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Notes to the Financial Statements
Washington H. Soul Pattinson and Company Limited
Annual Report 2016
68
4
NOTE 4
ACCOUNTING MOVEMENTS IN VALUE THAT ARE NOT REFLECTED
IN PROFIT: RESERVES
Group Structure and Performance
Accounting policies –
Reserves
Reserves represent the portion of the consolidated entity’s reserves that are attributable to our shareholders.
Certain changes in the value of assets and liabilities are not recognised in the income statement but are instead
included in other comprehensive income.
Also included in reserves is the Group’s share of the reserves of equity accounted associates.
Asset Revaluation reserve
Changes in the fair value of certain assets including long term equity investments are not recognised in the
income statement but instead are recognised in other comprehensive income and accumulated in the asset
revaluation reserve within equity. Amounts are reclassified to the profit or loss when investments are sold or
impaired. Refer note 11.
Hedge Reserve
The hedge reserve records the effective portion of changes in the fair value of derivatives that are designated
and qualify as cash flow hedges, as described in note 22. The gain or loss relating to the ineffective portion is
recognised in the income statement.
2016
2015
$’000
$’000
a) Reserves
General reserve
404,548
404,548
Asset revaluation reserve
220,103
271,242
Capital profits reserve
11,368
11,368
Hedging reserve
244
(9,735)
Share-based payments reserve
1,677
709
Foreign currency translation reserve
(126)
90
Equity reserve
(14,130)
(16,943)
Balance 31 July
623,684
661,279
b) Major movements in reserves consist of:
Asset revaluation reserve
Balance 1 August
271,242
264,747
Revaluation of long term equity investments, gross
(55,960)
(5,933)
Revaluation of long term equity investments, deferred tax
18,373
(60)
Transfer on sale of long term equity investments to profit, gross
(12,324)
(4,691)
Transfer on sale of long term equity investments to profit, deferred tax
1,844
1,205
Transfer on impairment of long term equity investments to profit, gross
12,934
8,138
Transfer on impairment of long term equity investments to profit, deferred tax
(3,880)
(2,444)
Share of associates (decrements)/increments
(12,126)
10,280
Balance 31 July
220,103
271,242
At balance date, the asset revaluation reserve predominately relates to the unrealised gains and losses
of Washington H. Soul Pattinson and Company Limited’s long term equity investments.