8Reserves

Reserves

			Option reserve £000	Profit and loss account £000
At 1 January 2008			61,474	400,971
Purchase of treasury shares			−	(40,286)
Proceeds on issue of treasury shares on exercise of share options			−	5,581
Credit in respect of FRS 20 employee share scheme charges			−	15,409
Loss for the financial year			−	(27,807)
At 31 December 2008			61,474	353,868

The Company has taken advantage of merger relief and not recorded the premium on the issue of shares for the acquisition of Artisan Components Inc. (now ARM Inc.). The option reserve represents the fair value of options granted on the acquisition of Artisan Components Inc. in 2004.

The Company considers the option reserve as non-distributable. Within the profit and loss account is £82,224,000 of credits in respect of FRS 20 employee share scheme charges in respect of services performed by employees of subsidiary undertakings and recorded as a capital contribution. The Company also considers these credits as non-distributable. As such, £271,644,000 of the profit and loss account is deemed distributable.

During 2008, to supplement the payment of dividends to shareholders, the Company continued its share buyback programme. The quantum and frequency of share re-purchases is not predetermined and will take into account prevailing market conditions, the short- to medium-term cash needs of the business and the level of employee share-based remuneration going forward. In 2008, a total of 41.2 million (2007: 94.5 million) shares were re-purchased from the market at a cost of £40,286,000 (2007: £128,561,000). At 31 December 2008, there were 91,160,488 (2007: 65,201,176) shares in the Company still held from these purchases with a market value of £78,854,000 (2007: £80,849,000).

Offset within the profit and loss account is an amount of £107,963,000 (2007: £90,000,000) representing the cost of own shares held within the ESOP and treasury shares. This comprises £nil (2007: £348,000), being the cost of £nil (2007: 1,201,434) shares held within the ESOP and £107,963,000 (2007: £89,652,000) being the cost of 91,160,488 (2007: 65,201,176) shares held as treasury shares. The nominal value of own shares held is £45,580.

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