Business review 01
Financial statements 63
The translation reserve represents the accumulated exchange differences arising since the transition to IFRS from the following sources:
− The impact of the translation of subsidiaries with a functional currency other than Sterling; and
− Exchange differences arising on hedging instruments that are designated hedges of a net investment in foreign operations, net of tax
Exchange differences arising prior to the IFRS transition were offset against retained earnings.
The hedge reserve records movements on derivative financial instruments designated as cash flow hedges.
Other reserves brought forward relate to the merger reserve which was present under UK GAAP and frozen on transition to IFRS.
22 Retained earnings
At 1 October 742.9 638.1
Profit for the year 227.3 189.5
Value of employee services 10.0 6.7
Dividends (98.6) (95.1)
Purchase of treasury shares (7.3) –
Actuarial loss on post employment benefit obligations (0.3) (0.3)
Equity movement of deferred income tax 3.1 4.0
At 30 September 877.1 742.9
The actuarial loss of £0.3m (2009: £0.3m) is made up of net gains of £0.5m (2009: gain of £0.1m) on post-employment benefits (note 26)
and a loss of £0.8m (2009: loss of £0.4m) on other long-term employee benefits (note 26).
The Group holds treasury shares in a trust which was set up for the benefit of Group employees. The Trust purchases the Company’s shares
in the market for use in connection with the Group’s share-based payments arrangements. The Trust holds 4,986,267 ordinary shares in
the Company (2009: 3,601,541) at a cost of £12.9m (2009: £10.1m) and a nominal value of £49,863 (2009: £36,015). The Trust originally
purchased the shares in February 2006, a further 2,990,210 shares were acquired by the Trust in August 2010 with the cost being reflected
in retained earnings.
These shares were acquired by the Trust in the open market using funds provided by the Company to meet obligations under the Performance
Share Plan. During the year, 1,605,484 shares were utilised to meet these obligations. The costs of funding and administering the scheme are
charged to the profit and loss account of the Company in the period to which they relate. The market value of the shares at 30 September
2010 was £13.8m (2009: £8.4m).
The Sage Group plc
Annual Report and Accounts 2010 99