62 ANNUAL REPORT  2013  KATHMANDU 20 RESERVES AND RETAINED EARNINGS (A) RESERVES GROUP PARENT Note 2013 2012 2013 2012 NZ$’000 NZ$’000 NZ$’000 NZ$’000 (i) Cash flow hedging reserve Opening balance (3,309) (9,055) - - Revaluation - gross 11,230 6,967 - - Deferred taxation on revaluation 5 (2,827) (1,072) - - Transfer to net profit - gross (27) (149) - - Closing balance 5,067 (3,309) - - (ii) Foreign currency translation reserve Opening balance 7,628 ) 3,889 - - Currency translation differences - Gross (20,723) 4,159 - - Currency translation differences - Taxation 2,537 ) (420) - - Closing balance 5 (10,558) 7,628 - - (iii) Share based payments reserve Opening balance 739 625 739 625 Current year amortisation 209 371 209 371 Transfer to Share Capital on vesting of shares to Employees (72) (249) (72) (249) Share Options / Performance Rights lapsed (53) (8) (53) (8) Closing balance 823 739 823 739 Total Reserves (4,668) 5,058 823 739 Nature and purpose of reserves 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 policy 2 (n) (ii). The amounts are recognised in profit and loss when the associated hedged transaction affects  profit and loss. The foreign currency translation reserve is used to record gains or losses on investments in foreign operations. The amounts are  accumulated in equity and recognised in profit and loss when the foreign operation is partially disposed of or sold. The share based payments reserve is used to recognise the fair value of share options and performance rights granted but not  exercised or lapsed. Amounts are transferred to share capital when vested options are exercised by the employee or performance  rights are granted. (i) Cash flow hedging reserve (ii) Foreign currency translation reserve (iii) Share based payments reserve