BP Annual Report and Form 20-F 2011 - Company Reporting

Notes on financial statements39. Capital and reserves continuedShare capitalThe balance on the share capital account represents the aggregate nominal value of all ordinary and preference shares in issue, including treasury shares.Share premium accountThe balance on the share premium account represents the amounts received in excess of the nominal value of the ordinary and preference shares.Capital redemption reserveThe balance on the capital redemption reserve represents the aggregate nominal value of all the ordinary shares repurchased and cancelled.Merger reserveThe balance on the merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares issued in anacquisition made by the issue of shares.Own sharesOwn shares represent BP shares held in Employee Share Ownership Plan Trusts (ESOPs) to meet the future requirements of the employee share-basedpayment plans, as discussed in Note 40. At 31 December 2011, a further 21,420,000 ordinary share equivalents were held by the group in the form ofADSs to meet the requirements of employee share-based payment plans in the US.Treasury sharesTreasury shares represent BP shares repurchased and available for re-issue.Foreign currency translation reserveThe foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreignoperations. Upon disposal of foreign operations, the related accumulated exchange differences are recycled to the income statement. This reserve is alsoused to record the effect of hedging net investments in foreign operations.Available-for-sale investmentsThis reserve records the changes in fair value of available-for-sale investments. On disposal or impairment, the cumulative changes in fair value arerecycled to the income statement.Cash flow hedgesThis reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge. When thehedged transaction occurs, the gain or loss on the hedging instrument is transferred out of equity to either profit or loss or the carrying value of assets, asappropriate. If the forecast transaction is no longer expected to occur the gain or loss recognized in equity is transferred to profit or loss.Share-based payment reserveThis reserve represents cumulative amounts charged to profit in respect of employee share-based payment plans where the scheme has not yet beensettled by means of an award of shares to an individual.Profit and loss accountThe balance held on this reserve is the accumulated retained profits of the group.244 BP Annual Report and Form 20-F 2011