Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)41. Segment informationReporting formatThe primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affectedpredominantly by differences in the products and services produced. Secondary information is reported geographically.Business segmentsThe Group comprises 2 main business segments:Retail : Outlets and counters operated by the Group in selected shopping centers and departmental stores where theproducts are sold directly to end user customers.Distribution : Products distributed by the Group and franchisees in overseas markets.Geographical segmentsThe Group’s geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed ingeographical segments are based on the geographical location of its customers.Allocation basis and transfer pricingSegment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated ona reasonable basis. Unallocated items comprise mainly corporate assets, income tax and deferred tax assets and deferred taxliabilities, interest-bearing loans and related expenses.Transfer prices between business segments are set on arm’s length basis in a manner similar to transactions with third parties.Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated onconsolidation.Notes to the Financial Statements 157Annual Report 2006