Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.4 Functional and foreign currency (cont’d)c) Foreign currency translationOn consolidation, the results and fi nancial position of foreign operations are translated into SGD using the followingprocedures:• Assets and liabilities for each balance sheet presented are translated at the closing rate ruling at that balancesheet date; and• Income and expenses for each income statement are translated at average exchange rates for the year, whichapproximates the exchange rates at the dates of the transactions.All resulting exchange differences are recognised in a separate component of equity as foreign currency translationreserve.On disposal of a foreign operation, the cumulative amount of exchange differences deferred in equity relating to thatforeign operation is recognised in the profi t and loss account as a component of the gain or loss on disposal.2.5 Subsidiaries and principles of consolidationa) SubsidiariesA subsidiary is an entity over which the Group has the power to govern the fi nancial and operating policies so as toobtain benefi ts from its activities. The Group generally has such power when it, directly or indirectly, holds more than50% of the issued share capital, or controls more than half of the voting power, or controls the composition of theboard of directors.In the Company’s separate fi nancial statements, investments in subsidiaries are accounted for at cost less anyimpairment losses.b) Principles of consolidationThe consolidated fi nancial statements comprise the fi nancial statements of the Company and its subsidiaries as at thebalance sheet date. The fi nancial statements of the subsidiaries used in the preparation of the consolidated fi nancialstatements are prepared for the same reporting date as the holding company. Consistent accounting policies areapplied for like transactions and events in similar circumstances.All intra-group balances, transactions, income and expenses and profi ts and losses resulting from intra-grouptransactions that are recognised in assets, are eliminated in full.Notes to the Financial Statements 88Annual Report 2006