Notes to the accounts
26. Reconciliation of movements in equity
|
Share |
Share |
Other |
Hedge |
Retained earnings |
Equity shareholders' funds |
Minority |
Total |
|---|---|---|---|---|---|---|---|---|
At 1 August 2007 |
144.6 |
289.0 |
242.2 |
18.6 |
208.9 |
903.3 |
|
903.3 |
Exercises of share options |
0.9 |
14.6 |
|
|
5.5 |
21.0 |
|
21.0 |
Purchase of own shares |
|
|
|
|
(20.7) |
(20.7) |
|
(20.7) |
Redemption of B shares |
|
|
0.1 |
|
(0.1) |
|
|
|
Acquisition |
|
|
|
|
|
|
2.0 |
2.0 |
Total recognised income and expenses for the period |
|
|
|
(47.8) |
180.6 |
132.8 |
0.3 |
133.1 |
Dividends paid to equity shareholders |
|
|
|
|
(131.4) |
(131.4) |
|
(131.4) |
Dilution of interest in associated company |
|
|
|
|
(0.9) |
(0.9) |
|
(0.9) |
Share-based payment |
|
|
|
|
11.8 |
11.8 |
|
11.8 |
At 31 July 2008 |
145.5 |
303.6 |
242.3 |
(29.2) |
253.7 |
915.9 |
2.3 |
918.2 |
Exercises of share options |
0.1 |
1.4 |
|
|
2.6 |
4.1 |
|
4.1 |
Purchase of own shares |
0.2 |
|
|
|
(0.2) |
|
|
|
Conversion of B shares |
0.1 |
1.6 |
|
|
|
1.7 |
|
1.7 |
Total recognised income and expenses for the period |
|
|
|
(57.9) |
117.8 |
59.9 |
1.5 |
61.4 |
Dividends paid to equity shareholders |
|
|
|
|
(132.0) |
(132.0) |
|
(132.0) |
Share-based payment |
|
|
|
|
9.4 |
9.4 |
|
9.4 |
At 31 July 2009 |
145.9 |
306.6 |
242.3 |
(87.1) |
251.3 |
859.0 |
3.8 |
862.8 |
Other reserves comprise a capital redemption reserve of £5.8m (2008: £5.8m), a revaluation reserve of £1.7m (2008: £1.7m) and a merger reserve of £234.8m (2008: £234.8m).
Retained earnings includes the value of Smiths Group plc shares held by the Smiths Industries Employee Benefit Trust. In the year the Company issued 682,922 shares to the Trust. In 2008, the Trust paid £20.7m to acquire shares in the market. At 31 July 2009 the Trust held 105,932 (2008: 1,095,965) ordinary shares with a market value of £0.8m (2008: £11.5m).
Capital management
Capital comprises shareholders' equity adjusted for goodwill recognised directly in reserves. For the period ended 31 July 2009 the average Group capital was £1,705.7m (2008: £1,728.1m).
The capital structure is based on the directors' judgement of the balance required to maintain flexibility while achieving an efficient cost of capital. The Group has a target gearing, calculated on a market value basis, of approximately 20%. At the balance sheet date the Group had gearing of 26% (2008: 18%).
As part of this process the Group maintains its target of a solid investment grade credit rating by monitoring the factors utilised by ratings agencies and evaluating the impact of potential distributions and future funding requirements. At 31 July 2009 the Group had a credit rating of BBB+/Baa2 – negative outlook (2008: BBB+/Baa2 – stable outlook) with Standard & Poor's and Moody's respectively.
Hedge reserve
The hedge reserve on the balance sheet comprises: |
|
2009 |
2008 |
|---|---|---|---|
Cash-flow hedge reserve |
|
1.8 |
1.1 |
Net investment hedge reserve |
|
(88.9) |
(30.3) |
|
|
(87.1) |
(29.2) |
See transactional currency exposure risk management disclosures in note 20 for additional details of cash-flow hedges and translational currency exposure risk management disclosure also in note 20 for additional details of net investment hedges.