Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.6 Associated companies (cont’d)Any excess of the Group’s share of the net fair value of the associated company’s identifi able assets, liabilities and contingentliabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead includedas income in the determination of the Group’s share of the associated company’s profi t or loss in the period in which theinvestment is acquired.When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company,including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations ormade payments on behalf of the associated company.The most recent available audited fi nancial statements of the associated companies are used by the Group in applying theequity method. Where the dates of the audited fi nancial statements used are not co-terminous with those of the Group,the share of results is arrived at from the last audited fi nancial statements available and un-audited management fi nancialstatements to the end of the accounting period. Consistent accounting policies are applied for like transactions and eventsin similar circumstances.In the Company’s separate fi nancial statements, investments in associated companies are accounted for at cost lessimpairment losses.2.7 Joint venturesThe Group’s investments in joint venture are accounted for using the equity method. Under the equity method, the investmentin joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets ofthe joint venture. The Group’s share of the profi t or loss of the joint venture is recognised in the consolidated profi t and lossaccount. Where there has been a change recognised directly in the equity of the joint venture, the Group recognises its shareof such changes. After application of the equity method, the Group determines whether it is necessary to recognise anyimpairment loss with respect to the Group’s net investment in the joint venture. The joint venture is equity accounted for fromthe date the Group obtains signifi cant infl uence until the date the Group ceases to have joint control over the joint venture.In the Company’s separate fi nancial statements, interests in joint ventures are accounted for at cost less impairment losses.2.8 Affiliated companiesAn affi liated company is a company, not being a subsidiary or an associated company, in which one or more of the directorsor shareholders of the Company have a signifi cant equity interest or exercise signifi cant infl uence.2.9 Related partiesParties are considered to be related if one party has the ability to control the other party or exercise signifi cant infl uence overthe other party in making fi nancial and operating decisions.Notes to the Financial Statements 90Annual Report 2006