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Notes to the Financial StatementsIncome taxesThe liability method of tax effect accounting is adopted by the Group and the Company. Current taxation isprovided at the current taxation rate based on the tax payable on the income for the financial year that ischargeable to tax. Deferred taxation is provided at the current taxation rate on all temporary differences existingat the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in thefinancial statements.Deferred tax liabilities are recognised for all taxable temporary differences (unless the deferred tax liability arisesfrom goodwill or the initial recognition of an asset or liability in a transaction that is not a business combinationand at the time of the transaction, affects neither the accounting profit nor taxable profit or loss). Deferredincome tax is provided on all temporary differences arising on investment in subsidiary companies, exceptwhere the timing of the reversal of the temporary differences can be controlled and it is probable that thetemporary difference will not reverse in the foreseeable future.Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable thatfuture taxable profit will be available against which the deductible temporary differences can be utilized (unlessthe deferred tax asset relating to the deductible temporary differences arises from goodwill or the initial recognitionof an asset or liability in a transaction that is not a business combination and, at the time of the transaction,affects neither the accounting profit nor taxable profit or loss).The statutory tax rates enacted at the balance sheet date are used in the determination of deferred income tax.Conversion of foreign currenciesItems included in the financial statements of each entity in the Group are measured using the currency that bestreflects the economic substance of the underlying events and circumstances relevant to that entity (“themeasurement currency”). The consolidated financial statements of the Group and the financial statements ofthe Company are presented in Singapore dollars, which is the measurement currency of the Company.Monetary assets and liabilities in foreign currencies except for foreign currency assets and liabilities hedged byforward exchange contracts are translated into Singapore dollars at rates of exchange closely approximatingthose ruling at balance sheet date. Foreign currency assets and liabilities hedged by forward exchange contractsare translated into Singapore dollars at the contracted forward exchange rates at the date of transaction andare not retranslated at balance sheet date. Other transactions in foreign currencies are converted at ratesclosely approximating those ruling at transaction dates.Except for the situations described below, exchange differences arising from such transactions are recorded inthe income statement.(i)(ii)Where a monetary item in substance forms part of the Company’s net investment in the foreign subsidiarycompanies and associated companies, exchange differences arising on such a monetary item are recordeddirectly to exchange fluctuation reserve to the extent that the net investment is represented by net assetsin the foreign entity until the disposal of the investments.Where foreign currency loans provide an effective hedge against the net investment in foreign subsidiarycompanies and associated companies, exchange differences arising on the loans are recorded directlyin exchange fluctuation reserve until the disposal of the investments.50 inter-roller engineering limited annual report2004
Notes to the Financial StatementsConversion of foreign currencies (cont’d)Assets and liabilities of foreign subsidiary companies are translated at the rates of exchange ruling at thebalance sheet date. The income statements of the foreign subsidiary companies are translated using theaverage monthly rates. Foreign currency translation adjustments arising are recorded directly in exchangefluctuation reserves.Segment reportingA segment is a distinguishable component of the Group that is engaged in providing material handling systemsand its related engineering services within a particular economic environment (geographical segment) and to aparticular industry (business segment) which is subject to risks and rewards that are different from those ofother segments.Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities includeitems attributable to segment as well as those that can be allocated on a reasonable basis. Unallocated itemsmainly comprise income-earning assets and revenue, interest-bearing loans, borrowings and expenses, andcorporate assets and expenses.Segment capital expenditure is the total cost incurred during the period to acquire segment assets that areexpected to be used for more than one period.Segment information is presented in respect of the Group’s geographical and business segments. The primaryformat, geographical segments, is based on the Group’s management and internal reporting structure. Inpresenting information on the basis of geographical segments, segment revenue and segment assets arebased on the geographical location of the Group’s facilities. Supplementary information of the group’s turnoverbased on the geographical location of customers is also given.Financial instrumentsFinancial instruments carried on the balance sheet include cash and cash equivalents, investments (excludingsubsidiary companies, associated companies or joint ventures), trade receivables and payables, other receivablesand payables, finance leases and borrowings. The particular recognition methods adopted are disclosed in theindividual policy statements associated with each item. These instruments are recognised when contracted for.The Group and the Company are also party to financial instruments that reduce exposure to fluctuations inforeign currency exchange and interest rates. These instruments, which mainly comprise foreign currencyforward contracts, are recognised in the financial statements on inception. The purpose of these instruments isto reduce risk.Foreign currency forward contracts protect the Group and the Company from movements in exchange rates byestablishing the rate at which a foreign currency asset or liability, or forecasted transaction will be settled. Anyincrease or decrease in the amount required to settle the asset or liability, or forecasted transaction is offset bya corresponding movement in the value of the forward exchange contract. The gains and losses are recogniseddirectly in equity through the Statement of Changes in Equity provided the criteria for hedge accountingare met.Disclosures on financial risk management are provided in Note 28.inter-roller engineering limited annual report2004 51
Page 3: Our MissionTo excel as a world-clas
Page 7 and 8: Corporate InformationProducts and S
Page 9 and 10: Company for 23 years. Directors are
Page 11 and 12: UnitedKingdomTunisiaEgyptUAESaudiAr
Page 13: PHILIPPINESNinoy Aquino Internation
Page 16 and 17: Senior ManagementJohn Sng Hee Kwee
Page 19 and 20: Financial HighlightsGroup Performan
Page 21 and 22: Half-Year Results of the Group2004
Page 23: Value-Added StatementsGroup 2004 20
Page 26 and 27: Operations ReviewHaikou Meilan Inte
Page 28 and 29: Operations ReviewJinan Internationa
Page 30 and 31: Operations ReviewINFLIGHT CATERING
Page 33: Corporate EventsJanuary 2004• 1st
Page 36 and 37: Directors’ ReportThe directors su
Page 38 and 39: Directors’ ReportShare options ex
Page 40 and 41: Statement by Directors and theChief
Page 42 and 43: Balance SheetsThe GroupThe Company3
Page 44 and 45: Statement of Changes in EquityExcha
Page 46 and 47: Consolidated Cash Flow StatementYea
Page 48 and 49: Notes to the Financial StatementsPr
Page 50 and 51: Notes to the Financial StatementsCa
Page 54 and 55: Notes to the Financial Statements3
Page 76 and 77: Report on Corporate GovernanceNomin
Page 78 and 79: Report on Corporate GovernanceAudit
Page 80 and 81: Share Transaction StatisticsSHARE V
Page 82 and 83: Notice of Annual General MeetingNOT
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Page 88: Inter- Roller Engineering Limited20

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