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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 27 — RESERVES AND RETAINED EARNINGS CONTINUED

Investment property revaluation reserve

This reserve relates to property that has been reclassified as an investment property and represents the cumulative increase in fair value of the
property at the date of reclassification.

Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to
hedged transactions that have not yet occurred.

Share-based payments reserve

This reserve includes the cumulative fair value of management share options not exercised and the fair value of the executive performance
shares which have been recognised as an employee expense in the Income Statement.

Foreign currency translation reserve

The foreign currency translation reserve records the foreign currency differences arising from the translation of foreign operations, the translation
of transactions that hedge the Group’s net investment in a foreign operation or the translation of foreign currency monetary items forming part of
the net investment in a foreign operation and the Group’s share of associates’ increment or decrement in the foreign currency translation reserve.
Refer to accounting policy Note 1(d).

THE GROUP PARENT ENTITY

2008
$’000
2007
$’000
2008
$’000
2007
$’000
Retained earnings
Balance at the beginning of the year
Transfer from general reserve
Transfer from hedging reserve
Transfer from foreign currency translation reserve
Profit attributable to members of the Parent Entity
Dividends paid during year
398,981
—
(416)
161
99,369
(37,263)
349,776
(2)
—
—
82,195
(32,988)
84,991
—
—
—
42,022
(37,263)
103,846
—
—
—
14,133
(32,988)
Balance at the end of the year 460,832 398,981 89,750 84,991

NOTE 28 —FINANCIAL RISK MANAGEMENT

The Company’s and Group’s exposure to financial risks, objectives, policies and processes for managing the risks including methods used to
measure the risks, and the management of capital are presented below:
The Company’s and Group’s activities expose it to of the following financial risks:

• credit risk;
• liquidity risk;
• market risk, including currency risk and interest rate risk.
The Board of Directors has overall responsibility for the oversight of the risk management framework. Risk management policies are established
to identify and analyse the risks faced by the Company and Group, to set appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly and modified as appropriate to reflect changes in market
conditions and the Company’s and Group’s activities.
The Audit Committee oversees how management has established and monitors internal compliance and control systems and to ensure the

appropriate and effective management of the above risks. The Audit Committee is assisted in its oversight role by the Internal Auditor. The
Internal Auditor undertakes reviews of risk management controls and procedures in accordance with an annual plan approved by the Audit
Committee. The results of these Internal Audit reviews are reported to the Audit Committee.

Credit risk

Credit risk arises from trade and other receivables outstanding, cash and cash equivalents, derivative financial instruments and deposits with
banks and financial institutions. It is the risk of financial loss to the Group if a customer or counterparty to the financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s trade receivables from customers. For the Company, it arises principally from
receivables due from subsidiaries.

Trade and other receivables

The Company’s and Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the

Group’s customer base, including the default risk of the industry and country in which customers operate, have less of an influence on credit risk.
Exposure to credit risk is monitored on an ongoing basis. Management has established a credit policy under which each new customer requiring
credit over a certain amount is analysed individually for creditworthiness before the Group’s standard payment and conditions are offered.
Purchase limits are established for major customers, which represents the maximum open amount without requiring approval from management.

The Company and Group have established an allowance for impairment that represents their estimate of incurred losses in respect of trade and
other receivables. The main component of this allowance relates to exposures for specific debtors.