Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

B Basis of consolidation
i) The consolidated financial statements include the financial statements of the Company, its subsidiary
undertakings and, on the basis set out in (ii) below, its associates and joint ventures. Subsidiary undertakings
are entities over which the Group has the power to govern the financial and operating policies. The results of
subsidiary undertakings, associates and joint ventures are included or excluded from their effective dates of
acquisition or disposal respectively. All material intercompany transactions, balances and unrealized surpluses
and deficits on transactions between Group companies have been eliminated. The cost of and related income
arising from shares held in the Company by subsidiary undertakings are eliminated from shareholders’ funds
and minority interests, and profit respectively.
ii) Associates are entities, not being subsidiary undertakings or joint ventures, over which the Group exercises
significant influence. Joint ventures are entities which the Group jointly controls with one or more other
venturers. Associates and joint ventures are included on the equity basis of accounting.
iii) Minority interests represent the proportion of the results and net assets of subsidiary undertakings and their
associates and joint ventures not attributable to the Group.
iv) The results of entities other than subsidiary undertakings, associates and joint ventures are included to the
extent of dividends received when the right to receive such dividend is established.
C Foreign currencies
Transactions in foreign currencies are accounted for at the exchange rates ruling at the transaction dates.
Assets and liabilities of subsidiary undertakings, associates and joint ventures, together with all other monetary
assets and liabilities expressed in foreign currencies, are translated into United States dollars at the rates of
exchange ruling at the year end. Results expressed in foreign currencies are translated into United States dollars
at the average rates of exchange ruling during the year, which approximate the exchange rates at the dates of
the transactons.
Exchange differences arising from the retranslation of the net investment in foreign subsidiary undertakings,
associates and joint ventures, and of financial instruments which are designated as hedges of such investments, are
taken directly to exchange reserves. On the disposal of these investments, such exchange differences are recognized
in the consolidated profit and loss account as part of the profit or loss on disposal. Exchange differences on other
non-current investments are dealt with in the exchange reserves as part of the gains and losses arising from changes
in their fair value. All other exchange differences are dealt with in the consolidated profit and loss account.
Goodwill and fair value adjustments arising on acquisition of a foreign entity after 1st January 2003 are treated as
assets and liabilities of the foreign entity and translated into United States dollars at the rate of exchange ruling at
the year end.
Annual Report 2008 33