NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the period ended 28 July 2018 F2 RETAINED EARNINGS/(ACCUMULATED LOSSES) AND RESERVES 2018 2017 $'000 $'000 (a) Retained earnings/(accumulated losses) Movements in retained earnings/(accumulated losses) were as follows: Balance at beginning of period 342,146 379,483 Profit/(loss) for the period (486,002) 11,939 Dividends (16,426) (49,276) Balance at end of period (160,282) 342,146 (b) Reserves Share-based payments (i) 27,931 27,186 Cash flow hedges (ii) 6,658 (6,894) Other reserve (iii) (25,621) (25,621) Foreign currency translation (iv) (3,717) (3,278) 5,251 (8,607) Movements in reserves were as follows: Share-based payments Balance at beginning of period 27,186 25,613 Share-based payments expense recognised (note H4) 982 1,782 Income tax (note A4) (237) (209) Balance at end of period 27,931 27,186 Cash flow hedges Balance at beginning of period (6,894) (7,441) Net gain/(loss) on revaluation 15,428 (1,632) Transfer to net profit (1,876) 2,179 Balance at end of period 6,658 (6,894) Foreign currency translation Balance at beginning of period (3,278) (3,607) Exchange differences on translation of foreign operations during the period (439) 329 Balance at end of period (3,717) (3,278) (i) Share-based payments The share-based payments reserve is used to recognise the fair value of options and rights granted to employees under the employee share plans. Further information on share-based payments is set out in note H4. (ii) Cash flow hedges The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity, as described in note E2. Amounts are recognised in the income statement when the associated hedged transaction affects profit or loss. (iii) Other reserve The Group acquired 65% of the sass & bide business in 2011, and the non-controlling shareholders held a put option over the remaining 35%. This resulted in the Group recognising a financial liability for the put option and a corresponding amount in other reserve. In 2014, upon acquisition of the remaining 35% of sass & bide, the cash payment of $33.4m was recorded against the financial liability and non-controlling interests balances were recorded against other reserve. (iv) Foreign currency translation Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to the income statement when the net investment is disposed of. Accounting policy (i) Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollars, which is Myer Holdings Limited’s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognised in other comprehensive income. 74 Myer Annual Report 2018