Notes to the Accounts For the year ended 31 December 2007

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19. Reserves

Share premium

The share premium account has been established to represent the excess of the exercise share price over the nominal value of the shares on the exercise of share options.

Capital redemption reserve

The capital redemption reserve relates to the cancellation of the Company's own shares. The increase in the year represents the nominal value of the 11,524,415 shares cancelled during the year as shown in Note 18.

Reserve for shares held in the employee benefit trust

At 31 December 2007, the reserve for shares held in the employee benefit trust consisted of 7,950,330 ordinary shares (2006: 5,55 2,237 ordinary shares) held for the purpose of satisfying awards made under the Incentive Share Plan and deferred shares under the Annual Bonus Plan, representing 2.43% of the called-up share capital with a market value of £22.9m (2006: £14.7m).

A total of 1,845,091 shares have been allocated to satisfy share awards made under the Incentive Share Plan, and 487,001 deferred shares have been allocated under the Annual Bonus Plan. Dividends are paid on these shares and they are included in the EPS calculation.

A total of 1,321,303 shares have been allocated to satisfy share option awards made under the Incentive Share Plan, and 229,984 deferred share option have been allocated under the Annual Bonus Plan. Dividends on these shares are waived and are treated as non dilutive.

Following the allocation of awards made under the above mentioned plans, to date 4,066,951 ordinary shares remain unallocated in the reserve. Dividends on these shares are also waived and are treated as non dilutive.

Currency translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations that are integral to the operations of the Company.

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