long leasehold properties of $8.5 million (2007: $8.5 million; 2006: $8.5 million).
Following the 1997 capital reduction, the holding company, Signet Group plc, is permitted to make distributions (including dividends, share buy-backs and other transactions classed as distributions) out of profit earned after 2 August 1997, the end of its 1997/98 half year.
The undertakings given to the High Court at the time of the capital reduction included the requirement that the Company transferred to a new special reserve any dividend paid by a subsidiary undertaking from profits relating to prior to that date. The special reserve is, for as long as the Company is a public company, treated as a non-distributable reserve for the purposes of section 264 of the Companies Act 1985.
In accordance with undertakings given by the Company to the High Court in connection with previous reductions of the share premium account, an earlier special reserve is available to write-off existing goodwill resulting from acquisitions and otherwise only for purposes permitted in the case of the share premium account. Under English law, dividends can only be paid out of profits available for distribution (generally defined as accumulated realised profits less accumulated realised losses less net unrealised losses) and not out of share capital or share premium (generally equivalent in US terms to paid-in surplus).
The own shares reserve represents the cost of shares in Signet Group plc purchased in the market and held by the ESOT to satisfy options under the Group’s share option schemes. The translation reserve represents exchange differences on translation of foreign operations. The hedging reserve comprises gains and losses in cash flow hedges net of related deferred taxation.
The capital redemption reserve has arisen on the cancellation of previously issued shares and represents the nominal value of those shares cancelled.
At 2 February 2008, after taking into account the recommended final dividend of 6.317 cents per share, the holding company had distributable reserves of $283.2 million (3 February 2007: $199.0 million). There are additional potentially distributable reserves held in subsidiary companies.