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## 19. Shareholders’ equity and other reserves 

## Capital increase 

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On 7 March 2012, the Company completed an offering of 3,000,000 previously unissued ordinary shares at £0.10 per share to its employee benefit trust (“Trust”) at a price of €0.80 per share, to make such shares available for the exercise of stock option rights that had previously been granted to employees. 

## Ordinary shares 

The amount of authorized shares at 31 December 2012 was 104,311,860 (2011: 104,311,860) with a par value of £0.10 per share, of which 68,068,930 (2011: 65,068,930) shares were issued and outstanding. 

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Dialog’s stock is issued in the form of registered shares. All shares are fully paid. 

## Additional paid-in capital 

The account comprises additional paid-in capital in connection with the issue of shares. With an amount of US$36,579,000 the increase in 2012 mainly relates to the conversion rights of the convertible bond which was launched in 2012 as described in note 18 and which were treated as equity instruments in accordance with IAS 32. 

## Retained earnings 

Retained earnings comprise losses and non-distributed earnings of consolidated Group companies. 

## Other reserves 

## Currency translation reserve 

The currency translation reserve is used to record exchange differences arising from the translation of the financial statements of subsidiaries and branches whose functional currency is not the US$. At 31 December 2012 and 2011, the negative currency translation reserve was US$1,964,000 and US$1,879,000 respectively. 

## Cash flow hedge reserve 

The cash flow hedge reserve is used to record the portion of the gain or loss on a hedging instrument that is determined to be a highly effective cash flow hedge. At 31 December 2012 the positive cash flow hedge reserve was US$1,537,000 compared to a negative cash flow hedge reserve of US$- 6,372,000 at 31 December 2011. Please refer to note 25 for the amounts reclassified from other comprehensive income and recognized in profit and loss statement. 

The related tax effects allocated to each component of other reserves for the years ended 31 December 2012 and 2011 are as follows: 

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