16. Equity
continued
16.4. Treasury units
In order to hedge partially its obligations arising under the unit option scheme, the Group has purchased Richemont `A' units. Changes
in the holding of this treasury stock of units are shown as movements in unitholders' equity as follows:
Units
millions
m
Movements in treasury units
Balance at 1 April 2006
18.2
408
Units sold
(5.4)
(144)
Balance at 31 March 2007
12.8
264
Units purchased
3.0
61
Units sold
(2.7)
(57)
Balance at 31 March 2008
13.1
268
The cost value of the 2.7 million units (2007: 5.4 million units) sold during the year to scheme participants who exercised their options
was
57 million (2007: 144 million).
The Group has entered into over-the-counter purchased call options with a third party to purchase treasury units at the same strike prices
as the unit options granted to executives in June 2007, 2006, 2005 and 2004. These call options together with treasury units provide a
comprehensive hedge of the Group's obligations arising under the unit option scheme. The costs of these call options together with the loss
realised on units sold during the year to scheme participants amounting to
33 million (2007: 81 million) were recognised directly in
retained earnings.
The market value of the 13.1 million units (2007: 12.8 million units) held by the Group at the year end, based on the closing price at
31 March 2008 of CHF 55.70 (2007: CHF 67.95), amounted to
467 million (2007: 536 million).
16.5. Hedge and unit option reserves
Hedge
Unit option
reserve
reserve
Total
m
m
m
Balance at 1 April 2006
(11)
83
72
Exchange adjustments
(2)
(2)
Movements in hedge reserve
fair value gains
22
22
recycle to income statement
(3)
(3)
Movement in employee unit option reserve
expense recognised in the year
33
33
Tax on items recognised directly in equity
29
29
Balance at 31 March 2007
8
143
151
Movements in hedge reserve
fair value gains
31
31
recycle to income statement
(13)
(13)
Movement in employee unit option reserve
expense recognised in the year
31
31
Tax on items recognised directly in equity
(3)
(21)
(24)
Balance at 31 March 2008
23
153
176
16.6. Legal reserves
Legal reserves amounting to
95 million (2007: 95 million) are included in the reserves of Group companies but are not available
for distribution.
Richemont Annual Report and Accounts 2008
95
Consolidated financial statements