COMPUTERSHARE ANNUAL REPORT 2008

Nature and purpose of reservesi. Foreign currency translation reserveExchange differences arising on translation of the foreign subsidiaries are taken to the foreign currency translation reserve, asdescribed in note 1. This amount is the net of gains and losses on hedge transactions and intercompany loans after adjusting forrelated income tax effects. The reserve is recognised in the income statement when the net investment is disposed of.ii. Cash flow hedge reserveThe hedging reserve is used to record gains and losses on a hedging instrument in a cash flow hedge that are recognised directlyin equity, as described in note 1.iii. Share based payments reserveThe share based payments reserve is used to recognise the fair value of shares which will vest to employees under employee andexecutive share plans.iv. Equity related contingent consideration reserveThis reserve is used to reflect deferred consideration for acquisitions which is payable through the issue of parent entity equityinstruments.v. Available for sale asset reserveChanges in fair value of investments, such as equities, classified as available for sale financial assets are taken to this reserve inaccordance with note 1.28. EMPLOYEE AND EXECUTIVE BENEFITS(a) Share plansComputershare Limited offers options over ordinary shares to eligible employees at the absolute discretion of the Board. Optionsare generally exercisable three years after the date granted or earlier in the case of special circumstances such as the employee’sdeath or retirement. The exercise price of the option is set at an amount equal to the market value of the shares at the date ofoption grant.During the year ended 30 June 2001 the Company introduced an Exempt Employee Share Plan. The Plan gives Computershareemployees the opportunity to acquire shares in Computershare Limited. Each year, participating employees can make contributionsfrom their pre-tax salary to acquire AU$500 worth of shares in the Company. Such employee contributions are matched by theCompany with an additional AU$500 worth of shares being acquired for each participating employee. All permanent employees inAustralia with at least 3 months service and employed at the allocation date are entitled to participate in this Plan.During the year ended 30 June 2002 a Deferred Employee Share Plan was established to enable Computershare to match dollar fordollar any employee pre-tax contributions to a maximum of AU$3,000 per employee. Shares purchased and funded by employee’spre-tax salary must remain in the plan for a minimum of 1 year. Matching Company funded shares must be kept in the plan for aminimum of 2 years or they will be forfeited. All permanent employees in Australia with at least 3 months service and employed atthe allocation date are entitled to participate in this Plan. A derivative of this Plan and the Exempt Employee Share Plan has beenmade available to employees in New Zealand, the United Kingdom, Ireland, Canada, South Africa and the United States of America.Subject to the discretion of the Board, shares in the Company may also be allocated to selected employees in accordance withan employee share plan on a discretionary basis having regard to special circumstances as determined by the RemunerationCommittee. Such shares may be subject to vesting and performance criteria as determined by the Board or the RemunerationCommittee.The Group also provides long term share based awards for key management personnel other than executive directors and otheremployees on a discretionary basis. Recipients of long term share based awards must complete specified periods of service as aminimum before any share awards under the long term incentive plan become unconditional. There has been no alteration to theterms and conditions of shares granted under the LTI plan since the original grant date.Ordinary sharesOptionsNumber of employee shares and options held 2008 2007 2008 2007Opening balance 8,723,041 10,937,977 - 447,500Shares purchased on market 2,642,388 1,628,971 - -Forfeited shares reissued/options reinstated 136,786 861,448 - -Shares/options forfeited (266,374) (299,464) - -Shares withdrawn/options exercised (2,419,482) (4,405,891) - (447,500)Closing balance 8,816,359 8,723,041 - -Fair value of shares granted through the employee share plan ($000s)* 23,006 16,621 - -* Weighted average fair value of shares is determined by the closing price at the end of the day’s trading on the Australian Stock Exchange on theallocation date.02-13Overview14-36Governance37-88Financials89-92Reports93-96Further InformationPAGE 65