Financial Statements

Notes to the Company Financial Statementsfor the year to 31 December 2008

11. Merger relief reserve

2008
£m
2007
£m
1 January 934.2
Premium on ordinary shares issued on acquiring 100% equity in George Wimpey Plc 1,934.2
Transfer to profit and loss reserve (934.2) (1,000.0)
31 December 934.2

In accordance with section 131 of the Companies Act 1985, the premium on ordinary shares issued on the merger with George Wimpey Plc was recorded as a merger relief reserve.

The reserve is not distributable but can be used to:

  • Make a bonus issue of fully paid shares;
  • Transfer to the profit and loss account reserve an amount equal to the amount that has become realised by virtue of either:
    The disposal of the related investment; or
    An amount written off the related investment and charged to the profit and loss account.

During the year, £934.2m (2007: £1,000.0m) was transferred to the profit and loss account reserve following an impairment charge being recognised in respect of the George Wimpey Plc investment.