Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.25 Income taxes (cont’d)b) Deferred tax (cont’d)Income tax relating to items recognised directly in equity is recognised in equity.Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current taxassets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxationauthority.c) Sales taxRevenues, expenses and assets are recognised net of the amount of sales tax except:• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority,in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expenseitem as applicable; and• Receivables and payables that are stated with the amount of sales tax included.The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivablesor payables in the balance sheet.2.26 SegmentsFor management purposes, the Group is organised on a world-wide basis into two major operating businesses. The divisionsare the basis on which the Group reports its primary segment information.Segment revenue, expenses and results include transfers between business segments and between geographical segments.Such transfers are accounted for on an arm’s length basis.2.27 Government grantsGrants and subsidies from government are recognised at their fair value where there is a reasonable assurance that thegrant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to anexpense item, it is recognised as income over the periods necessary to match them on a systematic basis to the costs whichit is intended to compensate. Where the grant relates to an asset, the fair value is credited to a deferred income account andis released to the profi t and loss account over the expected useful life of the relevant asset by equal annual installments.Notes to the Financial Statements 104Annual Report 2006