notes to the financial statements - Singapore Technologies ...

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204 SIMPLY SMARTERNOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)41. Other reserves (continued)Group2011 2010$’000 $’000iii.Foreign currency translation differences arise from:- Translation of quasi equity loans forming part of net investments in foreign entities (9,529) (2,423)- Translation of foreign currency loans used as hedging instruments for effective netinvestment hedges (5,487) 7,005- Translation of foreign entities 33,763 (84,873)18,747 (80,291)Foreign currency translation reserveThe foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreignsubsidiaries whose functional currencies are different from that of the Group’s presentation currency.As at 31 December 2011, bonds amounting to $257.4 million (US$198.1 million) (2010: $134.0 million (US$103.9 million)) have been designated asa hedge of the net investment in Vision Technologies Systems, Inc. and its subsidiaries (“US subsidiaries”) and are being used to hedge the Group’sexposure to foreign exchange risk on this investment. Gain or loss on the re-translation of these bonds is transferred to other comprehensive income tooffset any gain or loss on translation on the net investment in the US subsidiaries. There is no ineffectiveness in the hedge during the year.Statutory reserveIn accordance with foreign Enterprise Law application to the wholly-owned subsidiaries in the People’s Republic of China (“PRC”), certain subsidiaries arerequired to make appropriation to a Statutory Reserve Fund (“SRF”). At least 10% of the statutory after tax profits as determined in accordance with theapplicable PRC accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiaries’registered capital. Subject to approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registeredcapital of the subsidiaries. The SRF is not available for standard distribution to shareholders.In accordance with the Law of the PRC on Joint Ventures Using Chinese and Foreign Investment applicable to certain subsidiaries, appropriations fromthe net profits are made to the Reserve Fund and the Enterprise Expansion Fund, after offsetting accumulated losses from prior years (if any), and beforeprofit distributions to the investors. The percentage to be appropriated to the Reserve Fund and the Enterprise Expansion Fund is to be determined by theBoard of Directors of the PRC entities.Fair value reserveFair value reserve records the cumulative fair value changes of available-for-sale financial assets until they are derecognised or impaired as well as theportion of the fair value changes on the derivative financial instruments designated as hedging instruments in cash flow hedges that are determined tobe an effective hedge.Share-based payment reserveShare-based payment reserve represents the equity-settled share options, performance shares and restricted shares granted to employees and nonexecutivedirectors. The reserve is made up of the cumulative value of services received from employees recorded on grant of equity-settled share options,performance shares and restricted shares. The expense for services received will be recognised over the vesting periods.
SINGAPORE TECHNOLOGIES ENGINEERING LTD Annual Report 2011205NOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)41. Other reserves (continued)Premium paid on acquisition of non-controlling interestsThe reserve represents the difference between the consideration paid on acquisition of non-controlling interests and the carrying value of the proportionateshare of the acquiree’s net assets acquired.42. Retained earningsGroup2011 2010$’000 $’000Retained by:The Company 536,877 487,984Subsidiaries 379,268 353,754Associates and jointly controlled entities 116,868 109,0641,033,013 950,80243. DividendsGroup and Company2011 2010$’000 $’000Final dividend paid in respect of the previous financial year of 4.0 cents(2010: 4.0 cents) per share 121,503 120,418Special dividend paid in respect of the previous financial year of 7.55 cents(2010: 6.28 cents) per share 229,508 188,906Interim dividend paid in respect of the current financial year of 3.0 cents(2010: 3.0 cents) per share 91,656 90,955442,667 400,279Additional final dividend paid in respect of the previous financial year due to issue of sharesbefore books closure date 1,509 1,959444,176 402,238The Directors propose a final dividend of 4.0 cents (2010: 4.0 cents) per share amounting to $122.3 million (2010: $121.5 million) and a special dividendof 8.5 cents (2010: 7.55 cents) per share amounting to $259.8 million (2010: $229.5 million), in respect of the financial year ended 31 December 2011.These dividends have not been recognised as a liability as at year-end as they are subject to approval at the Annual General Meeting of the Company.
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